Jim Cramer recommends five stock plays for the vaccine distribution pipeline
- "Now that the vaccine developers are approaching the finishing line, distributing this thing is priority number one," CNBC's Jim Cramer said.
- The "Mad Money" host pointed to the stocks of FedEx, UPS, McKesson, Carrier and CVS Health for investment opportunities.
- "They're the ones who'll ultimately solve this crisis, assuming we can convince enough people to take the darned vaccine," he said.
After Wall Street welcomed more positive data from a biotech firm working on a coronavirus vaccine Monday, CNBC's Jim Cramer turned his attention to investment opportunities linked to the vaccine distribution pipeline.
"Now that the vaccine developers are approaching the finishing line, distributing this thing is priority number one," the "Mad Money" host said.
Moderna is the latest vaccine producer to release optimistic phase three vaccine research results, even topping the promising information that Pfizer reported last week. Moderna found its potential vaccine to be more than 94% effective in preventing Covid-19, the disease caused by the novel coronavirus. Pfizer's preventative, also in a late-stage trial, found its vaccine to be 90% effective.
When the federal government approves a vaccine, it must be distributed to the states where state leaders are responsible for distributing it to residents, Cramer said about the next steps. Multiple companies will play a role in logistics, including refrigeration needed for the products.
He recommended investors look at names like FedEx and UPS for shipping services, McKesson for distribution, Carrier for freezer trucks and CVS Health for administering the shot.
"They're the ones who'll ultimately solve this crisis, assuming we can convince enough people to take the darned vaccine," he said.
Below are Cramer's takeaways for each stock:
"I really like the stock of UPS right here. It's selling for roughly 20-times next year's earnings estimates," he said. "I believe in [CEO Carol] Tomé's leadership and the company should make a fortune distributing the vaccine before the stay-at-home economy dries up."
"They built out a ton of infrastructure after shipping vaccines for the swine flu epidemic 11 years ago. That may give them an edge here," the host said.
"Carrier makes freezer trucks and they're all in on ensuring we have enough of them. They're integral to the chain," Cramer said.
"Before the vaccine gets to the logistics plays, it will likely go through the drug distributors," he said. "This is where the big money's going to be made. It's an oligopoly industry. It's controlled by McKesson, Cardinal Health … and AmerisourceBergen."
"If you want to buy one, I say you buy McKesson. That's the largest, it's the best-run and, crucially, the only drug distributor that's specifically been selected to participate [in] Operation Warp Speed," he added.
"The government has agreements with CVS and Walgreens to give the vaccine to residents of long-term care facilities," Cramer said. "Everyone with pharmacy exposure gets a boost. CVS should benefit the most."
Disclosure: Cramer's charitable trust owns shares of CVS Health and UPS.
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