Jim Cramer, the host of Mad Money, recently broke down the market’s performance on Tuesday, discussing how President Donald Trump’s early days in office might be influencing investor sentiment. He speculated that the stock rally could be tied to a belief among investors that Trump’s promises on tariffs may be harsher than his actual actions, leading to optimism.
Cramer pointed out that during Trump’s first presidency, investors learned to buy stocks during moments of market volatility caused by his aggressive rhetoric. He noted that Trump’s frequent saber-rattling would often prompt sell-offs, but those moments, when stocks of companies he criticized dropped, turned out to be prime opportunities to invest.
Cramer explained that this pattern of buying the dips was exactly what played out on Tuesday. After months of discussing high tariffs, Trump’s inaugural speech struck a more tempered tone, and he avoided threatening severe trade barriers. According to Cramer, this shift in rhetoric surprised many, especially given how aggressive his stance had been in the past.
“Maybe four years is a long time ago, but people seem to forget the Trump drill. The president loves the stock market. He always loves to send signals that all hell is going to break loose and when it doesn’t, well guess what? The market flies.”
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Cramer also suggested that this latest market rally is driven by the prospect of tariffs, especially on tariffs that are smaller than initially forecasted. He mentioned that these could increase if foreign countries don’t comply with U.S. demands. Furthermore, Cramer highlighted the role of new projects such as Stargate, an AI infrastructure initiative backed by OpenAI, Oracle, and SoftBank. He noted that this project, which will involve new data centers likely outfitted with Nvidia technology, was another contributing factor to the market’s upbeat performance. Cramer noted that the presence of major tech leaders at the inauguration further reinforced optimism.
“Will it stay this way? What did we learn about Trump the first time around? You could never be sure. The difference on day one? He knows business people, Silicon Valley. He knows how things work. You may like him. You may hate him. But the bottom line? If you’re a tech titan, Trump will take your call. In fact, he’ll call you. Biden, I don’t know if he knew who they even were and he certainly didn’t bother to call them. In the end, I think he preferred to sue them. If you own stocks, which is why you watch me, Trump’s method is a heck of a lot better for your portfolio.”
8 Stocks on Jim Cramer’s Radar
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 21. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 Stocks on Jim Cramer’s Radar
8. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 82
While Cramer was on the subject of housing, he explained that The Home Depot, Inc. (NYSE:HD), one of the largest and most recognized retailers in the home improvement sector, is part of his Charitable Trust portfolio because he believes the company will perform well in a lower interest rate environment. He mentioned that he and his team have been buying shares since September 2024, expecting positive results as interest rates decline. He went on to say:
“While we haven’t exactly gotten that lower-rate environment, Home Depot’s stock has held up pretty well these past few months. It’s actually up modestly since September… I think it’d be one of the best stocks in the Dow. Last year, Home Depot did a relatively large deal. It put this $18.25 billion acquisition of SRS Distribution, which let them move further into the part of the market where Builders FirstSource operates, that’s the professional space.
The deal’s already benefiting Home Depot when the company last reported earnings in November, its sales were up 6% year over year, despite the fact that still cautious do-it-yourselfers, well, the shoppers, they went into Home Depot less and spent less per transaction than in the year before. That didn’t matter because they did so much professional business. Home Depot also called out hurricane-related demand in the quarter, but I think it’s going to play out over multiple quarters or even multiple years like the fires in the Southland.”
Cramer reiterated that both Builders FirstSource and Home Depot (NYSE:HD) are stocks that rely on lower interest rates to perform well. He emphasized that if someone believes long-term rates will continue to rise, these stocks could face challenges. However, he said that if someone believes that the rise in long-term rates is mostly over, then both Builders FirstSource and Home Depot should be considered strong buying opportunities. Cramer hammered his point with a clear “buy buy buy” buzzer sound as he expressed his confidence in these stocks. Lastly, he added:
“Bottom line, once the macro backdrop is right, then Builders FirstSource and Home Depot stand to benefit… from both the persistent housing shortage and now the additional business that will come from the vast rebuilding efforts underway in multiple states impacted by natural disasters recently. So if you’re in the camp that expects lower rates, those are two terrific stocks to buy right now.”
7. Builders FirstSource, Inc. (NYSE:BLDR)
Number of Hedge Fund Holders: 55
Cramer put Builders FirstSource, Inc. (NYSE:BLDR) “at the very top of the list” and said:
“It’s a company called Builders FirstSource, that’s the nation’s largest supplier [of] building products, prefabricated components, and value-added services to home builders and contractors. I’ve been recommending Builders FirstSource for years now as a play on the idea that we have a structural shortage of single-family homes and even if everybody builds like crazy, it’ll take years to fill that shortage. However, Builders FirstSource has been a tough stock to own when interest rates go higher like they’ve been doing for the bulk of the past four months.
When rates go higher, mortgages and home equity loans get more expensive. People buy fewer houses and so the builders don’t need to buy as much stuff from Builders FirstSource. When you look at its stock versus the yield in the 10-year treasury, you can see that it peaked in mid-September at just over $200 and then fell more than 30% from its highs before bottoming earlier this month. That’s entirely because the yield in the 10-year went from 3.6% to 4.8% during that time.”
Cramer pointed out that last week’s pullback in long-term rates caused a significant rebound in the stock, emphasizing that Builders FirstSource’s (NYSE:BLDR) future performance depends on the bond market. Cramer stated that if rates keep falling, the stock could continue to do well, but if rates rise again, the rally would likely end. While the recent 70% rally wasn’t solely driven by interest rates, he highlighted that rate movements play a key role in the stock’s potential. He added:
“On Thursday night, the stock caught a very enthusiastic coverage initiation from Raymond James with an outperform rating. They argue any bad news is already baked in and Wall Street’s not giving Builders FirstSource enough credit for what it does. Well, I think they’re gonna be bright. The very next morning, we learned that December housing starts came in well above expectations. Overall, housing starts were up 15.8% month-over-month, rising to a seasonally adjusted annual rate of 1.5 million units.
Wall Street was only looking for an increase of 3%. Highest annualized housing starts in 10 months. Most of last year, anything related to the home builder struggled as housing starts consistently came in below expectations. Once it became clear that the Fed wasn’t going to cut interest rates as aggressively as Wall Street was hoping, the builders pulled in their horns. Then when rate cuts from the Fed finally did materialize in the final months of the year, it didn’t help because the bond market went in the opposite direction, very strange behavior and long rates soared.”
Cramer highlighted the importance of long-term interest rates in the construction industry, as they impact mortgage rates. He noted that builders have grown more confident, suggesting an increase in building activity. Cramer also pointed to the extensive rebuilding needed in areas affected by Hurricanes Helene and Milton in the Southeast and the wildfires in Southern California. With tens of thousands of homes in Florida, North Carolina, and California requiring repairs or complete reconstruction, Cramer believes this will create more business opportunities for Builders FirstSource (NYSE:BLDR) and other companies in the sector. He concluded by saying:
“Bottom line, once the macro backdrop is right, then Builders FirstSource and Home Depot stand to benefit… from both the persistent housing shortage and now the additional business that will come from the vast rebuilding efforts underway in multiple states impacted by natural disasters recently. So if you’re in the camp that expects lower rates, those are two terrific stocks to buy right now.”
6. United Rentals, Inc. (NYSE:URI)
Number of Hedge Fund Holders: 45
United Rentals, Inc. (NYSE:URI) rents a wide range of construction, industrial, and specialty equipment to sectors like construction, utilities, and government, while also selling used equipment and offering maintenance services. Here’s what Mad Money’s had to say about the company:
“United Rentals was in second, gaining nearly 15% on the news that it’s trying to acquire its competitor H&E Equipment Services. You rarely see an acquirer rally on takeover news unless the shareholders really believe in it, right?”
Cramer recently had some thoughts on United Rentals’ (NYSE:URI) acquisition of H&E for $4.8 billion as we discussed in Jim Cramer Discusses Joe Rogan, Elon Musk, And These 13 Stocks.
“If I were either Jonathan Kanter at the antitrust division of the Justice Department or I was Lina Khan who runs the FTC, I would veto this deal immediately. Why? Because they’re in the same industry. H&E this is a terrific product. It makes, it’s another rental. URI used to be a roll up, they kind of stopped that because they knew that everything would be blocked by antitrust. David, we’re back. You can merge anybody. Why not? You can just merge anybody. These are two companies that could compete, what the heck, why don’t you merge them and make it so everybody’s better for it. Particularly the shareholders.”
5. Schlumberger Limited (NYSE:SLB)
Number of Hedge Fund Holders: 65
Cramer has been a fan of Schlumberger Limited (NYSE:SLB) for a while and often sings praises of the company. During the episode, he remarked:
“Oil giant SLB was in third place, up almost 13%, after reporting a terrific quarter on Friday that nobody was looking for.”
Schlumberger (NYSE:SLB), a prominent player in carbon management and energy systems integration, focuses on addressing various facets of the global energy landscape. The company recently reported its full-year and fourth-quarter results for 2024, surpassing Wall Street’s consensus expectations. It finished the year with strong earnings and free cash flow, achieving growth in earnings both sequentially and year over year, while maintaining high margins for the cycle.
For the full year of 2024, Schlumberger (NYSE:SLB) reported a GAAP EPS of $3.11, which exceeded analyst projections and represented a 7% increase compared to the previous year. Revenue reached $36.29 billion, surpassing estimates and showing a 10% year-over-year increase.
Additionally, during the fourth quarter of 2023, the company acquired Aker subsea business as part of its OneSubsea joint venture, which contributed $1.93 billion in revenue for the full year of 2024 and $484 million in revenue for the fourth quarter of 2023.
4. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 68
Discussing Intel Corporation (NASDAQ:INTC) during the episode, Cramer said:
“Couple of semiconductor names like Applied Materials, which make semiconductor capital equipment, and even the lowly Intel both also roughly 12% higher thanks to the amazing quarter (of Taiwan Semiconductor)… Even lowly worm Intel managed to become one of the five best-performing stocks… up more than 12% and many other chip plays had huge gains, especially the semiconductor capital equipment names.”
Intel (NASDAQ:INTC) develops and produces computing products such as processors, memory, and AI solutions. Since TSMC released its earnings results on January 16, Intel’s stock is up over 7%. Explaining why Intel and other stocks in the group experienced gains because of TSMC, Cramer said:
“Now, like I said earlier, the pin action from this Taiwan Semi quarter was extensive, but some of the biggest beneficiaries were the semiconductor capital equipment companies that, well, these are huge, huge makers of equipment that Taiwan Semi buys… So why did Taiwan Semi quarter spark such a big rally for the semi capital equipment sector? Simple: In addition to all of its bullish revenue and margin guidance for the first quarter of 2025 and the positive commentary about its long-term revenue growth potential, Taiwan Semi also disclosed its capital equipment budget for full year 2025. It was enormous.
Cramer highlighted that TSMC plans to invest between $38 billion and $42 billion in capital expenditures this year, marking an increase of 28% to 41% from the previous year. This spending forecast surpassed Wall Street’s expectation of $36.4 billion. Cramer pointed out that TSMC’s management emphasized that higher capital spending often signals greater growth potential in the years to come, a statement that Cramer believes shows the company’s strategic foresight. He also noted that this strong outlook for capital equipment investment is one of the reasons why semiconductor capital equipment stocks have been gaining momentum recently.
3. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Cramer mentioned that semiconductor stocks like Applied Materials, Inc. (NASDAQ:AMAT) recently saw a spike because of Taiwan Semiconductor’s strong earnings result.
“Couple of semiconductor names like Applied Materials, which make semiconductor capital equipment, and even the lowly Intel both also roughly 12% higher thanks to the amazing quarter (of Taiwan Semiconductor)… Applied Materials rallied 4.5% last Thursday and is now up more than 8% in the three trading days since the quarter, amazing for a supplier.”
Applied Materials (NASDAQ:AMAT) is a provider of manufacturing equipment, services, and software for the semiconductor and display industries. The stock often gets impacted by broader market events. For example, its stock experienced a decline in October 2024 because of a disappointing quarterly report from ASML. In the past week since TSMC reported its fourth-quarter earnings report, AMAT stock has seen a modest uptick.
Cramer discussed TSMC’s earnings report and its reverberations on the other stocks in the industry as he said:
“While Taiwan Semi itself was only up 1.5%, by the end of last week, the company’s commentary was so positive that the Philadelphia Semiconductor Index finished the week up 5.4%. Even lowly worm Intel managed to become one of the five best-performing stocks… up more than 12% and many other chip plays had huge gains, especially the semiconductor capital equipment names. Let’s talk about those. There’s a reason these stocks ran… Taiwan Semi’s guidance for the first quarter of 2025. In the first quarter, Taiwan Semi expects revenue of $25 to $25.8 billion, which represents an increase of 33 to 37% year-over-year.”
Cramer also mentioned the importance of capital spending from Taiwan Semiconductor as that is a positive for companies like Applied Materials that supply the high-cost equipment used in semiconductor manufacturing. While TSMC’s spending is encouraging, Cramer noted that semiconductor capital equipment stocks, which started 2025 strong, have struggled over the past six months. Only a few companies, including Applied Materials, ended the year in the green. He added:
“Long story short, I think the breakout in the semiconductor capital equipment group is a reflection of investors starting to think once again about the scale of the opportunity, not about what’s dismal, but the opportunity ahead for these companies.”
2. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 88
Cramer discussed Citigroup Inc.’s (NYSE:C) strong fourth-quarter earnings result which led to the stock gaining.
“Last week we finally got some positive action for the stock market in 2025 with the S&P 500 gaining nearly 3% and turning positive for the year. Cooler inflation data pushed down long-term interest rates and we got flooded with great earnings reports. So what performed best during last week’s rally? When you look at the top performers, there are really some interesting patterns here. Two of the big banks that reported strong quarters made the list. Both Goldman Sachs, which we own for the Charitable Trust, and Citigroup rallied 12%.”
Citigroup (NYSE:C), a leading global financial services company, offers a wide range of financial products, such as cash management, trading, and investment banking services. The company recently released its fourth-quarter and full-year earnings results, surpassing analyst expectations. Its revenue for the fourth quarter reached $19.6 billion, slightly exceeding forecasts. Additionally, the company reported EPS of $1.34, a significant increase from a loss of $1.16 per share in the fourth quarter of 2023.
Citigroup’s (NYSE:C) net income saw an impressive rise of nearly 40%, reaching $12.7 billion. This performance marked a strong finish to the year, as the company also surpassed its full-year revenue goal. Moreover, the company achieved record results in key areas, including Services, Wealth Management, and U.S. Personal Banking, further highlighting its positive financial trajectory.
1. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 72
The Goldman Sachs Group, Inc. (NYSE:GS) is a leading international financial services firm, known for its specialization in investment banking, wealth management, and various other financial offerings. Talking about the company, Cramer said:
“Last week we finally got some positive action for the stock market in 2025 with the S&P 500 gaining nearly 3% and turning positive for the year. Cooler inflation data pushed down long-term interest rates and we got flooded with great earnings reports. So what performed best during last week’s rally? When you look at the top performers, there are really some interesting patterns here. Two of the big banks that reported strong quarters made the list. Both Goldman Sachs, which we own for the Charitable Trust, and Citigroup rallied 12%.”
Before Goldman Sachs (NYSE:GS) reported its 2024 full-year and fourth-quarter earnings, Cramer highlighted the favorable environment for mergers and acquisitions this year, which he believes bodes well for the bank’s performance. According to Cramer, stocks like Goldman Sachs are currently trading at relatively low price-to-earnings multiples, making them an attractive option. He added:
“I like these stocks and they’re well off their highs with very low price-to-earnings multiples. Could it be a real opportunity? I think so.”
Cramer noted that he and his team have been purchasing shares of Goldman Sachs (NYSE:GS) for their Charitable Trust portfolio, pointing out that a healthy economy tends to produce favorable outcomes for financial companies, independent of factors like the bond market or the actions of the Federal Reserve. Moreover, with fewer credit problems on the horizon, Cramer sees a positive outlook for these stocks moving forward.
While we acknowledge the potential of The Goldman Sachs Group, Inc. (NYSE:GS) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
