There are no guarantees when it comes to thematic investing, says Jim Cramer
Speakers
Jim Cramer
— Host, Mad Money
Summary
Jim Cramer argues that thematic investing still works if you pick the right plays. He sees a merger wave driven by lax antitrust enforcement and recommends Goldman Sachs and Morgan Stanley as M&A advisors rather than trying to guess takeover targets. With tech having run far, he suggests rotating into innovative healthcare names like Eli Lilly, Johnson & Johnson, and Moderna, all of which have strong recent catalysts.
- M&A activity is accelerating because Trump-era antitrust enforcement is virtually nonexistent.
- Goldman Sachs and Morgan Stanley are prime beneficiaries of the M&A advisory boom.
- Picking potential acquisition targets is a sucker's game.
- Pharmaceutical stocks with innovation, such as Eli Lilly and Johnson & Johnson, are attractive non-tech tech plays.
- Both Lilly and J&J reported strong quarters and can be bought on weakness.
- Moderna received FDA approval for an mRNA flu vaccine, validating its specialized-vaccine strategy.
- Cramer warns that thematic investing carries risks, including stumbling into the wrong drug stock or sector.
Ideas
Goldman Sachs and Morgan Stanley M&A advisory boom
Pent-up demand for M&A is surging because the Biden era of overzealous antitrust enforcement has been replaced by the Trump era of almost non-existent enforcement. Companies are rushing to get deals done before the window closes. Goldman Sachs and Morgan Stanley have world-class M&A advisory departments, and this business is a gold mine that generates tremendous earnings per person and earnings per share. Rather than betting on takeover targets, buy the investment banks that enable the deals.
Buy Eli Lilly and JNJ on weakness
Tech has had such a run that portfolio managers want exposure to other innovative sectors. Eli Lilly and Johnson & Johnson are non-tech tech stocks with strong innovation. Both just reported terrific quarters and deserve to be bought on any weakness.
Moderna's mRNA vaccine approval drives upside
Moderna is finally realizing its dream of specialized vaccines for specific illnesses. The company recently received FDA approval for its mRNA flu vaccine, and the stock reflects this success, having gained 83% for the year.
