Mad Money

Cramer's single stock solution for those baffled by biotech

Charles River CEO: Critical to drug development process

(Click for video linked to a searchable transcript of this Mad Money segment)

Because of the promising treatments and medications coming out of the sector, Jim Cramer believes that biotech stocks belong on every investor's radar.

If these drugs deliver on their promise, they can change the lives of patients and in the process generate significant returns for shareholders.

"Consider that just since the end of January, we've seen four biotech IPOs that have since more than doubled in value; , Ultragenyx, Revance Therapeutics, and Auspex Pharmaceuticals," Cramer said. "And there are five more biotechs that have rallied anywhere from 34% to 90% since coming public in the last couple of months."

However, Cramer realizes the sector is not without peril. When stocks are this hot they can also burn.

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"For those of you who just can't bring yourselves to embrace the kind of red-hot biotech IPOs, like those mentioned above, I want to give you a different way to play all of this money flowing into the biotech space," Cramer said.

That is, if you're uncomfortable picking the developers of new drugs, Cramer suggests playing the space with Charles River Labs, a provider of services to biotech firms.

"This is a company that provides everything needed to discover new drugs," Cramer explained. And not only do they make it easier, they help clients operate more efficiently.

"As a result, more biopharma firms are outsourcing lab work to this company and others like it," Cramer said.

Not only did Cramer call the last quarter 'excellent," he noted that "Charles River is buying the contract research division of Galapogos NV for $180 million, in a deal that's expected to add 10-cents to the company's earnings this year. This gives them even more exposure to early stage drug discovery work."

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All told, Cramer sees every reason to like this stock.

Of course, Cramer realizes that over the past 6 months, shares have gained 30%. However, despite the gains, considering the appetite for biotech, "I think there should be even more upside, here," he said.

Call Cramer: 1-800-743-CNBC

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