Major technology stocks saw a welcome boost on Monday, with the Nasdaq Composite index rising 2.2% amid gains from tech giants like Nvidia, Amazon, Alphabet and Apple. According to CNBC’s Jim Cramer, while these innovative companies present exciting opportunities, investors should maintain diverse portfolios that include health care stocks as well.
Cramer cited Nvidia’s unveiling of new AI capabilities for PCs and optimistic analyst notes on Apple as driving factors behind tech’s upward momentum. However, during his Monday evening Mad Money program, he advised viewing these stocks in balance. In the end, stocks like Microsoft and Nvidia, which are bringing AI to the PC, and stocks like Apple, which is integrating artificial intelligence with the cellphone, are going to offer amazing investment opportunities,” he said. “I think a well-rounded portfolio needs to have health care, too.”
The host cited this week’s JPMorgan Healthcare Conference in San Francisco as an ideal time to research promising health care stocks. With industry leaders presenting throughout the high-profile event, Cramer sees lucrative prospects in the space. He pointed to substantial innovation from companies like Walgreens, Bristol-Myers Squibb and Eli Lilly.
Additionally, Cramer noted the wave of multi-billion dollar biopharma acquisitions that closed out 2023. With mergers and buyouts accelerating, investors should be on high alert for the next major health care deals in 2024.
A Key Disparity Between Tech and Healthcare
Importantly, Cramer highlighted that there is a significant valuation gap between technology and health care companies currently. While tech stocks like Apple and Microsoft may see larger absolute dollar gains due to their massive market caps, health care stocks have greater potential for percentage returns.
“Don’t forget that what we care about is percentage gains, not incremental gains,” Cramer explained. “And I think we can find bigger percentage gains in health care, especially if we identify the next takeover targets.”
With price-to-earnings ratios remaining relatively low for many health care stocks compared to tech, investors have an opportunity to capitalize on upside. Savvy stock pickers can target health companies poised for exponential growth.
Staying Balanced Amid Market Shifts
Cramer’s advice underscores the importance of maintaining a diverse investment portfolio even amid short-term market rotations. While previously unloved sectors may suddenly come into favor, the long-term growth stories remain intact for many tech and healthcare companies.
Nimble investors should seek to take advantage of value opportunities across sectors while investing in firms with strong fundamentals. As 2023 showed, the stock market can change direction rapidly. Spreading capital across promising stocks in varied industries helps weather uncertainty.
With upbeat outlooks for both tech innovation and healthcare advancement in 2024, staying balanced is key. Heeding Cramer’s tips, investors can build portfolios to capitalize on growth across multiple sectors. Maintaining diversity and seizing value will be winning strategies for the year ahead.
