We're buying a health-care stock that should be higher after reporting a strong quarter

Published Wed, Apr 17 20248:46 AM EDT

Shortly after the opening bell, we will be buying 100 shares of Abbott Laboratories at roughly $108.26. Following the trade, Jim Cramer's Charitable Trust will own 800 shares of ABT, increasing its weighting to roughly 2.8% from 2.45%. Abbott Laboratories on Wednesday reported better-than-expected first-quarter earnings, but its stock is trading lower in the premarket, opening the door for us to add to our position for the third time in recent weeks. In the three months ended March 31, Abbott's worldwide sales increased 2.2% year over year to roughly $10 billion, edging Wall Street estimates of about $9.88 billion, according to LSEG. Organic sales growth for the underlying base business, which excludes Covid-19 testing-related sales, continued its momentum, growing 10.8% year over year, marking the fifth consecutive quarter of double-digit growth. The performance was broad based. Organic sales in Abbott's Medical Devices segment led the way, increasing 14.3% on an annual basis, followed by Established Pharmaceuticals up 13.7%, Nutrition up 7.7% and Diagnostics up 5.4%. Abbott also beat on the bottom line, with adjusted earnings per share of $0.98 topping analyst estimates of $0.95, according to LSEG. Following the better-than-expected quarter, Abbott raised the low end of its full-year adjusted EPS and organic sales outlooks. The EPS guidance range moved to $4.55 to $4.70 from $4.50 to $4.70, while the organic sales growth range for the underlying base business increased to 8.5% to 10% from 8% to 10%. This second line is what's most important to us. The best way to look at the company is by analyzing its underlying business because it does not include Covid-related sales. Abbott is not going to get any credit in the market for Covid testing-related guidance raises, but it should if the underlying business is performing better than expected. The fact Abbott raised its full-year outlook at the low end is a good sign of what is in store this year. And yet its stock is down about $1 year to date, or nearly 1%, and trading lower by another $1 in the premarket Wednesday. Perhaps there is always someone looking for an outlook boost at both the low and high end of guidance, but that is not Abbott's way a few months into the year. We think this weakness on a strong quarter is an opportunity to add to our position. We initiated our Abbott stake in late January. Our two most-recent purchases came on March 15 and March 21 . (Jim Cramer's Charitable Trust is long ABT. 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.