We recently compiled a list of the Jim Cramer’s Bold Predictions About These 10 Healthcare Stocks. In this article, we are going to take a look at where Cardinal Health, Inc. (NYSE:CAH) stands against the other healthcare stocks Jim Cramer has made bold predictions about.
Healthcare has been one of Jim Cramer’s favorite topics lately. The tail end of the year has pushed a portion of the sector, namely healthcare benefit managers and pharmaceutical chains, into Wall Street’s spotlight. Investors were particularly anxious after President-elect Trump’s remarks during a press conference at Mar-e-Lago. At the event, he promised to take on the healthcare middleman due to the high costs that Americans were facing. Americans are “paying far too much. . . .much more than other countries” for healthcare, shared Trump. He pointed at what he believes is the heart of the problem. According to Trump, “We have a thing called the middle man, you know, the middle man right? The horrible middleman that makes more money frankly than the drug companies. And they don’t do anything except they’re a middleman.”
The role played by the healthcare middlemen has also made the President-elect vow to “knock out the middle man” despite understanding that he’s “going to be very unpopular after that.” Cramer has spent several shows discussing either the broader impact of the President-elect’s goal on the benefits management industry or the impact on specific companies. After Trump shared his plans for the middlemen, Cramer pointed out that the industry does enjoy significant reach.
He shared “I think that what, if President-elect Trump follows up about knocking out the middleman, he will. He will because these companies will eventually lose their support in Congress.” This is because Cramer believes that once the different levers of the US government (Republicans, Democrats, and the Executive) act in unison then, “when you have that kind of come together over them, you don’t wanna be in that business.”
However, he cautioned that the big companies are not completely vulnerable. “These companies are not, uh, without their friends,” shared Cramer. He also added that the firms also “resent the middlemen. Cardinal’s had a lot to be able to be a little bit more forward about what can be done. [MCK] is considered to be a company that has done a lot to be able to make it so smaller drug stores get product.”
Yet, while the companies might have friends, some of them are vulnerable as well. Later during his show, Cramer commented on the firm that ranks 13th on this list. He shared that this firm is “viewed as being part of the problem of the cost of healthcare,” and added that “they have no friends.” He also mentioned another firm in a later program. This stock ranks 6th on our list of stocks Cramer talked about after the Fed’s interest rate cut.
He believes that “Look I think that if I were the people at [the healthcare benefit managers], when the President-elect decides that he is going to take a shot at you, as we know from his first time around, it’s not one off. There’s multiple shots. Multiple attempts to say listen you guys are . . . friction. I would not buy these stocks.” Commenting on President-elect Trump and his partner Elon Musk, Cramer commented “I mean these guys are powerful one-two combination.”
The rather sharp remarks for the pharma benefits manager were somewhat of a departure from Cramer’s earlier comments. For the same stock, he shared “Can we just say that the middlemen have been under fire for decades. And they are always, they always, McKesson is always standing. McKesson has just defied everyone. Right. They defy everybody. No one can touch McKesson.”
Overall though Cramer believes that the healthcare benefits management sector might be in for trouble in the future. Investors also appear to be cognizant of this reality with some stocks down 45.57% year-to-date. Within this turmoil, let’s see how his previous stock predictions have fared.
Our Methodology
To compile our list of Jim Cramer’s bold predictions about healthcare stocks, we scanned the stocks he mentioned in Mad Money and Squawk on the Street as far back as in August. Then, we picked out pharma, hospital management, and healthcare benefit management stocks and ranked them by the number of hedge funds that had bought the shares in Q3 2024.
For these stocks, we also mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds invest in? 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).
Cardinal Health, Inc. (NYSE:CAH)
Number of Hedge Fund Holders In Q3 2024: 40
Date of Cramer’s Comments: 8-20-24
Performance Since Then: 8.70%
Cardinal Health, Inc. (NYSE:CAH) is a medical products firm that sells surgical equipment and other supplies. While it has struggled amidst a broader healthcare spending slowdown in 2024, the firm has managed to stem its losses by focusing on the specialty drug market. These drugs are pricier than standard medicines, and Cardinal Health, Inc. (NYSE:CAH)’s $1.12 billion acquisition of Oncology Network has also expanded its presence in the industry. Cardinal Health, Inc. (NYSE:CAH)’s shares soared by 6.7% in November after the firm lifted its profit-per-share full-year guidance to $7.75 to $7.90 from an earlier $7.55 to $7.70.They gained an added 12% after the election and the firm’s new acquisitions to expand its presence in the diabetes and gastroenterology market. Here’s what Cramer said in August:
“A while ago, we checked in with Cardinal Health, one of the three big drug distributors in America—some people call them pharmaceutical middlemen, but they’re more than that. I thought they told a pretty good story, frankly. However, since then, we learned that Cardinal’s second-largest customer, OptumRx, wouldn’t be renewing their contract, which initially sent the stock down 5% in a single session. That’s suboptimal. However, when the company reported last week, they delivered an 11-cent earnings beat on a $1.73 basis, with revenue significantly higher than expected, up 12% year-over-year. Even better, management raised the earnings forecast for the 2025 fiscal year, which just started for them. I think that’s pretty impressive.”
Overall, CAH ranks 8th on our list of healthcare stocks Jim Cramer has made bold predictions about. While we acknowledge the potential of CAH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CAH 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 is originally published at Insider Monkey.