If you watch Mad Money regularly, you know that sometimes when a caller asks about a stock Jim Cramer tells them quite honestly he needs to do more work before he can form a thesis.
And he means it. Following is research and Cramer's resulting conclusion sparked by viewer questions about stocks.
Globus Medical (TICKER: GMED)
Jason in Virginia called in to get Cramer's thoughts on Globus Medical, a medical device company that's a pure play on the spine market.
At first glance the stock looks extremely attractive. "Globus is a relative newcomer in the field so it has a lot of room to grow," said Cramer. "It's developing some exciting new products, and the stock is inexpensive, selling for 14.5 times next year's earnings estimates with a 14% long-term growth rate."
But all that said, Globus is trading near a 52-week low and that's a tell-tale trouble sign.
"Globus faces three headwinds that must clear before I can countenance owning the stock. First, the company only came public in August and there's a big lockup expiration coming next month that will allow lots of selling by insiders. Second, the spine segment of the medical device industry has been in secular decline for years, so we can't touch this until we see a rebound in spinal procedures. And third, Globus has declining gross margins, which is the kiss of death, especially in the medical device space."
All told, Cramer said steer clear of this one. If you're looking for a similar play he thinks Johnson & Johnson is a better option.