Cramer's Drug Research/CRO Stocks (CVD, PRXL)

On tonight’s MAD MONEY on CNBC, Jim Cramer came out with a positive tease early on in the contract research organization sector (CRO’s) as it pertains to drugs, biotech, and medical research.  He thinks this sector is recession proof and is set to continue growing whether the market rises or falls.  For growth and cost cutting this sector is mandatory for an ailing drug and pharma sector.  His picks tonight were:

• His pick that does both early and late stage: Covance (NYSE: CVD) is Cramer’s best pick of the group and is 50/50 in early and late stages and a high customer diversification.  They can save customers the most by outsourcing, and the balance sheet is immaculate with new factories/offices opening.
• Paraxel (NASDAQ:PRXL) is another he likes in the CRO sector.

This sector has seen some incredible performance over the last 12 to 18 months, yet only Quest has a $10 Billion market cap.  The multiples have gotten higher of late, but that is the price for being defensive now.  He isn’t at all convinced that today is the start of a market trend and he thinks the market will roll over again, so he wants to look at safety names besides tonight’s key oversold and overlooked tech stock picks he gave tonight.

Jon C. Ogg
January 14, 2008