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Why Charles River Labs Is the Biotech Stock to Buy: Jim Cramer

Ready to diversify your portfolio but unfamiliar with the biotech space? Here's a stock pick from Jim Cramer.
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Investors who aren't familiar with the biotech space may be afraid to jump into it. Jim Cramer has a stock recommendation for investors curious about the sector.

Jim Cramer said that Charles River Labs (CRL) - Get Charles River Laboratories International, Inc. Report is the "arms merchant of biotech."

"The biotech companies themselves do not have enough money to develop drugs. So you have to send to Charles River Labs, which by the way, if you want to get a hold of them, you dial 1-800-LAB-RAT," Cramer advised.

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"If we have this big IPO rush...stocks tend to get sold on an IPO rush. But, I do think the Charles River Labs is a great way to play this whole revolution," Cramer said.

Here's why biotech is a hot sector currently.

"The biotech companies are funded to a level where they can do great original research. And the reason why I'm suggesting Charles River Labs is because the FDA has changed under [Scott Gottlieb]. [He] understands both compassionate use, meaning that he understands that a lot of people would die if it weren't for certain drugs. So we should be more willing to approve those drugs. He also understands the cost of drugs. And what's happened is, is that we had more than 50 drugs approved last year, far more than usual, which is one of the reasons why there's such a big rush to own biotech," Cramer explained.

Related. Take a Poker Player's Approach to Playing Small Biotech Stocks

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