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Jim Cramer: A better way to invest in the Covid-19 vaccine gold rush

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Key Points
  • "Rather than chasing the Covid vaccine developers that are panning for gold, I want to go with the equipment suppliers that sell the medical equivalent of pans and picks and shovels to the gold miners," CNBC's Jim Cramer said.
  • The "Mad Money" host recommended investors take a look at Abbott Laboratories, Thermo Fisher Scientific, Danaher and Honeywell International.
  • "All these little vaccine developers with Covid-19 exposure are roaring here, but there can be only most likely let's say three or four actual winners," he said.
VIDEO5:0005:00
Jim Cramer: A better way to invest in the Covid-19 vaccine gold rush

CNBC's Jim Cramer on Friday revealed a tangential way that investors can play the Covid-19 vaccine rush without taking on the risk of investing in a developer that loses the race.

"Rather than chasing the Covid=19 vaccine developers that are panning for gold, I want to go with the equipment suppliers that sell the medical equivalent of pans and picks and shovels to the gold miners," the "Mad Money" host said, likening the endeavor to discover a vaccine to the California gold rush of the 19th Century.

Cramer, who has a liking for pharmaceutical names like Johnson & Johnson, Pfizer and Regeneron, thinks most smaller vaccine developers are risky plays.

The market digested vaccine development updates from Moderna and Johnson & Johnson this week and is anticipating data from a phase one trial of AstraZeneca's own research into a potential vaccine expected to publish on Monday.

"All these stocks though are wild traders. I want to be more thoughtful than just speculate endlessly on who is in front and who isn't. The horse race just continues," Cramer said. "All these little vaccine developers with Covid-19 exposure are roaring here, but there can be only most likely let's say three or four actual winners."

Cramer recommends taking the side door by investing in Abbott LaboratoriesThermo Fisher Scientific, Danaher and Honeywell International.

Abbott Labs, which makes multiple Covid-19 testing kits, saw its stock trade sideways for a few months as the country focused on reopening from the coronavirus lockdown.

Shares, however, are back on the rise, alongside the latest outbreak of the fast-spreading disease across the American South. Abbott Labs closed at a record $99.25 Friday after maturing nearly 3%.

"Right now, Abbott's at $99 and if it breaks out above $100, I'm betting there'll be another leg higher," Cramer said.

Thermo Fisher produces medical instruments and laboratory equipment for the pharmaceutical industry. Those products include supplies for virus samples and tools for drug and vaccine developers.

Stock in Thermo Fisher made a fresh closing record of $395.40 Friday after climbing 0.76% during the trading day.

"The only problem here is that the stock's been such a juggernaut and you haven't really gotten a chance to buy it into weakness," the host said. "I think you can put on a small position, though, here and then hope for a pullback that gives you a better entry point."

Danaher, which recently spun off multiple business to focus on its life sciences and diagnostics arms, rivals Thermo Fisher and has exposure to the world of Covid-19 testing.

Danaher shares also set a new closing high in Friday's session after rallying 1.13% to finish at $190.95.

"Like Thermo Fisher, the stock's had a giant run. You really haven't had a chance to buy it since the March low weakness," he said. "Danaher's got great management though, so put it on your shopping list, because this one's absolutely worth buying into weakness."

Honeywell is a big producer of N95 masks, personal protective equipment and medical equipment. The stock is within 16% of its January closing high.

"This is not a great short-term play. This stock's going to be hobbled until we actually get a vaccine, we know that, but longer term I'm a gigantic believer in Honeywell, and I like that you can get it at a discount right now. This thing sells for less than 18 times 2022 earnings. It's got a solid 2.33% yield," Cramer said. "If you want to buy this one, you should go slowly, because I think you'll get a better entry point down the road."

Disclaimer

Disclosure: Cramer's charitable trust owns shares of Johnson & Johnson and Abbott Laboratories.

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