Jim Cramer: The Bellwether We've Searched For

NEW YORK (Real Money) -- Let's use DexCom (DXCM) as a poster boy for what's both right and wrong with this market.

Here's a company with disruptive technology -- a device to monitor glucose remotely with no finger pricking -- that's pretty much sweeping the Type One diabetes world by storm. The company's got a real edge over the other companies in the field, including Medtronic (MDT), and its device is truly a wonder, as I saw last night with my own eyes when CEO Terry Gregg came on Mad Money.

Gregg's a proven money maker. He had been president and chief operating officer of MiniMed, another monitoring company, and was instrumental in selling that company to Medtronic for $3.4 billion in 2001. He also served in executive positions with Smith & Nephew (SNN) and Allergan (AGN). He is no stranger to high-quality drug and device companies.

It is true that the patient population that might use continuous glucose monitoring systems is only 1.5 million and there is no epidemic of it, unlike Type 2 diabetes. But only 9% use a continuous monitoring system, and so there's huge upside. The accuracy is breathtaking and you can follow the levels remotely, something that every parent of a child with diabetes must want to do.

But here's the rub.

This is a company that is hiring so fast to meet the demand and is spending so much money on research that it is not making money. So, it failed to meet Street expectations and in this environment a company valued on sales per share that misses the estimates is just plain history.

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