We recently compiled a list of the Jim Cramer’s Game Plan: 23 Stocks to Watch. In this article, we are going to take a look at where Danaher Corporation (NYSE:DHR) stands against the other stocks to watch according to Jim Cramer.
As Wall Street dives into the heart of earnings season, Jim Cramer has provided insights into market trends and earnings reports to watch in the upcoming week. Cramer remarked,
“It’s hard to believe, but this market’s now been up for six straight weeks. That’s right, despite interest rates running higher since mid-September, despite being on the verge of an election where both candidates want to pile on trillions of dollars of debt to an already unfathomable amount of borrowing, this market seems like it can’t help itself from going higher.”
Cramer highlighted the influence of the Federal Reserve, noting that ever since the rate cut on September 18, the market has largely trended upward. He emphasized that it is not solely the Fed driving this bullish sentiment, the earnings season has brought some remarkable quarterly results. With strong performance from banks kicking off the earnings cycle, Cramer posed the question of whether the rally could extend into a seventh consecutive week, suggesting following his game plan to assess this possibility.
On a separate note, addressing economic indicators, Cramer warned that if the economy continues to produce solid numbers, the likelihood of substantial rate cuts will diminish. While he believes that rates will eventually decline, he cautioned those shorting Treasurys, suggesting that they may be making a mistake.
Cramer noted a significant caveat, which is the upcoming election, and pointed out that both candidates are advocating potentially inflationary policies.
“Both candidates have pushed potentially inflationary policies. As I said at the top, if Trump can win enough of a majority to pass his huge tariffs, or Harris expands housing tax credits and de facto subsidy, they could push home prices higher. Then inflation might stage a comeback. But I’m not betting on that. I think both parties are terrified of being blamed for inflation, which almost single-handedly sunk Joe Biden’s presidency. No matter what the candidates campaign on, I don’t see their allies in Congress taking any chances with inflation beyond the usual unwillingness to balance the budget.”
He concluded that those betting against Treasurys have overreached, suggesting that their efforts to counter the Fed’s policies are unlikely to end well. Cramer observed that when a large number of investors align on one side of a trade, as seen currently, that group often ends up being incorrect.
Our Methodology
For this article, we compiled a list of 23 stocks that were discussed by Jim Cramer during his episode of Mad Money on October 18. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 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).
A healthcare professional in a lab coat holding a microscope and looking at a slide under the lens.
Danaher Corporation (NYSE:DHR)
Number of Hedge Fund Holders: 83
Danaher Corporation (NYSE:DHR) is one of Cramer’s favorites. He acknowledged that he has some concerns about it while remarking that it is an important position.
“Now, one of my Charitable Trust’s favorite companies is Danaher. It’s an amazing life sciences conglomerate that I think might be ready to return to its old greatness. The stock’s been doing nothing for ages, but then again, Danaher can’t outrun its clients and its clients are new young biotechs with deep pockets. Unfortunately, that’s a scarce commodity in this environment.
Still, there are enough young biotechs and of course, just older healthcare companies that are out there that I bet Danner can tell a story of an expanding client base and growing orders. It’s a very important position… I’m obviously on tenterhooks about it. I am concerned because it has not done well.”
Danaher (NYSE:DHR) specializes in designing and manufacturing a diverse range of professional, medical, industrial, and commercial products and services on a global scale. The company’s focus is on advancing the development and production of therapeutics, while also providing essential analytical tools, diagnostic products, and laboratory automation solutions across multiple sectors.
Management’s expectation shows a core revenue decline in the low single digits for the full year, along with an anticipated adjusted operating profit margin of around 29%. CEO Rainer Blair has previously highlighted the positive momentum within the bioprocessing business and noted market share gains for the molecular diagnostic testing division, particularly through its Cepheid brand.
On October 1, The Fly reported that Evercore ISI analyst Vijay Kumar raised the price target on Danaher (NYSE:DHR) to $278 from $275 and maintained an Outperform rating. In the MedTech sector, utilization rates remained favorable entering the third quarter, and the outlook for capital expenditures next year appears to be strong.
Within the life sciences tools arena, bioprocessing trends are expected to improve in the latter half of the year, though discussions continue regarding the instrument outlook and potential impacts from stimulus efforts in China, especially following the recent stock performance in this sector, as per the MedTech and Tools Q3 preview.
Overall DHR ranks 5th on Jim Cramer’s list of stocks to watch. While we acknowledge the potential of DHR 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 DHR 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.