We recently published an article titled, Jim Cramer on Netflix and Other Stocks. In this article, we are going to take a look at where DuPont de Nemours, Inc. (NYSE:DD) stands against other stocks discussed by Jim Cramer.
Recently, Mad Money’s host, Jim Cramer addressed what he called a “ridiculous plethora of sell-side downgrades,” noting that the Dow Jones Industrial Average fell by 0.94%, the S&P 500 decreased by 0.96%, and the Nasdaq Composite dropped by 1.18% on Monday. While he acknowledged the session’s poor performance, he cautioned that paying too much attention to downgrades can be detrimental for long-term investors.
Cramer urged investors not to get overly influenced by the negative sentiment on Wall Street and emphasized the importance of staying committed to strong companies, even when their stock prices experience volatility. He recounted the history of the bull market, stating:
“When I look at the history of this incredible bull market, and it has been an incredible bull market, it’s littered with buy-to-hold, hold-to-sell, buy-to-hold, hold-to-sell. These downgrades scare you out of amazing stocks at levels that may temporarily be too high, but will recover later. If you listen to the downgrades, though, you’ll never recover with it.”
In discussing the challenges investors face, Cramer pointed out that many get rattled by analyst downgrades and might sell their shares in solid companies, which can make it difficult to buy back in later.
“In the last decade, the toughest thing to do is to hold on to good stocks. But analysts and commentators love to take aim at big long-term winners. Their jeremiads have scared so many people out of some amazing gains.”
He observed that complacency can be prevalent on Wall Street, with bullish investors often overlooking risks while bearish ones miss out on potential opportunities. For those considering action based on a downgrade, Cramer advised waiting for a bounce to sell, but he noted that timing such moves is “incredibly hard,” even for seasoned traders.
Cramer emphasized that when analysts downgrade stocks that have already taken a hit and overlook positive aspects, it can create a challenging environment. However, he believes it is still possible to profit. Here’s what he said:
“I need you to understand that when analysts downgrade after stocks have already been hammered, when really good investors ignore the positives, then, it may be a grim time. But not so grim that we can’t make money by focusing on the fundamentals of the companies. And not just the economy, the Fed, interest rates and oil.”
Our Methodology
For this article, we compiled a list of 15 stocks that were mentioned by Jim Cramer during his episodes of Mad Money on October 7 and October 8. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 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).
Cramer Says To Buy DuPont de Nemours, Inc. (NYSE:DD)
DuPont de Nemours, Inc. (NYSE:DD)
Number of Hedge Fund Holders: 58
DuPont de Nemours, Inc. (NYSE:DD) is a technology-driven company that specializes in materials and solutions across various sectors. Cramer mentioned that Barclays dislikes the company. Cramer expressed that following analysts would have led to missing out on profits and likely selling shares before the three-way breakup orchestrated by Chairman Ed Breen, whom he regards as a top breakup strategist.
“Why does Barclays do this? Why did they downgrade it? Well, it took it to sell after a really nice run that you wouldn’t have caught a penny of if you listened to the analysts. You’d be selling it right now, before the three-way breakup masterminded by Chairman Ed Breen, one of the greatest breakup artists to ever play the game. Seems crazy to me. But I guess Barclays feels that Breen doesn’t know what he’s doing. I wouldn’t take that bet. I say buy DuPont.”
In May, DuPont de Nemours (NYSE:DD) announced plans to separate into three publicly traded companies. It included the divestiture of its Electronics and Water businesses, while the New DuPont continues to operate as a diversified industrial firm.
The new entity includes the Water & Protection segment (excluding Water Solutions), a majority of the Industrial Solutions segment, where healthcare is included, and certain businesses categorized under Corporate, such as adhesives. The combined businesses generated around $6.6 billion in net sales, with an operating EBITDA margin of approximately 24% in 2023.
Moreover, DuPont de Nemours (NYSE:DD) has revised its guidance for the full year 2024, indicating an optimistic outlook for net sales, operating EBITDA, and adjusted earnings per share. Management forecasts net sales to reach approximately $12.45 billion, with an operating EBITDA of around $3.085 billion and adjusted EPS estimated at $3.75.
As for the third quarter, the company expects to see organic sales growth return, driven by the Electronics & Industrial segment, with anticipated growth in both sales and earnings from Water & Protection starting in the fourth quarter.
Overall, DD ranks 10th on our list of stocks discussed by Jim Cramer. While we acknowledge the potential of DD 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 DD 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 is originally published at Insider Monkey.