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We are making our first bullpen update for 2024. Bullpen is a collection of stocks that he has identified by the CNBC Investment Club team as potentially joining the Jim Cramer Charitable Trust. Here are four of the most interesting investment opportunities we found among several corporate CEOs Jim interviewed at the JPMorgan Healthcare Conference in San Francisco this week. Abbott Labs: A long-time fan of charitable trusts, the portfolio we use in our club, we’ve done well with Abbott Labs from 2017 to early 2022, reducing our portfolio exposure at that time. I know that I exited my position at close to $120 per share. To the winners of Covid. The company, a leader in medical devices and other healthcare solutions, has traded essentially flat since then, as testing revenue has declined and the company may have finally emerged from a post-pandemic hangover. We believe that enough time has passed to revisit the issue. Revenue drivers. The stock had been working in this direction over the summer, after Novo Nordisk announced the results of a trial evaluating the ability of its weight loss drug Wegovy to reduce negative outcomes in cardiovascular disease, and Abbott It lost about 20% of its value. The market assumed that these GLP-1 drugs (club name Eli Lilly, two of which are on the market) would help patients better manage their diabetes, lose weight, and generally be healthier. The company believed that the rise of “diabetes and cardiology” would fundamentally disrupt Abbott’s primary focus on diabetes and cardiology. unit. ABT 5Y Mountain Abbott Laboratories 5 Years After an initial decline, the stock price began to recover as the market began to realize that Abbott’s use of GLP-1 and Abbott’s FreeStyle Libre continuous glucose monitoring system was not a zero-sum game. I did. After all, the company’s research shows that GLP-1 adopters are seeing better results when using Libre in combination with drugs, suggesting that the existential risk to the company’s business is overestimated. Suggests. To be fair, we’re still wary about the impact this new class of drugs will have on the food industry (particularly salty snacks and sweets), but less so on the medical side. Beyond devices, Abbott has some interesting businesses, including nutrition. The division understandably received a lot of criticism in 2022 due to a recall of its popular infant formula, but the company’s commitment to quality and safety has helped it overcome this issue. We also have a line of nutritional shakes for adults, which we believe can provide protein to people who are benefiting from the GLP-1 trend and are looking to limit muscle loss caused by these drugs. Now that the impact of the coronavirus is in the rearview mirror and the market is starting to realize that GLP-1 concerns are overblown, investors should start appreciating all the growth and innovation happening at Abbott. In the third quarter, organic sales from the underlying business (excluding COVID-19 testing) increased 13.8% year-over-year, with each of Abbott’s four main businesses posting double-digit growth. Amgen: For much of last year, Amgen’s focus has been on overcoming challenges from the Federal Trade Commission to the biotech company’s roughly $28 billion acquisition of Horizon Therapeutics. After the FTC filed suit last May to block the deal, Amgen reached a settlement with minimal concessions in September, and the deal closed in early October. The completion of this transaction strengthens Amgen’s four-pronged long-term growth strategy, which includes the company’s four-pronged long-term growth strategy focused on (1) general medicine, (2) oncology, (3) rare diseases, and (4) inflammation. You can look to the future. Analysts at BMO Capital recently estimated that revenue from Horizon could rise to $6.2 billion by 2030, contributing to Amgen’s growth as other business units face pressure. . But the biggest question investors have for nearly every drug company right now is: What is their obesity strategy? Everyone is trying to play catch with Eli Lilly and Novo and his Nordisk. If you were to bet on who the third largest company would be, it might be Amgen. AMGN 5Y Mountain Amgen 5 Years Given how established Lilly and Novo Nordisk’s leadership is, the only way to gain market share will be to develop differentiated products. Amgen may be planning something. It’s called AMG 133, and what makes it unique is that it is administered less frequently. AMG 133 is a monthly injection, while Lilly’s tirzepatide (Zepbound for obesity and Mounjaro for diabetes) or Novo Nordisk’s semaglutide (Wegovy and Ozempic) are weekly. It’s highly unlikely that anyone will dethrone Lilly or Novo from their obesity thrones, but you could argue that Amgen could capture some share of this $100 billion-plus market with once-a-month injections. The second stage readout is expected to take place in the second half of this year. Amgen is also working on developing an oral drug, with Phase 1 data expected in the first half of this year. Among the startups looking to enter the obesity market, Amgen may be the best bet. And since the returns are about 15x, it’s a cheap way to play. Novartis: Over the past decade, Novartis has focused on developing pure-play products for innovative medicines, including spinning out its eye health division Alcon several years ago and completing the separation of Sandoz’s generics and biosimilars business last fall. We have transitioned into business. As a result, Novartis has become an even more focused company. The company has four core therapeutic areas (1) Cardiovascular/Nephrology/Metabolism, (2) Immunology, (3) Neuroscience, and (4) Oncology, and four priority markets (U.S., China, Germany, and Japan). We are prioritizing our efforts. Just a handful of technology platforms. In doing so, Novartis created a “new” company with a more attractive financial profile. Since making this transformation in 2014, core margins have expanded from 26% to 36.9% in the first nine months of 2023. Looking ahead to 2027, management believes it can increase core margins to around 40% while continuing to grow sales at a mid-range. -Single digit clips every year. Management expects to achieve these goals through a combination of sales from existing brands and pipeline execution. Novartis currently sells six brands with multibillion-dollar sales potential, five of which are expected to maintain exclusivity beyond 2030. The company is also making good progress in its pipeline of new drugs and expanding the indications for its existing lineup. In the past year, he has delivered 10 positive Phase 3 reports and presentations. NVS 5Y Mountain Novartis 5 Years The business is also coughing up a lot of cash. Since 2014, Novartis’ free cash flow has increased from $6.8 billion (15.6% of sales) to $11.0 billion (32.4% of sales). This has allowed management to reinvest in research and development (R&D), increase annual dividends, and buy back shares. From 2018 to 2023, Novartis has carried out $32 billion worth of share buybacks, with just under $13 billion left to execute on the $15 billion program announced in July 2023. . Walgreens Boots Alliance: Among the various companies we spoke to at the conference, Walgreens stood out as having the best turnaround potential. Pharmacy stocks were among the worst on the Dow Jones Industrial Average last year, after the company reported mixed results last week, cut its dividend by nearly 50% and readjusted its yield to about 4%, leading to a decline in 2024. It’s been a slow start to the year. Looking further back, this stock has been a stock I’ve been avoiding for years due to the challenges at the front (retail portion) of the story with his club name, Amazon, and the headwinds facing pharmacies and his PBMs. It was the brand I was thinking of. WBA 5Y Mountain Walgreens 5 Years After a change in leadership, Walgreens has finally found a leader to right the ship. Tim Wentworth took over as CEO in October. He is a highly respected healthcare executive who enjoyed success as CEO of Express Scripts and CEO of his Evernorth, Cigna’s healthcare services subsidiary. He brings credibility to a company that has so far lacked credibility. As J.P. Morgan analysts noted when they upgraded Walgreens to overweight, equivalent to buy, in late October, Mr. Wentworth never once served as CEO of Express Scripts from 2016 to 2018. I never missed a quarter. Part of Wentworth’s early focus was cutting costs and generating cash. Reducing dividends frees up capital to invest in the business and pay down debt. He also has set a goal of generating $1 billion in savings in fiscal 2024 through right-sizing cost structures, closing unprofitable stores and reducing capital expenditures. Walgreens also owns about $6 billion in stock in pharmaceutical wholesaler Sencora (formerly known as AmerisourceBergen), which it can monetize if needed. Turnarounds require a lot of work and can often be more complex than originally thought. But if there’s one leader at Walgreens who can pull it off, it’s Wentworth’s industry expertise. The hard lesson of the last few years is to be skeptical of bullish CEOs of struggling companies, but we always like to see them put their money where their mouth is. There is. That’s why we noted that Wentworth bought 10,000 shares worth about $250,000 last Friday at an average price of $24.222. (See here for a complete list of Jim Cramer Charitable Trust stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in a charitable trust’s portfolio. If Jim talks about a stock on his CNBC TV, he will wait 72 hours before executing a trade after issuing a trade alert. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
Aerial view of customers entering a Walgreens store in San Pablo, California on January 4, 2024.
Justin Sullivan | Getty Images
We are making our first bullpen update for 2024. Bullpen is a collection of stocks that he has identified by the CNBC Investment Club team as potentially joining the Jim Cramer Charitable Trust. Here are four of the most interesting investment opportunities we found among several corporate CEOs Jim interviewed at the JPMorgan Healthcare Conference in San Francisco this week.
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