Cramer’s 5 health-care stocks he likes right now
Jim Cramer continues his “power rankings” with the health-care sector. His stock picks include a hospital operator, an animal health play and a medical robot maker.
CNBC’s Jim Cramer continues his stock-picking “power rankings” with the health-care sector.
The “Mad Money” host’s top picks include a hospital operator, an animal health play and a medical robot maker.
In volatile times for the stock market, investors need to know the best-positioned stocks in each sector for when they want to do some buying.
That’s why CNBC’s Jim Cramer has been rolling out sector-by-sector power rankings, his selections of the top five most investable stocks in each market group based on their prospects.
After tackling the communications services, consumer staples, consumer discretionary and energy spaces, the “Mad Money” host turned to health care.
“If, like me, you’re worried about a Fed-mandated slowdown, … you absolutely need some health-care stocks in your portfolio. It’s a terrific industry. This is a group of stocks that doesn’t need a strong economy in order to thrive,” Cramer said. “You don’t stop taking medicine just because the economy slows down. Just like the consumer staples, the health-care names are as close as it gets to recession-proof.”
Here are Cramer’s five favorite power players in the health-care space:
1. HCA Holdings Inc.
Cramer’s favorite of the group was HCA Holdings, a for-profit health-care facility operator with a stock that has run 54 percent year to date.
Calling HCA’s stock “a steal” at its current $135.50 level, Cramer explained the thesis behind investing in HCA, which operates about 300 hospitals and surgery centers in densely populated and growing metropolitan areas.
“These are areas where the consumer is feeling more affluent, and when people have more money in their pockets, they pay up for health care,” he said. “Even though I’m worried about a Fed-mandated slowdown here, employment remains very strong and that’s what matters for HCA, which is why the company had very strong volume growth this year, with patients getting more expensive procedures.”
Moreover, HCA has a good balance sheet and a smart management team, not to mention a potential political tailwind, Cramer said.
“Just as Republicans are a party of tax cuts, Democrats are the party of spending more on health care,” so a blue wave in November could be good news for HCA, he said. “Best of all, HCA is absurdly cheap. I can’t believe, even after this run, [that] it sells for just 13.5 times next year’s earnings estimates. The company reports in two weeks. I bet you’ll like what HCA has to say.”
2. Idexx Laboratories
Cramer’s “humanization of pets” theory comes into full force with his second power play, veterinary diagnostics company Idexx Laboratories.
“People are spending more and more money to keep their companion animals happy and healthy,” the “Mad Money” host said, noting that shares of Idexx slipped 12 percent from their highs in the recent sell-off.
“The fundamentals here remain very strong, and while the stock is still pretty pricey, that’s because Idexx has a turbocharged growth rate,” he continued. “The company reports on Nov. 1. I would pick some up before the report.”
3. Intuitive Surgical
The medical devices stocks are some of the most resilient securities in the market, and niche device play Intuitive Surgical snagged third place in Cramer’s health-care power ranking.
“Intuitive Surgical occupies a very attractive niche here: their robotic-assisted surgery machines help doctors perform more procedures with better outcomes [and] fewer mishaps,” Cramer explained. “In fact, the company practically invented this business with its da Vinci surgical system.”
What made Intuitive Surgical the “Mad Money” host’s favorite robotic surgery play was its deeply ingrained razor-razorblade business model. The company sells the machine along with one-use items that it requires to function, “where the real money gets made,” Cramer said.
“Intuitive Surgical has the largest installed base of surgery systems — they have the most razors, so they sell the most blades,” he explained. “This one reports Thursday night. Given the major pullback in the stock over the past week, I suggest putting on a small position before the quarter.”