Jim Cramer, host of Mad Money, recently addressed how investors can sometimes lose sight of the broader market perspective. He reminded his audience that the key to successful investing is simple: buy good stocks at reasonable prices and sell poor-performing stocks, even at a loss.
“Sometimes we forget what we are trying to do around here. We’re looking to find good stocks at good prices and buy them. We want to sell bad stocks at any price and kick them out of our portfolio.”
Cramer also touched on the current market environment, noting that we’re nearing the beginning of a rate-cutting cycle. While some may argue it’s not yet a cutting cycle, Cramer believes it is, regardless of whether it proceeds gradually. He pointed out that there’s another important factor to consider, an environment that is heavily oversold.
“We know that there are inflationary tariffs in the wind, but we don’t know their size, their breadth or their impact, but that’s why we’re already oversold. People saw this coming, they were worried and they took action ahead. They dumped stocks so they wouldn’t be long or own as much when the meeting (Fed meeting) occurred.”
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As Cramer looked at the market, he expressed his focus on identifying high-quality stocks that have seen significant declines. He noted that, in a market that has already experienced substantial gains, the only place to find true value is among the laggards. Specifically, he pointed to the healthcare sector, where 62 healthcare stocks in the S&P 500 are currently down by an average of 19.7% from their peaks. Cramer acknowledged that some of this decline is tied to real risks within the sector, such as President-elect Trump’s focus on addressing middlemen in the drug industry, including pharmacy benefit managers and drug distributors. However, he believes much of the risk has already been priced into these stocks, making them potentially attractive investments at this point.
Cramer also drew attention to the medical device and technology sector, where stocks are on average down 17.6% from their highs.
“Now the goal is to build a position that starts somewhere well below where it was, simply because it has gone out of style in the current version of the Wall Street fashion show and is being hit with heavy end-of-the-year tax selling… You know why you do this? Because of the overarching principle behind good investing, buying low so that one day you can sell high, or maybe not sell at all.”
Jim Cramer Recently Discussed These 7 Stocks
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For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 17. 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).
Jim Cramer Recently Discussed These 7 Stocks
7. IDEXX Laboratories, Inc. (NASDAQ:IDXX)
Number of Hedge Fund Holders: 42
Cramer noted that IDEXX Laboratories, Inc. (NASDAQ:IDXX) is a prominent player in veterinary diagnostics and predicted that the company ought to benefit once pet-related vet visits return to a normal frequency.
“Finally… How about IDEXX Laboratories? That’s a leader in veterinary diagnostics. When we started this show, they used to be one of our favorites. They do software water microbiology testing… But after an incredible run from below $200 in March of 2020 to an all-time high of about $700 in August 2021, the stock’s been lost to the wilderness for a couple of years. That action mirrors what we’ve seen in many other pet stocks because, after a huge boom in pet adoption during the pandemic, there were a couple [of] lean years that followed, including lower vet visits trends, something that impacts IDEXX. Their latest quarter was of the mixed variety, a revenue miss paired with a 12-cent earnings beat… but IDEXX trimmed its full-year revenue and merely reiterated its earnings forecast. So the outlook is not so great so the stock got hit in response. In the weeks after the quarter, the company also announced a CFO departure although that didn’t impact the stock as much as I thought it would. IDEXX has become, let’s say it’s been making a comeback since this late October breakdown, but it’s still down about 27% from its March highs. I think the company should benefit from a continued comeback for vet visits, which has been happening but at a slower pace than they expected. As we get further and further removed from the pandemic, I expect everything pet-related to keep trending back towards normal levels. And in the context of IDEXX, normal means strong secular growth thanks to increased vet visits and tremendous pricing power. Clearly, a leader in veterinary testing. At its high in 2021, IDEXX sold for 76 times the next year’s earnings estimate. Now it’s trading just 36 times next year’s earnings estimates… I think that’s a compelling entry point. Not ironclad, but pretty good.”
IDEXX Laboratories (NASDAQ:IDXX) develops and distributes diagnostic products and services for veterinary, livestock, poultry, dairy, and water testing markets. As of the third quarter, IDEXX has an installed base of more than 144,000 instruments worldwide, reflecting a 10% year-over-year growth. A notable technological advancement came with the launch of the Idexx inVue Dx Cellular Analyzer, which received nearly 700 pre-orders, signaling strong demand for this new product.
However, IDEXX Laboratories (NASDAQ:IDXX) adjusted its full-year revenue growth guidance to between $3.865 billion and $3.89 billion, reflecting a reported growth range of 5.5% to 6.2%. This marks a reduction of approximately $38 million at the midpoint. The company updated its organic revenue growth projection to a range of 5.3% to 6.0%, influenced by recent trends in U.S. clinical visits and demand levels. Additionally, the company narrowed its EPS outlook, with the new range set at $10.37 to $10.53, maintaining a consistent midpoint.
6. Edwards Lifesciences Corporation (NYSE:EW)
Number of Hedge Fund Holders: 55
Cramer discussed the case of Edwards Lifesciences Corporation (NYSE:EW) stock and mentioned that it is worth owning the stock.
“What else might work? Well, how about this down and out, Edwards Lifesciences, EW? This leader in structural heart solutions like non-invasive heart valve replacements used to be one of my favorite stocks until the Fed started raising rates in 2022 and anything with a high price to earnings multiple got eviscerated.
This thing’s made a couple comeback attempts over the past two years, but both, they ultimately failed. This year, that failure happened in a dramatic fashion in July. The stock fell an astounding 31% in a single session after a disappointing quarter that included lower-than-expected sales for the company’s core transcatheter aortic valve replacement business. Since then, Edwards has been working its way back higher even as they reported another weakest quarter in late October. At this point, the stock’s down 23% from its two-week high, down 44% from its all-time high in late 2021. Why bother with Edwards Lifesciences? Well, yesterday, analysts at Bank of America upgraded this thing from neutral to buy, which seemed like a bold call for a stock that’s been out of favor for a while now.
But when I read the upgrade, I found myself pretty convinced that better days are indeed ahead for Edwards. The BofA analyst cited a catalyst-rich schedule for the company in 2025 and 2026. Lots of potential growth drivers coming up. They also argue that the company’s in a sweet spot in the transcatheter aortic valve replacement space, which is a high-growth market with significant unmet needs. With the upgrade, the Bank of America analysts raised their price target on this $74 stock from $82 to $90. And you know what? When I read it, I think they’re on to something, which is why I think Edwards is worth owning here. A very compelling piece of research. I usually don’t pivot like that, but I liked it.”
Edwards Lifesciences (NYSE:EW) specializes in products for structural heart disease and critical care monitoring. As per John Babitt of Ernst & Young LLP, Edwards’ Evoque valve replacement system became the first transcatheter therapy to receive FDA approval for treating the tricuspid valve in February. Babitt also highlighted that Edwards is a major player in the aortic space.
On December 16, BofA analyst Travis Steed upgraded the stock to Buy from Neutral, increasing the price target to $90 from $82. He noted that the outlook for 2025 appears more positive, driven by potential catalysts and strategic value in TAVR. The analyst also mentioned that earnings, having been adjusted for spin-off/deal dilution, have the potential for double-digit growth.
At its annual investor conference, the company reaffirmed its 2024 sales growth guidance of 8% to 10% in constant currency. It also highlighted several key growth drivers. For 2025, Edwards Lifesciences (NYSE:EW) projects constant currency sales growth of 8% to 10%, with adjusted EPS between $2.40 and $2.50.
Transcatheter Aortic Valve Replacement sales are expected to reach $4.1 to $4.4 billion, while Transcatheter Mitral and Tricuspid Therapies sales are projected at $500 to $530 million. The company anticipates continued growth from structural heart therapies, aiming for 10% annual sales growth and double-digit EPS growth in the coming years.