Cramer ‘Blown Away’ by St. Jude Medical
St. Jude Medical might be about as recession-resistant as you can get, Cramer said Wednesday. Let’s face it, you don’t put off buying a pacemaker just because the economy’s bad.
As St. Jude Chairman and CEO Daniel Starks told Mad Money, “We’re really on anybody’s short list of highest spending priorities, and relatively resistant to global economic trends.”
Investors have been rushing into the whole medical-products group for just that reason. So it’s no wonder STJ is up about 11% year to date, with peers Boston Scientific and Medtronic up as well, while both the Dow and the S&P 500 are down over the same time period.
St. Jude, though, seems to be the best of the group. Sales growth over the last three, five and 10 years has clocked in at or above 15%. The company has launched an average of 20 products a year for the last three years. And Starks said that St. Jude’s Eon Mini, a high-tech pacemaker, would have brought in a lot more money if only the company could have produced more. Still, that product grew 32% year-over-year.
“We have not seen any weakness,” Starks’ said on the company’s earnings conference call. “I suspect one company’s weakness might be another company’s share gain.”
But that was then. And Cramer never recommends stocks based on past performance. It’s the future he’s focused on. Luckily for investors, though, St. Jude is developing products in three key areas:
- implantable defibrillators, which should reduce the number of Americans who die every day from sudden cardiac deaths (it’s 800 to 1,000 right now);
- a device that helps with atrial fibrillation, a condition where the upper chambers of the heart stop pumping, leaving only the lower chambers functional. Billions of dollars are being spent trying to prevent this, and St. Jude’s technology could reduce those costs;
- and lastly, a product that would stimulate the brain as a way to treat chronic, drug-resistant depression.
So the growth opportunities are there. St. Jude even has a treatment for Parkinson’s disease that’s in very early-stage testing. Starks’ said he didn’t “want to raise false hopes,” though, because “this won’t be a treatment for everybody, but it’s very promising.”
Cramer was “blown away,” he said.
“You want to sleep at night? You want to have a company that is not going to be rocked by [Treasury Secretary] Tim Geithner? Or by bank failure? By ridiculous unemployment that we can’t stop?” he asked. “All right, well, you just heard it.”
Cramer did urge investors to research St. Jude, though, before buying the stock. In this market, you can’t take anything for granted.
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