CNBC’s Jim Cramer on Thursday recommended investors take a look at buying stock in diagnostic companies as the coronavirus pandemic rages on.
“With Covid spiking and a very good chance that Joe Biden wins the White House, ushering in a more test-friendly administration, I bet the testing stocks have a lot more room to run,” the “Mad Money” host said.
While Americans tuned into the election count, the U.S. counted a ghastly new record for coronavirus cases with 102,000-plus positive tests on Wednesday. Officials have tallied more than 1,000 deaths, which lag new cases, in consecutive days in the country.
“The pandemic is once again out of control,” Cramer said.
More than 1 million Covid-19 tests have been conducted in the U.S. each day since late October, according to The Covid Tracking Project.
“That’s huge, although we need even more [testing] given these hideous case numbers,” said Cramer, who noted a “major bottleneck” in processing tests.
The seven stocks he recommended on Thursday include large players like Thermo Fisher, a $204 billion diagnostics manufacturer, and a speculative play in Fluidigm, a $485 million company that makes life science tools.
While a number of his suggestions are at or near their highs, Cramer says investors can buy them on pull backs. Below is his take on each testing stock pick:
“The stock [has] had such a remarkable run. It’s up roughly 59 for the year, including a 40-point gain over the past week,” he said. “As much as I hate to chase, I think it’s worth buying into any kind of pullback.”
“Hologic’s had a monster run, “It’s up 45% for the year, but you know when you put pen to paper and you look at the new estimates,” Cramer said, “the stock’s only trading at 12 times next year’s earnings. I give you permission to start nibbling on it tomorrow.”
“When the company reported a couple weeks ago, we learned their diagnostics segment was up 39% just versus the previous quarter. Abbott said they’ve sold 100 million total tests and they left the quarter with a run rate of $1.3 to $1.4 billion in COVID testing sales,” he said.
“I’ve been telling you to buy this one for ages, and while it’s rocketed 8% this week alone, I think you stick with it.”
“PerkinElmer shot the lights out when it reported last month, but the stock hit a new high today. Now you want to wait for a pull back,” Cramer said.
“Quidel’s competing directly against Abbott Labs here, but seeing as we still have a shortage of testing, competition really isn’t that much of a problem. However, the stock’s up 275% for the year and it’s been a wild trader,” he said. “Why not let it cool down a little.”
“While the stock’s up 95% for the year, it’s still a long way from its all-time highs from over the summer. This thing was briefly at $12.45 in August,” Cramer said. “Fluidigm … kind of feels too risky for me, but if you want something to speculate on, it’s worth looking into.”
Laboratories Corporation and Quest Diagnostics
“These companies are practically printing money right now because they’re pretty much a duopoly. That’s actually been a serious problem in terms of coping with the pandemic, they’ve got a bottleneck, but it’s also great for Labcorp and Quest’s shareholders,” he said. “Both stocks remain cheap.”
