On Wednesday’s episode of Mad Money, Jim Cramer reviewed the recent developments affecting drug distribution companies and laid out why he is turning cautious on the group. He pointed out that stocks of major drug distributors have retreated from their all-time highs.
“Most of the time, that’s because of vague, amorphous concerns that some type of regulatory crackdown will force them out of business or, at the very least, make them a lot less profitable.”
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Cramer referenced the executive order signed by the President last week aimed at lowering drug prices, which triggered a sell-off across the drug distribution sector. He explained that the order would effectively require pharmaceutical companies to offer the U.S. government drug prices that match the lowest rates charged in other advanced economies. Cramer said the market’s fear is straightforward: if drugmakers are forced to cut prices for their government customers, then drug distributors could see their margins shrink.
“The bottom line: No matter how well the drug distributors have been doing, I do not want to stick my neck out for an industry that now seems to be hated by both the Democrats and the Republicans. It seems like the only thing they agree on, doesn’t it? There are so many potential winners in this market, I say, why take the risk?”
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episodes of Mad Money aired on May 14. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
8 Stocks on Jim Cramer’s Radar Recently
8. Astera Labs, Inc. (NASDAQ:ALAB)
Number of Hedge Fund Holders: 51
A caller asked about Cramer’s opinion of Astera Labs, Inc. (NASDAQ:ALAB) during the recent episode, and he commented:
“Okay, Astera Labs is a company that is incredibly well run, that has tremendous growth, but like many other companies, that stock has come down in value. I actually think it’s a good place to buy, given the fact that so many of these other stocks actually even have higher price-to-earnings multiples.”
Astera Labs (NASDAQ:ALAB) develops and sells semiconductor-based connectivity solutions used in cloud and AI systems, including hardware products and software that support system management, resource optimization, and high-speed data transfer. Artisan Partners stated the following regarding Astera Labs, Inc. (NASDAQ:ALAB) in its Q4 2024 investor letter:
“Among our top Q4 contributors were Astera Labs, Inc. (NASDAQ:ALAB), Veracyte and Vita Coco. Astera Labs is a fabless provider of connectivity chips designed to address data, network and memory bandwidth bottlenecks in data centers. With increasingly powerful graphics processing units and central processing units—costing $5,000 to $40,000 and depreciating within 3–5 years—often operating at only ~50% utilization due to architectural constraints, Astera’s products play a critical role in enhancing efficiency. As compute architectures become more heterogeneous across graphic processing units, central processing units and custom accelerators, Astera’s solutions enable better collaboration between disparate chips. Recent earnings displayed strong momentum of its core products and benefited from adding new offerings to drive scale within the data center market, driving a strong rally in shares. After the strong rally, we trimmed our position based on valuation.”
7. Omega Healthcare Investors, Inc. (NYSE:OHI)
Number of Hedge Fund Holders: 21
Expressing concerns about the safety of its dividend due to potential cuts to Medicaid, a caller inquired about Omega Healthcare Investors, Inc. (NYSE:OHI). In response, Cramer said:
“I think you’re right to be worried. I think you’re right to be worried. Why? Because of exactly what you said. That’s why I’ve always liked Ventas because I think that Deb Cafaro can navigate through anything, but the yield is much lower. I don’t want to reach for yield.”
Omega Healthcare Investors (NYSE:OHI) is a real estate investment trust (REIT) that offers capital and financing to the long-term care sector. It focuses mainly on skilled nursing facilities in the United States and the United Kingdom.
The company recently reported its results for the first quarter of 2025. Omega Healthcare Investors (NYSE:OHI) reported net income of $112 million, $0.33 per share, which was an increase from the same period in 2024, when net income totaled $69 million, or $0.27 per share. Year-to-date, the company completed $423 million in new investments through April.
