CNBC's Jim Cramer on Monday touted the burgeoning bull market of medical devices, noting positive earnings reports from related companies across the board.
"It's undeniable that we've got an emerging bull market in medical devices — we've heard the same incredibly positive story from company after company," Cramer said. "I'm just praying we get another debt ceiling-related sell-off that drags down the entire market and gives you a chance to buy the medical device plays at an undeserved discount."
Over the past few years of pandemic turmoil, tons of non-urgent surgeries were postponed as hospitals inundated with Covid-19 patients struggled to provide critical care. But as the crisis subsided, nonessential procedures returned, prompting an uptick in the sale of medical devices.
Cramer pointed to companies like Inmode, known for developing minimally-invasive radio frequency devices primarily used for cosmetic surgery, whose earnings report earlier this month showed consumables and service revenue up 43%. However, Inmode stock fell sharply in the wake of the report, likely because the company did not update its full-year forecast, Cramer said. But Cramer chalked up those results to overly-cautious executives, dubbing Inmode stock a bargain.
Another potential boon is Johnson & Johnson, which reported a better-than-expected quarter in April, due in part to the success of its medical devices division, according to Cramer.
"When it comes to J&J, it's all about talc right now — as in the lawsuit about their talc's possible link to ovarian cancer," Cramer said. "That litigation risk is the real issue here, not earnings."
Cramer also highlighted Intuitive Surgical, which makes the robotic Da Vinci Surgical System and reported a "true beat and raise quarter." Although Intuitive sold the same number of robotic surgery systems as the year prior, the number of such procedures worldwide increased by 26% year over year, Cramer said. Since Cramer spoke with Intuitive CEO Gary Guthart back in March, the company's stock is up 38%.
Also on Cramer's radar is GE HealthCare, which he said he purchased for the Investing Club portfolio last week.
"This company's got a terrific diagnostic equipment division, including tons of scanners that are essential for catching and monitoring Alzheimer's," Cramer said. "As the FDA approves more Alzheimer's drugs, we'll need more of these machines just to know if the new medications are working."
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Johnson & Johnson and GE HealthCare.
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