With all the trouble in oil, largely due to unchecked speculation, the market has just lost one of its key drivers over the past few months. The triple threat of oil, banks and tech has gotten a bit less threatening as a result, and Wall Street needs to find another sector to take up the flag. Cramer thinks he’s found it in health care.
That’s right, health care. The very industry that President Obama’s reform-minded administration has had in its sites. The uncertainty about what could happen, about which companies would suffer most, caused a sell-off in the group’s stocks, and probably with good reason. But now that we have a better idea of what the White House has planned, some of these companies can be had on the cheap.
What do we know? Obama hates waste. So the businesses that cut costs, save money and boost efficiency will be favored. That’s why Cramer likes MedcoHealth Solutions, Quest Diagnostics and Allscripts-Misys Healthcare Solutions .
Medco saves both companies and consumers money by selling drugs in bulk, a business that offers consistent earnings and significant growth. If health care does replace oil as a market leader, which Cramer expects, this stock could jump to $60 from $46.
Quest and Allscripts generate plenty of savings as well. The former catches diseases and other medical conditions early through testing, while the latter digitizes medical records and prescription writing. Both should do well under Obama, Cramer said.
Elsewhere in health care, Cramer likes device markers St. Jude Medical on the high end and Boston Scientific on the low end. Like Medco, STJ is known for its consistency, and BSX is showing signs of a turnaround.
Health care also offers something oil cannot: long-term growth, even in a slowdown. With the impending doom of Obama’s possible changes now in the past, this sector should be on track to deliver that.
Health care, tech and financials fueled the 1990s bull market, Cramer said, and he thinks the trio could do it again.
Cramer's charitable trust owns Abbott Labs and Gilead Sciences.
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