We recently compiled a list of the 8 Stocks on Jim Cramer’s Radar. In this article, we are going to take a look at where Danaher Corporation (NYSE:DHR) stands against the other stocks.
Jim Cramer, the host of Mad Money, recently shared some investment guidelines based on his 40 years of experience. As we previously discussed in our article, Jim Cramer Talked About These 8 Stocks, Cramer emphasized that both bulls and bears can profit, but greed leads to losses, advising investors to take profits and avoid being overly greedy. His second rule is that paying taxes is acceptable. Finally, Cramer stressed the importance of not making large, all-at-once buys or sales, recommending gradual adjustments to positions instead.
In addition to these guidelines, Cramer’s next rule was to recognize the importance of distinguishing between damaged stocks and damaged companies. He explained that buying stocks from companies that are fundamentally flawed is a mistake with no chance of recovery, but stocks of companies that are simply experiencing temporary issues may present a buying opportunity. This distinction is critical because, as Cramer pointed out, there’s no “money-back guarantee” when buying into a company with long-term problems.
Investors should focus on finding stocks that are down for reasons that aren’t related to poor company fundamentals. Cramer then moved on to his next rule, which is to always do the relevant homework.
“If you want to build a portfolio of individual stocks, that’s a big if since there’s nothing wrong with getting all of your equity exposure from a cheap index fund that mirrors the S&P 500, well, you gotta be rigorous about it. Which brings me to my next rule: Do the homework.”
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Cramer said that doing the homework means more than just picking stocks based on a gut feeling; it involves actively researching companies by listening to earnings calls, reading research reports, and staying on top of the news. Cramer noted that some investors dismiss this kind of work, seeing it as unnecessary or outdated in today’s fast-paced world. However, he was clear in his belief that failing to do proper research before buying stocks is foolish and can lead to poor investment choices.
Cramer further emphasized that doing homework today is easier than ever. With so much information available on the internet, there’s no excuse for not gathering as much data as possible. For those who don’t have the time or inclination to dive deep into individual stocks, Cramer suggested that index funds are a great alternative. Another crucial rule that Cramer continually stresses is the importance of diversification.
“The next rule is another essential that I harp on constantly: Diversify, diversify, and diversify. Always be diversified, that controls risk, and managing risk is really the holy grail of this business. What’s the biggest risk out there? It’s called sector risk.”
Sector risk refers to the potential for a specific sector of the economy to lag, which can result in negative impacts on investments within that sector. Cramer explained that sector risk is one of the most significant dangers to an investment portfolio, and diversification is the only way to protect against it.
He frequently says that “diversification is the only free lunch in this business” because it’s the one investment principle that benefits everyone. As per Cramer, by mixing different sectors in a portfolio, at least five according to him, investors can prevent themselves from suffering catastrophic losses if one particular sector takes a hit.
“Here’s the bottom line: Whether you’re an amateur or professional, you always need to do your homework and keep your portfolio diversified. This is the kind of routine maintenance that protects you from monster losses down the line. Remember, if you can keep your losses to a minimum and let your gains run, you almost always come out ahead. But don’t try to rationalize those losses because stocks don’t always come back to even or anywhere near that.”
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episodes of Mad Money. 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 healthcare professional in a lab coat holding a microscope and looking at a slide under the lens.
Danaher Corporation (NYSE:DHR)
Number of Hedge Fund Holders: 98
Introducing Danaher Corporation (NYSE:DHR), another one of his Charitable Trust’s holdings, Cramer said:
“Full disclosure, this is a name that we have been battling for a few years now. The position was established in early 2022, which was bad timing because I didn’t appreciate the scale of the inventory glut issue. But we stuck with Danaher because we have tremendous respect for the company. I always believed that once the temporary headwinds cleared, this one would bounce right back. It still has a high price-to-earnings multiple though so it got annihilated today, down five bucks or 2% on the poorly received Fed meeting.”
Cramer highlighted that the stock saw a big surge in July but then struggled with a sharp decline in mid-October, dropping 19% from its August high. Despite this, Cramer sees it as a good buying opportunity. He noted that he is not alone in this outlook, as on December 13, Bank of America raised its rating on Danaher (NYSE:DHR) to Buy from Neutral while maintaining a price target of $290.
The firm noted that the recent decline in the stock has made it a more appealing entry point and believes the shares could outperform in 2025 as the bioprocess recovery gains momentum, driven by “more realistic” buy-side expectations. Cramer noted that the firm expects business to normalize next year, with a significant rebound in China driven by government stimulus efforts, and commented:
“There has been no government stimulus in this sector whatsoever. Now, I agree with that recommendation though, which is why we stuck with Danaher for the Charitable Trust. If like me, you believe it, the healthcare sector’s prime for a comeback next year. Danaher’s a great stock.”
Danaher (NYSE:DHR) designs and manufactures a broad range of products and services across several industries, offering solutions for therapeutic development, clinical diagnostics, and laboratory research. In Q3, it faced a decline in high-growth markets, especially in China, due to weak orders and cautious spending. Management noted that despite China’s stimulus measures, they haven’t sparked a notable uptick in orders.
However, the company saw growth from its pharmaceutical, biopharma, and CDMO customers, with demand improving as they moved past inventory destocking. Danaher (NYSE:DHR) management expects this recovery to continue in the coming quarters.
Overall DHR ranks 2nd on our list of stocks on Jim Cramer’s radar. While we acknowledge the potential of DHR 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 DHR 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.