In a recent discussion on Mad Money, Jim Cramer, the show’s host, shared his thoughts on Abbott Laboratories (NYSE: ABT) and its ongoing legal challenges over baby formula. He expressed confidence that the company would ultimately prevail in these lawsuits.
Cramer, who often emphasizes long-term investing, suggested that investors should focus on the growth potential of pharmaceutical stocks, even during periods when certain sectors may seem out of favor. He noted that stocks, including those in the healthcare sector, often experience cyclical trends, sometimes falling temporarily out of favor.
“Stocks go in and out of style. Entire sectors can suffer. Right now, healthcare is facing a downturn like I’ve never seen,” Cramer said.
However, Cramer remains optimistic about the long-term prospects for pharmaceutical companies. He recently attended the JPMorgan healthcare conference in San Francisco, where he observed that several pharmaceutical stocks are undervalued by Wall Street. While the short-term outlook for these companies might not be stellar, Cramer believes the potential for substantial long-term returns is significant.
“Why focus on the long term? Because the potential for these companies is huge and incredibly profitable, even though the present is just okay,” he explained.
Cramer also pointed to the advancements in healthcare, particularly in GLP-1 drugs. These treatments, currently used for diabetes and weight loss, have the potential to address other health conditions. Additionally, pharmaceutical companies are working on developing oral versions of these treatments, offering more convenient options for patients. Beyond GLP-1 drugs, there are innovations in cancer therapies, eye care, asthma treatments, and experimental COVID-19 drugs.
“The key question: What happens if things improve? If the future turns out better than the past, there will be many winners in drug and medical device companies,” he said.
Methodology
This article is based on a recent segment of Mad Money, where Jim Cramer discussed 9 stocks. These stocks were ranked based on hedge fund sentiment from the third quarter, using Insider Monkey’s database of 900 hedge funds.
Why focus on hedge funds? Research has shown that following the top stock picks of successful hedge funds can help investors beat the market. Our quarterly newsletter, which selects 14 small- and large-cap stocks, has returned 275% since May 2014, outperforming the benchmark by 150 percentage points.
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