Jim Cramer, host of Mad Money, recently emphasized the importance of long-term investing, urging investors to focus on the growth prospects of certain pharmaceutical stocks while also answering callers’ questions about certain stocks. Cramer acknowledged that stocks often experience cyclical trends, with some sectors falling out of favor temporarily.

“Look, stocks go in and out of style in the Wall Street fashion show.  Whole sectors wallow at times. Right now, healthcare’s in some sort of doghouse the likes of which I’ve never seen.”

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Despite the industry’s struggles, Cramer reflected on his observations at the JPMorgan healthcare conference in San Francisco, where he saw many pharmaceutical companies that he believes are not being properly valued by Wall Street. While the present outlook for these companies may not be particularly stellar, he highlighted the strong and lucrative long-term potential they offer.

“Why am I so willing to focus on the so-called out years? Because the long-term possibilities for these companies, frankly, they’re incredible and by the way, incredibly lucrative too, even as the present is good, but not great.”

He pointed to the ongoing progress in the healthcare sector, particularly with GLP-1 drugs, which have the potential to treat more conditions beyond diabetes and weight loss. Additionally, companies are working on developing oral versions of these treatments, which could offer patients more convenient options. Beyond GLP-1 drugs, healthcare companies are expanding their portfolios with new cancer therapies, treatments for eye care and asthma, and experimental drugs for COVID-19.

“The bottom line: Ask yourself what happens if things get better, please. What if the future is brighter than the past? If that’s the case, and I think it is, then you’ll have a lot of winners with these drug and medical device plays.”

Our Methodology

For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on January 14. 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).

9 Stocks on Jim Cramer’s Radar

9. Ardmore Shipping Corporation (NYSE:ASC)

Number of Hedge Fund Holders: 22

Commenting on Ardmore Shipping Corporation (NYSE:ASC), Cramer said:

“I’m not a fan of Ardmore Shipping. I’m not a fan of most of the container and just kind of commercial cargo ships because they tend to be too episodic for me. So I’m going to take a pass.”

Ardmore Shipping (NYSE:ASC) specializes in the global transportation of petroleum products and chemicals, catering to oil majors, oil and chemical companies, traders, and pooling service providers. BIMCO, under its Container Shipping Market Overview & Outlook December 2024, reports that, despite the fastest supply growth and fleet expansion since 2010, the supply/demand balance tightened in 2024.

Ship demand has risen as 90% of the capacity that typically passes through the Suez Canal has been rerouted around the Cape of Good Hope, leading to longer average sailing distances and increased demand for ships. Although average sailing speeds are expected to keep decreasing, which would reduce supply, growth projections suggest the supply/demand balance will remain weaker than in 2019, when freight rates were significantly lower than current levels, once ships return to regular Suez Canal routes.

8. Super Micro Computer, Inc. (NASDAQ:SMCI)

Number of Hedge Fund Holders: 33

Super Micro Computer, Inc. (NASDAQ:SMCI) specializes in designing and producing high-performance server and storage systems. When asked about the company, Cramer stated that accounting irregularities are a signal to sell.

“I have very strict rules in companies that have accounting issues and that is sell. It doesn’t matter. I don’t care, and that’s it. Accounting irregularities equals sell. It’s made me a lot more money and saved me a lot more than any of the rules that I have.”

Super Micro (NASDAQ:SMCI) recently experienced significant turbulence. This followed an unexpected departure by Ernst & Young, its former auditor, which led to potential risks of being delisted from the Nasdaq due to delayed financial filings. As a result of these issues, after peaking in March 2024, shares were down over 70% till the end of December 2024.

Despite the turbulence, the company has taken steps to address the situation, launching an internal investigation that found no evidence of fraudulent activities by executives. Super Micro (NASDAQ:SMCI) has since partnered with BDO as its new auditor and is working diligently to meet the Nasdaq’s deadline of February 25 for filing its financial results.

7. Dutch Bros Inc. (NYSE:BROS)

Number of Hedge Fund Holders: 37

Dutch Bros Inc. (NYSE:BROS) manages and franchises drive-thru establishments throughout the U.S. When asked about the company, Cramer praised the CEO and said, “I think Christine is doing a remarkable job at Dutch Bros. Yes, this stock is all the way up.”

Cramer previously talked about Dutch Bros (NYSE:BROS) in September 2024 as he highlighted Dutch Bros (NYSE:BROS) CEO, Christine Barone, and remarked:

“I like Dutch Bros. I’m glad that they slowed their expansion. It was kind of willy-nilly. I hate to see that, that’s something that the bankers often talk you into and I’m feeling it’s much on steadier ground now as Christine Barone run[s] the joint.”

In November 2024, during an interview with Cramer, Barone mentioned that it could take a while before the Oregon-based company expands into the Northeast region. She said:

“We’re really growing in a contiguous way, so that we’re growing across states that are next to each other. We just had the ability to enter Florida this year. So, we still have a lot of growth ahead of us. We will be there, but it’ll be a little while.”

6. FMC Corporation (NYSE:FMC)

Number of Hedge Fund Holders: 41

FMC Corporation (NYSE:FMC) is an agricultural sciences company that offers crop protection, plant health, and pest management products to improve crop yield and quality, as well as for pest control in non-agricultural sectors. When a caller asked Cramer about the stock, his response was:

“… I can only rate that one a hold because I don’t like the sector it is in, crop chemicals, fungicide. No, I’m not there for that. I’m sorry.”

FMC (NYSE:FMC) has faced significant challenges recently. It has seen declining sales volumes and destocking, which have hurt its financial performance. Over the past five years, FMC’s stock has dropped by over 45%.

However, it is noteworthy that on January 14, BofA analyst Steve Byrne raised FMC’s (NYSE:FMC) rating to Neutral from Underperform, setting a price target of $61, reduced from $63. The firm acknowledges that FMC’s recovery from the expected 2024 downturn will be difficult due to company-specific challenges, weak agricultural conditions, trade war concerns, and a strong dollar.

It also expects a significant EBITDA rebound in 2025 as volumes improve and earnings benefit from cost reductions and falling raw material prices. The analyst noted that the current valuation appropriately reflects these risks.

5. Medtronic plc (NYSE:MDT)

Number of Hedge Fund Holders: 60

Cramer recently highlighted a conversation with the CEO of Medtronic plc (NYSE:MDT), who expressed confidence in the company’s strong performance.

“Yesterday… we had Geoff Martha on, he’s the CEO of Medtronic, that’s another stock that hasn’t done anything lately. I thought he told a great story about all the new products he’s rolling out, lifesaving products nobody seemed to care about. It was a big yawn. Uh-uh. Today, when the stock was one of the best performers of the S&P 500, up 4%, I remembered what he said yesterday, which is things are pretty darn good. It does make a difference.”

In December 2024, Cramer again discussed the company as he said:

“… the medical device company that’s focused on cardiovascular disease, neuroscience, robotic surgery, and diabetes. Full disclosure, Medtronic’s been a long-term underperformer, up just 12% over the past decade. The stock had a big run during the early portion of the pandemic, reaching new all-time highs, but the gains didn’t last. By the time Medtronic bottomed in late 2023, the stock was actually below where it traded in March of 2020 during the depths of the Covid crash. That’s miserable. But I’m interested in Medtronic here because the company seems to be making a turn, getting back its momentum from the recent spate of weakness in healthcare.”

Cramer also discussed Medtronic’s (NYSE:MDT) stock performance from late October to December 2024, calling it an exhausting but strong investment opportunity. He highlighted the company’s successful product launches, with 120 approvals in 2024, including advancements in transcatheter aortic valve replacement, pulsed-field ablation, leadless pacemakers, and the Hugo robotic surgery platform.

Cramer noted that these innovations have driven better financial results for Medtronic (NYSE:MDT), including eight consecutive quarters of mid-single-digit organic sales growth. He further added:

“Medtronic’s earnings were basically flat in the last full fiscal year, which ended in April but in the current 2025 fiscal year, the earnings are expected to grow by almost 5%. And if you believe the consensus estimates, that should accelerate to 7% in fiscal 2026 and 8% in fiscal 2027. When Medtronic reported its most recent numbers in mid-November, the stock sold off a bit, but the actual quarter was strong.

Management even raised their full-year organic sales growth forecast and their earnings forecast. So I’d be looking to buy Medtronic in the weakness, but the stock’s selling for just under 14 times next year’s earnings estimates. That’s pretty amazing. It’s one of the cheapest names in the medtech group and hey, Medtronic’s paying you to wait for a comeback. It’s got a bountiful 3.4% dividend yield, very safe, best in the MedTech space by a wide margin.”

4. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)

Number of Hedge Fund Holders: 62

Cramer discussed how Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) keeps getting undermined despite the company’s rich pipeline and its strength in drug development.

“How about Regeneron? Now, here’s a stock that traded at $1,211 in August of last year. Now, after declining nearly 4% today alone, it sits at $690. Wow. The issue, Regeneron has this fabulous eyecare franchise being challenged by an Amgen biosimilar. By the way, that’s a biotech version of just a generic drug but that’s all Wall Street cares about.

Doesn’t matter that Regeneron is working on 40 different compounds, many of which could be blockbusters, doesn’t matter if their breakthrough drug Dupixent is indicated for seven gigantic illnesses, asthma, eczema, [and] nasal polyps. This company has never lost its ability to develop new medicines, including the one that likely saved President-Elect Trump’s life when he caught Covid near the end of his first term. For now, none of that seems to matter, but you know, one day it will.”

Regeneron (NASDAQ:REGN) creates and brings to market medications for various health conditions, while also concentrating on the development of innovative therapies for multiple medical issues. Bronte Capital stated the following regarding Regeneron (NASDAQ:REGN) in its Q3 2024 investor letter:

“Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) – the biggest loser in the book by absolute dollars. Regeneron is a large position for us. We wrote the position up in June 2021 letter. The stock has almost doubled since the original write-up, but it is down on the month. Allow some time for an explanation There are two ways of looking at Regeneron. The sum-of-the-parts way and the platform way.

Regeneron has 11 approved drugs but two comprise most of the cash flows. The two are Eylea and Dupixent.

Eylea is a VEGF drug that is injected into patients’ eyes and stops macular degeneration (the main cause of blindness in old people). The drug stops capillaries growing in the retina…” (Click here to read the full text)

3. Abbott Laboratories (NYSE:ABT)

Number of Hedge Fund Holders: 63

Commenting on Abbott Laboratories’ (NYSE:ABT) ongoing litigation, Cramer remarked that the company will win the cases.

“I still can’t believe that Abbott Labs, perhaps the most diversified healthcare company in the world with some of the greatest growth franchises, has a series of lawsuits hanging over its head, crimping its price-to-earnings-multiple. I think Abbott will win these baby formula cases. Yet, who wants that overhang, right? Certainly not Wall Street. So what does this stock do? It languishes. Who knows how quickly things can change though.”

Abbott Laboratories (NYSE:ABT) is a global healthcare company that focuses on discovering, developing, manufacturing, and selling a wide range of healthcare products. The company has been facing legal challenges related to its infant formula, with over a thousand claims alleging that the product causes necrotizing enterocolitis, a severe intestinal condition.

In July, Abbott Laboratories (NYSE:ABT) was required to pay $495 million in damages after losing the first trial brought by a plaintiff. However, the company received some relief in November 2024 when the jury in its second trial ruled in its favor, finding Abbott not liable in that case. Following this, Cramer said:

“Several analysts wrote about the ruling overnight, and the overall consensus is that this outcome strengthens Abbott’s position in future NEC cases and also puts Abbott in a much better position for a possible settlement for the remaining claims.”

2. Merck & Co., Inc. (NYSE:MRK)

Number of Hedge Fund Holders: 86

Cramer commented on the global healthcare company, Merck & Co., Inc. (NYSE:MRK), as he said:

“How about Merck? Okay, now here’s a company with the single greatest anti-cancer franchise of all time. It’s called Keytruda, but I think it’s not getting enough credit for an acquisition it made in 2021, that was the purchase of Acceleron for $11.5 billion. With that acquisition, they got this drug called Winrevair. It is approved by the FDA, just this last year for an almost always fatal disease called pulmonary arterial hypertension.”

Cramer discussed Merck’s (NYSE:MRK) drug Winrevair, highlighting a statement from the company’s CEO, Rob Davis. According to Cramer, Davis, who has a non-promotional approach, described the drug as something that has “pulled people back from the brink of death.” Cramer also pointed out that Davis mentioned that people who used the drug are now ‘alive and may have to go back to work again’. In response to this, Cramer humorously remarked, “win some, lose some.” He went on to add:

“They (the company) also have a shot, Gardasil, that protects against HPV. It’s [a] very common STD, that can cause cervical cancer. It’s a true lifesaver. Women have been using it for years. [The] Chinese government recently approved it for men too. But for some reason, Merck’s having a problem with its Chinese distribution and women. Weird situation going on over there. Right now, the stock’s well-ensconced a few points around 52-week low.”

Cramer expressed that he does not believe Merck (NYSE:MRK) stock will remain at its current low level for long. However, he also acknowledged that he can’t predict exactly how long it will take for the stock to recover. Musing whether this meant investors should sell, Cramer responded, “Sure, if you’re a day trader, but not if you’re an investor.”

1. Eli Lilly and Company (NYSE:LLY)

Number of Hedge Fund Holders: 106

While talking about a leading global pharmaceutical company, Eli Lilly and Company (NYSE:LLY), Cramer said:

“I want to start with a stock that got pummeled today. Eli Lilly, pulverized. Here’s a company that pre-announced $58 to $61 billion in revenue next year, substantially better than expected on the back of those GLP-1 drugs, approved for diabetes, weight loss, and now obstructive sleep apnea. There’s just one problem here. Lilly’s fourth-quarter estimates, the fourth quarter that we just finished, they aren’t as strong as Wall Street was hoping.”

Cramer noted that the company had a volatile recently, moving from the top of the S&P 500 to the bottom, where it ended up on Tuesday. He pointed out that, despite the company’s large presence, its performance that day was so poor that it lagged behind the other 499 companies in the index. Cramer acknowledged the disappointment but remained somewhat unfazed by the drop, explaining to viewers of his CNBC Investing Club that he sees this as an opportunity.

“See, I’m thinking that Lilly’s wonder drug Mounjaro, also known as Zepbound, has way too many potential indications to write it off because of one subpar quarter. This drug, I believe, will work against hypertension, known as the silent killer, heart failure, complicated liver disease, joints, dementia, and yes, heavy drinking.

It has so many uses that Lilly’s spending $20 billion to build out manufacturing so it can meet the demand even though there’s a very capable competitor, Novo Nordisk, and there are a lot of companies trying to get into space.”

Cramer pointed out that Eli Lilly’s (NYSE:LLY) investment in GLP-1 drugs is crucial, as these medications are not easy to manufacture. He believes the company’s spending in this area will help keep competitors from catching up. However, Cramer also acknowledged that, in the short term, the company has not done an ideal job in launching the drug, and he expressed his disappointment with that aspect of their performance.

“I’m not thrilled about that either. I gotta tell you, however, I can’t think of a better chance to buy the stock on weakness given that Mounjaro has grown faster than any other large drug. So let me ask you, do we want the fastest ramp-up, or do we want the biggest drug of all time? The so-called community of analysts wants the former, I’ll take the latter any day of the week. Oh, did I mention they’ll soon have this weight loss drug in pill form, not just injectable for those who don’t like to give themselves a shot once a week?

Of course, it’s not just the botched launch that’s holding Lilly back. Bobby Kennedy, Jr. (Robert Kennedy Jr.), Trump’s nominee for Health and Human Services is universally known as an anti-vaccine proponent. Now that’s true, but you can also think of him as a believer in diet and exercise. He’s not a huge fan of the GLP-1 drugs, but the food industry has made that diet and exercise regimen almost impossible for most people. So why not let those who can’t diet or exercise enough, take the shot?”

Cramer also pointed out a significant head-and-shoulders pattern in Eli Lilly’s (NYSE:LLY) stock chart, which is often seen as a warning sign. He acknowledged that, in the short term, the outlook for the company may appear bleak. However, Cramer expressed his confidence in the company’s long-term prospects, stating that he remains a firm believer in Eli Lilly’s potential. His advice to investors? “Buy, buy, buy” the stock, indicating his optimism for the future despite the current challenges.

While we acknowledge the potential of Eli Lilly and Company (NYSE:LLY) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.