This article presents an overview of Jim Cramer’s 5 Favorite Healthcare Stock Picks in 2024. For a detailed overview of such stocks, read our article, Jim Cramer’s 10 Favorite Healthcare Stock Picks in 2024.
5. GE Healthcare Technologies Inc (NASDAQ:GEHC)
Number of Hedge Fund Investors: 44
Jim Cramer has been excited about GE Healthcare Technologies Inc’s (NASDAQ:GEHC) use of AI in its MRI technologies. In December, Cramer said that GE Healthcare Technologies Inc (NASDAQ:GEHC) was “mispriced.” Last month, he said that GE Healthcare Technologies Inc (NASDAQ:GEHC) stock can go higher.
“You want a stock that goes higher? That’s GE Healthcare.”
Last month, GE Healthcare Technologies Inc (NASDAQ:GEHC) revealed Prostate Volume Assist (PVA), an AI-based software that helps clinicians with prostate volume measurements.
Cooper Investors Global Equities Fund stated the following regarding GE HealthCare Technologies Inc. (NASDAQ:GEHC) in its fourth quarter 2023 investor letter:
“During the quarter the portfolio initiated a position in GE HealthCare Technologies Inc. (NASDAQ:GEHC). GEHC is the former Healthcare division of GE, spun out in early 2023. It’s a global leader in imaging equipment such as MRI machines, CT scanners and ultrasound systems along with associated consumables. The business has a long and storied history but was trapped inside a larger, underperforming conglomerate, starved of the love and attention it needed to thrive.
From a subset of value perspective, we view GEHC as a Low risk turnaround. The underlying business is fundamentally sound but has ceded market share over time, with sales growth lagging the industry. There is significant margin opportunity with core imaging margins (~50% of sales) much lower than its main peer. We see two drivers in restoring performance. Firstly an increase in research and development spending (since 2017 R&D spend is up 70%, far outpacing revenue growth). Secondly an opportunity to improve SG&A cost efficiency.
What makes the turnaround low risk? Management and Board quality are critical. GEHC features a few of what we call ‘CI Alumni’; executives we have invested behind at other companies. Top of this list is Chairman Larry Culp, the former CEO of Danaher, an executive we have the highest respect for.
GEHC has strong financial characteristics. It is a market leader in an oligopolistic industry where market share changes slowly and gross profit comes largely from aftermarket. The balance sheet is appropriately geared with well structured debt. Our analysis of GEHC’s accounts suggests there may be some conservatism baked into the P&L numbers. At today’s share price you don’t need to assume much going right to do well, which partially reflects the backdrop of healthcare stocks having been under pressure this year. If GEHC can deliver on its potential, the upside is significant.”
4. Medtronic PLC (NYSE:MDT)
Number of Hedge Fund Investors: 56
Cramer has been consistently recommending medical device company Medtronic PLC (NYSE:MDT), especially after Medtronic PLC’s (NYSE:MDT) partnership with Nvidia according to which Nvidia’s AI tech will be integrated with Medtronic PLC’s (NYSE:MDT) GI Genius™ intelligent endoscopy module.
In a latest program, Cramer yet again praised the stock and said that Medtronic PLC’s (NYSE:MDT) CEO Geoffrey S. Martha has been “undervalued here.”
“I like what they are doing in AI. You’ve got a good one with a good yield.”
Polen International Growth Strategy stated the following regarding Medtronic plc (NYSE:MDT) in its fourth quarter 2023 investor letter:
“Medtronic plc (NYSE:MDT) is the largest medical technology company in the world. Despite a few tough years characterized by post-COVID supply chain issues, Chinese market payment changes, and diabetes business challenges, the company has continued to invest aggressively in its R&D pipeline. Because of this long-term mindset and commitment to product innovation, the company is in a position today where it has numerous significant new product launches across the business, helping to accelerate growth and improve profitability. More recently, the market’s infatuation with the promise of GLP-1 drugs has resulted in valuation de-ratings across the medtech industry broadly, to which Medtronic was not immune. The combination of all of these factors has resulted in Medtronic shares trading at their lowest valuation in a decade. Given the emerging business momentum, we felt the valuation offers a compelling chance to increase our weight in the world’s largest medtech company.”
3. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Investors: 64
Abbott Laboratories (NYSE:ABT) is one of the favorite healthcare stocks of Jim Cramer. In a latest program, Jim Cramer said Abbott Laboratories (NYSE:ABT) is in the portfolio of his charitable trust. He was recommending the stock lately. Last month, Cramer told investors to benefit from the latest selloff around Abbott Laboratories (NYSE:ABT) and buy the stock.
Polen Global Growth Strategy stated the following regarding Abbott Laboratories (NYSE:ABT) in its fourth quarter 2023 investor letter:
“Abbott Laboratories (NYSE:ABT), a globally dominant healthcare business serving a broad range of end markets, was another position we added to in the period. The stock has come under pressure in recent quarters as the company has experienced a significant (and expected) decline in sales tied to pandemic-era COVID testing. However, we feel this amounts to little more than a distraction, as the core business continues to perform very well. Nothing has changed around our expectations for long-term growth, yet the stock’s valuation has compressed, making for an attractive opportunity to add to the position given the long-term durable growth profile of this business.”
2. Eli Lilly And Co (NYSE:LLY)
Number of Hedge Fund Investors: 102
Eli Lilly And Co (NYSE:LLY) is one of the top favorite stocks of Jim Cramer. His charitable trust also owns a stake in Eli Lilly And Co (NYSE:LLY). Cramer is bullish on the stock because of Eli Lilly And Co’s (NYSE:LLY) weight loss drugs. Recently, Cramer said the latest selloff around the stock wasn’t “warranted.” He said he’d buy more Eli Lilly And CO (NYSE:LLY) “after the dust settles.”
Aristotle Atlantic Core Equity Strategy stated the following regarding Eli Lilly and Company (NYSE:LLY) in its fourth quarter 2023 investor letter:
“Eli Lilly and Company (NYSE:LLY) is a leading pharmaceutical company that develops diabetes, oncology, immunology and neuroscience medicines. The company generates over half of its revenue in the U.S. from its top-selling drugs Trulicity, Verzenio and Taltz. The company operates in a single business segment, Human pharmaceutical products.
Eli Lilly has a deep pipeline in treatment areas focused on metabolic disorders, oncology, immunology and central nervous system disorders. Currently, there are two phase three assets, Orforglipron, an oral GLP-1 and retatrutide, a triple incretin agonist, which have the potential to expand upon the potential success of Mounjaro. We believe that Mounjaro has the potential to commercialize beyond type 2 diabetes and obesity, potentially in the areas mentioned above of heart disease, sleep apnea, fatty liver disease and chronic kidney disease. We belief the premium valuation is supported by this outsized growth profile.”
1. UnitedHealth Group Inc (NYSE:UNH)
Number of Hedge Fund Investors: 113
Earlier this month, Cramer talked about the reasons why some stocks in the Dow were declining and UnitedHealth Group Inc (NYSE:UNH) was one of them. Cramer said some negative news in the insurance industry along with the cyber attack are weighing down UnitedHealth Group Inc (NYSE:UNH). But he thinks the stock is a great buy on the latest pullback.
UnitedHealth Group Inc (NYSE:UNH) shares are down 15% over the past one year.
ClearBridge Large Cap Growth Strategy stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its first quarter 2024 investor letter:
“Given our view that the overall market looks expensive, mostly due to mega cap valuations, the low likelihood that technology can continue to deliver well above market returns and an expected slowdown in economic growth, risk management has guided our recent positioning activity. We have been consistently trimming from the select bucket and redeploying into undervalued stable and cyclical names, while also being cognizant of position sizing to maintain the latitude to add to names when prices become attractive.
We were also active in adding to stable bucket investments PayPal and UnitedHealth Group Incorporated (NYSE:UNH) where negative near-term sentiment led to more attractive risk/reward profiles. We added to electronic payments provider PayPal as we have growing confidence that new CEO Alex Chriss’s strategic focus areas can improve the company’s performance, particularly in the key branded business. We added to our UnitedHealth position after shares were pressured due to fears over competition among managed care providers and rising medical loss ratios in the industry. We believe the company will be able to “re-price” for higher medical costs, making this pressure transitory and we see competitive concerns as overblown.”
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