We recently compiled a list of the 6 Stocks Jim Cramer Talked About This Week. In this article, we are going to take a look at where Bristol-Myers Squibb Company (NYSE:BMY) stands against the other stocks Jim Cramer talked about this week.
Jim Cramer, host of Mad Money, recently reflected on how investors often overlook obvious opportunities, particularly with cult stocks, which in hindsight appear to be clear success stories. He discussed how, sometimes, the fundamentals that guide traditional investing can hold investors back from seizing these opportunities.
Cramer acknowledged that many investors, himself included, have missed out on these types of stocks and emphasized that it’s important to examine why these opportunities were missed to avoid making the same mistake again. He mentioned that, early on, he and others mistakenly believed that fundamentals were always the key to making sound investments, only to realize that in certain situations, that’s not the case.
Cramer highlighted that in the case of cult stocks, the stock price can sometimes move independently of the company’s underlying performance. These stocks can experience long-term growth due to a fiercely loyal shareholder base, and as a result, they may not follow traditional market behavior. He explained that while meme stocks might follow similar trends, cult stocks have staying power and can defy expectations.
“There’s a lesson here and it is a brutal one. Sometimes conventional methods of valuation are completely worthless, and you need to embrace the dynamics of cult stocks. The trick is to recognize when we’re in one of those moments. In 2025, let’s strive to find the stocks of companies that do defy orthodoxy.”
READ ALSO Jim Cramer’s Lightning Round: 7 Stocks to Watch and Jim Cramer’s Game Plan for This Week: 8 Stocks in Focus
Shifting the focus to the healthcare sector, Cramer noted that although the market has seen significant gains in recent weeks, it has become increasingly difficult to find promising investment opportunities. However, he believes that healthcare could be the place to look as 2025 approaches. Cramer explained that healthcare stocks have significantly underperformed this year, trailing behind the broader market, which has created an opportunity.
“Now, it’s hard to bet on healthcare when the Fed’s cutting rates because these are textbook slowdown stocks and thrived when the economy was not doing so hot, but the election was also a clear negative catalyst for the group.”
He noted that President-elect Trump’s potential appointment of Robert F. Kennedy Jr. to head the Department of Health and Human Services is a major concern for the industry, especially given Kennedy’s reputation as a vaccine skeptic. Cramer also warned that if the second Trump administration attempts to dismantle Obamacare, it could lead to many Americans losing access to affordable health insurance, which would add further risk to healthcare stocks.
Despite these concerns, Cramer believes that, at some point, all the negative factors will be factored into healthcare stocks, and that moment is fast approaching. He stated that the damage done to healthcare stocks, particularly in biotech and pharmaceuticals, has been severe, but he sees an opportunity as these stocks have become too cheap relative to their long-term potential.
“With so many groups hitting new highs, I think it’s worth taking a step back and putting money to work in one of the most hated groups out there, healthcare. These stocks have simply gotten too cheap given its prospects, especially Eli Lilly, Vertex Pharma, and Bristol-Myers.”
Our Methodology
For this article, we compiled a list of 6 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 16. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A pharmacy shelves stocked with pharmaceutical drugs awaiting distribution.
Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 70
Cramer highlighted that Bristol-Myers Squibb Company (NYSE:BMY) is one of the cheapest pharmaceutical companies in the S&P 500. He commented:
“Finally, as I’ve been saying pretty regularly for the past few months, I think you should consider building a position for Bristol-Myers Squibb, which happens to be the newest position of my Charitable Trust… This stock has been hot since the summer as investors have bought into the new strategy put forward by CEO Christopher Boerner, who took over late last year.
Now, Boerner’s trying to build world-class franchises in cancer, cardiology, and neuroscience. His plan started paying off when Bristol-Myers got approval for the first and a totally new class of schizophrenia drugs back in September. Something they picked up from a recent acquisition, far fewer side effects than the competition. Doesn’t hurt that AbbVie’s working on a competing product that failed a major clinical trial last month. But after a nice pop on the AbbVie failure, Bristol-Myers has been pulling back this month to the point where it’s now down almost 9% from its mid-November highs.
As with Vertex, I can’t give you a good reason for that. Again, I think the pullback simply reflects concerns about the group, has nothing to do with Bristol-Myers specifically. Hey, by the way, even after rallying some 42% from its early July lows, this stock sells for just 7.9 times next year’s earnings estimates. Boy, you know, that’s the cheapest pharmaceutical company in the S&P 500, aside from the unprofitable Moderna. Bristol-Myers also supports a 4.4% yield. That’s the second best of the group. So to recap, the fundamentals improved dramatically in the second half of this year, the stock’s still dirt cheap and you’re even getting paid to wait with that juicy dividend, which was just boosted last week.”
Bristol-Myers (NYSE:BMY) is a major player in the biopharmaceutical industry, with a focus on developing treatments for a variety of diseases across multiple therapeutic areas. In September, the U.S. Food and Drug Administration approved the company’s schizophrenia drug, marking a significant achievement as the first new class of antipsychotic medicine in decades.
This approval followed the company’s $14 billion acquisition of Karuna Therapeutics in the previous year, through which the company obtained the schizophrenia treatment, Cobenfy (formerly known as KarXT). Cobenfy distinguishes itself from other schizophrenia medications in several ways. Its labeling does not carry a warning about the increased mortality risk in elderly patients, a concern commonly associated with other antipsychotic treatments.
Additionally, unlike many other medications for the disorder, Cobenfy does not lead to the typical side effects such as weight gain and movement disorders. These attributes make Cobenfy a notable addition to BMS’s portfolio of treatments. The company is also undergoing significant structural changes to streamline operations. The company launched a $1.5 billion restructuring initiative earlier in 2024 that is expected to run through 2025.
According to Bristol-Myers (NYSE:BMY) CEO Chris Boerner, BMS management is actively reviewing its overall spending to prioritize investments that will generate the best long-term returns. The company is on track to meet its $1.5 billion cost-saving target by the end of next year.
Overall BMY ranks 4th on our list of the stocks Jim Cramer talked about this week. While we acknowledge the potential of BMY as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BMY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.