A revolutionary product and string of coming catalysts make Given Imaging a very attractive buy, Cramer said Tuesday.
He got the idea from a caller during the April 22 Lightning Round. Cramer didn’t know about the stock at the time, but after doing some research he’s ready to make a call. He said Given’s PillCam – a disposable video capsule that is swallowed and allows doctors to see the gastrointestinal tract – has immense potential, and there are a number of events on the horizon to help the company realize it. Plus, the charts agree – this stock must be owned. Just not yet, though.
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About the PillCam: Given has iterations for the esophagus, small bowel and colon. This latter one is crucial because it helps patients avoid horribly invasive colonoscopies. These dreaded procedures have led to extremely low compliance rates for colon-cancer screenings in Europe – 25% overall and as low as 10% in some countries there – which is why Cramer called the PillCam a “no-brainer” alternative to the procedures we have now.
Speaking of Europe, those low numbers are the biggest catalyst for Given right now. Cramer thinks the company’s second-generation colon PillCam, which will soon roll out in phases there, will be well received by patients unwilling to suffer a colonoscopy. But there’s also a clinical trial of the device beginning in the second half of the year that will hopefully lead to Food & Drug Administration approval here in the US.
That, along with the great most recent quarter and a strong balance sheet, is the fundamental case for the stock, but what about the charts? The technicals say Given is stalled here but ready to push higher. First, though, weak demand may cause a short-term pullback. Once that happens, said one of Cramer’s favorite chartists, Given Imaging could run to $27. The stock closed Tuesday trading at $21.68.
Cramer’s in “total agreement” with that technical analyst, and he thinks that pullback would be an opportunity to buy. Management itself predicted a weak quarter when the company reports on May 11, so that could be the best chance to get in.
Just remember, though, this is a small company – with only a $630 million market cap – which makes it speculative by definition. Therefore, Cramer’s regular rules apply here. Do not buy this stock in after-hours tradingm, do your homework and purchase only in small increments.
But most of all, Cramer said, “Be patient.”
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