Cramer says popularity weight loss drugs new investing opportunities

CNBC’s Jim Cramer on Monday said the increasing popularity of GLP-1 drugs — medications used to treat diabetes and obesity — has created some new investing opportunities.

According to Cramer, Wall Street feared the effects of these drugs on the market during the fall. Investors soured on companies that made junk food and medical device companies that could benefit from higher rates of obesity or diabetes, he said. But with the market as a whole seeing a rebound, Cramer said investors can now turn their attention to stocks that could see gains because of these drugs.

“I think we should start to appreciate the good, and that’s what I want to go over,” he said. “Because if you really believe tons of people will take these weight loss medications, to the point where it’ll have a transformational impact on the economy, well that’s going to create lots of winners, too.”

First, investors could simply buy shares of the companies that make these medications. To Cramer, two companies own the GLP-1 space — Eli Lilly and Novo Nordisk — and their stocks have already had significant runs. But Cramer said he thinks they could see more gains because these drugs may be able to treat conditions besides obesity and diabetes, such as heart disease, kidney disease and alcoholism.

But there are several less obvious GLP-1 plays, like companies known for producing meat and high-protein foods such as Tyson Foods or Hormel Foods. Cramer said GLP-1 drugs can cause patients to lose muscle as well as fat, so doctors are encouraging them to consume more protein. An engineering and construction outfit like Jacobs Solutions could also benefit from the GLP-1 craze, as it helps design the manufacturing facilities that pharmaceutical companies use to create these medications.

Cramer said he also sees potential in the apparel space, with consumers likely to need new clothes to accommodate their weight loss. He pointed to his October interview with Levi’s CEO Chip Bergh, who said the company had already benefitted from customers’ changing waistlines post-pandemic.

“When the market was ugly, everyone was worried about how much money the food companies would lose from these GLP-1 weight loss drugs,” he said. “Now that the market’s much more optimistic, we’re focused on potential winners from the same story.”

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Eli Lilly.