Every once in a while, CNBC's Jim Cramer watches a once-beloved stock fall out of favor with investors. But what really interests him is how that stock gets its groove back when Wall Street throws it to the wayside.
"Let’s consider the case of Danaher, the life sciences, diagnostics and environmental technology play," the "Mad Money" host said on Tuesday. "Over the past few decades — decades — Danaher has been perhaps the single best conglomerate on earth."
But earlier this year, shares of Danaher stalled after the company issued some disappointing guidance. That spiraled into tariff-related pain as investors worried about its broad overseas business. Then, in April, Danaher's earnings report revealed another problematic side to the story: the conglomerate's lagging dental business.
This quarter, however, Danaher turned things around, deciding to spin off its dental business as a separate company and addressing tariff concerns head-on, Cramer said.
"Suddenly, the two biggest overhangs had been either removed or alleviated," he said. "Now it appears that the China impact is both minimal and manageable, and dental will soon be no longer part of the company."
Now, Danaher's diagnostics, life sciences and environmental segments can continue to enjoy their double-digit growth and margin expansion without the slow-growing dental business infringing on the numbers, Cramer said.
"Think of it as addition by subtraction," he said, adding that Danaher's stock is still a buy thanks to "the consistency and the acceleration of the numbers."
"Danaher’s doing everything it needs to do to generate higher stock prices, which is why I think this baby has more room to run," Cramer continued. "Without dental to worry about, with the tariffs looking manageable, this already terrific story is suddenly looking a heck of a lot better."