Investing Club: We're buying in health care again, a sector insulated from geopolitical upheaval

Published Thu, Feb 24 202211:40 AM ESTUpdated Thu, Feb 24 202211:50 AM EST

We are making another buy for the portfolio Thursday. We're adding 150 more shares of Bausch Health Companies (BHC) at roughly $22.16. Following the trade, we'll own 4,150 shares of BHC, increasing the stock's portfolio weighting to 2.47% from 2.38% Similar to our buy of Eli Lilly (LLY) Thursday morning, we like the drug stocks and health care here because these are companies that can continue to grow their earnings even if there is a slowdown in the economy. So why is BHC lagging behind its peers and the broader market? We think the selloff is less about its business and more about how difficult the current market conditions are to launch not one but two initial public offerings (IPOs). On the earnings call Wednesday , management confirmed that the IPOs of Solta Medical and Bausch + Lomb are all ready to go, but they're waiting for when stock market conditions are right to maximize shareholder value. This is prudent and shows that management has a clear understanding that the breakup value of the company is worth more than the whole. Although the current market uncertainty may have created a bit of a waiting game, it won't last forever. Ultimately, we feel our patience will be rewarded because the company has confidence that they will be able to get valuations necessary to unlock value and deliver on their leverage targets. (Jim Cramer's Charitable Trust is long BHC and LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

A street sign for Wall Street is seen in the financial district in New York, November 8, 2021.

Brendan McDermid | Reuters

We are making another buy for the portfolio Thursday.