CNBC’s Jim Cramer said Thursday that the life sciences sector is in “raging bull” mode, especially in the instrument manufacturing market.
“The life science stocks have caught fire, and while some of that has to do with a rotation, what’s really going on here is Thermo Fisher and Danaher are both incredibly well-run companies that are kind of in the sweet spot right now, ” the “Mad Money” host said. “I think you can buy some here, you buy more lower.”
The biology industry is one place money managers like to invest in when Wall Street fears the economy is slowing because it’s a space that can post good numbers, even in a recession, Cramer said. In the past month alone, Thermo and Danaher shares have run nearly 10% and almost 8%, respectively.
Even if the Federal Reserve decides to cut interest rates to rejuvenate the economy and spurs portfolio managers to move money back out of the recession-proof stocks, it won’t be the end of the day for these two names. Both companies are worth buying on a pullback, Cramer said.
“These are two incredibly well-run, fantastic management companies that are firing on all cylinders, which makes them incredibly good long-term investments,” he said.
Life sciences has support on both sides of the aisle in Washington, D.C., Cramer noted. The National Institutes of Health increased its biology budget by 5% in 2019, he added.
Thermo Fisher, which offers analytical and laboratory products, is betting on its most lucrative end markets in individualized medicine and biopharmaceutical services, Cramer said.
“Thermo Fisher makes lots of little acquisitions in red-hot areas, then it accelerates the growth and scales up the businesses once they’re under the TMO umbrella,” he said. “That’s how these guys have been able top put numbers up, fantastic numbers, time and again.”
Danaher, the health care technology conglomerate that has a $21.4 billion cash deal for General Electric’s biopharma unit, creates a big opportunity, Cramer said.
“Danaher has a great track record when it comes to making acquisitions … They have a whole system that lets them turn good businesses into great ones,” he said. “That’s one reason the stock’s up nearly 35% for the year. I think Danaher could have even more upside, but, again, how about buy some here and then wait for the pullback.”
A shopper checks out the merchandise at a Target store in Denver, Colorado.
Helen H. Richardson | Denver Post | Getty Images
Cramer said retail earnings have revealed the middle part of the sector is “struggling.”
“There’s a market for high-end luxury goods and low-end mass market merchandise, but right now there’s not much space in between,” he said.
Diving into the sector’s quarterly results, presented over the past weeks, Cramer noted that the discount, high-end and online businesses have been working for investors. The companies closely connected to malls are seeing the most pain, he added.
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Fake meat food fight
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Cramer said Beyond Meat, the company, is here to stay, but the hot stock that has been on a huge run could soon get brought back down earth.
Tyson Foods, the meat and poultry giant that has a $30.1 billion market cap, is planning to jump into the fake-meat space.
Click here to hear what the host has to say about the looming plant-based food wars
Hot or not?
A pedestrian passes a Michael Kors store in New York
Scott Mlyn | CNBC
Cramer advised investors to stick with the bulls on Capri Holdings.
The Michael Kors parent held an analyst meeting earlier this week in which management laid out its growth plans, but it yielded conflicting opinions from the community. The stock is down more than 55% from its highs in September.
“I’m always thrilled when we this kind of dueling situation among the analysts because you can pit their arguments against each other and then you’ll become to a better investor,” the host said. “You become to have a better understanding of both the company and the stock.”
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What’s next for diabetes monitoring
Kevin Sayer, CEO, Dexcom
Scott Mlyn | CNBC
Dexcom will launch a number of upgrades for its G6 diabetes system over the next year, including its direct-to-Apple Watch version, CEO Kevin Sayer said.
Apple CEO Tim Cook earlier this year said he wanted to leave a mark on the health care industry under his tenure at the iconic technology giant. The collaboration between the two companies would allow diabetes patients to track glucose on Apple’s top wearable device.
“It’s coming,” Sayer said in a sit-down interview Cramer. “And this tool is great for people with diabetes.”
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Cramer’s lightning round: Ball is in a duopoly. It’s a ‘total windfall’
In Cramer’s lightning round, the “Mad Money” host zips through his thoughts about callers’ stock picks of the day.
Mercer: “I think that that’s a very tough business and I’m gonna have to say hold off.”
Lumenthum Holdings: “That one is too risky.”
Synopsys: “I like it very much.”
Disclosure: Cramer’s charitable trust owns shares of Apple.