Insider Monkey recently published a list of 7 Stocks Jim Cramer is Bearish On. Under Armour Inc Class A (NYSE:UAA) ranks second in that list.
Since Under Armour is a popular name among both hedge funds and retail investors, it deserver a detailed look.
Jim Cramer in a latest program yet again lamented over the market’s obsession about the Fed’s stance over sticky inflation, saying the latest Fed minutes from April 30 to May 1 spooked investors because the central bank officials seem to be getting “impatient” with the inflation’s slower-than-expected decline.
However, Cramer said that economic data released after these Fed minutes showed that the labor market as well as inflation are cooling, exactly what the Fed wants. Cramer said had the Fed officials seen this data before, their minutes would have been different.
Cramer said that the Fed needs to know that their “inflation lamentation” from three weeks ago isn’t necessary.
Jim Cramer said that consumer spending has been the biggest issue for the Federal Reserve as they wonder, “is they any place that’s too high for them (consumers).” Cramer acknowledged that without putting brakes on consumer spending it’d be impossible to beat inflation.
However, the CNBC host said that if Fed officials had paid attention they’d have found that they are “finally” winning their battle against consumer spending too.
Jim Cramer said there are “nascent signs” showing that the consumers are finally saying “enough is enough.” Cramer pointed to Walmart’s latest numbers as a sign of consumers’ preference for discount retailers. Cramer said Walmart is one of the few companies offering value in budget.
“The Consumer Has Had Enough”
“After years of seemingly endless price increases, the consumer has had enough. Consumers are now staying more at home.”
Jim Cramer also highlighted latest comments from Kevin Hourican, the CEO of Sysco, which supplies food products to restaurants. Hourican said that the industry needs to do “something” about the rising prices that are affecting foot traffic at restaurants.
Jim Cramer thinks a “consumer rebellion” is happening in the industry which has executives scratching their heads.
Another sign of this rebellion, according to Cramer, is major companies like McDonald’s Corp (NYSE:MCD) rolling out budget options. Cramer said that consumers also has had enough of price increases at McDonald’s Corp (NYSE:MCD), and the company needed these budget menu offerings to increase traffic.
While Cramer is bullish on stocks like NVIDIA Corp (NASDAQ:NVDA), Amazon.com Inc (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG), he’s recommending investors to stay away from UAA. Let’s see why.
Under Armour Inc Class A (NYSE:UAA)
Number of Hedge Fund Investors: 33
Jim Cramer recently said in a program that he’s a “huge supporter” of Kevin Plank, Under Armour Inc Class A’s (NYSE:UAA) founder and CEO. However, he said he’s not a supporter of the stock. That’s because, according to Cramer, the competition in the athletic apparel industry is very high. Cramer said he’s sure if Kevin Plank goes to another industry he’d be “crushing it” but in this industry you have to compete with major players like Nike and New Balance.
“These are just serious competitors and you’ve got to be on your game every second.”
Wall Street analysts are also questioning Under Armour Inc Class A’s (NYSE:UAA) future following downbeat fiscal Q4 results. J.P. Morgan analyst Matthew recently said that increasing competition in the industry and Under Armour Inc Class A’s (NYSE:UAA) 18-month reset plan would leave it lagging behind peers, as he downgraded the stock to $6
“While we see secular health/wellness and casualization tailwinds providing Sportswear sector insulation, we see Under Armour lagging peers in terms of innovation, profitability, and DTC infrastructure,” the analyst said.
Under Armour Inc Class A (NYSE:UAA) shares are down about 20% so far this year.
While Cramer is bearish on UAA, he’s recommending NVIDIA Corp (NASDAQ:NVDA), Amazon.com Inc (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG).
Of the 919 hedge funds tracked by Insider Monkey, 33 funds reported owning stakes in Under Armour Inc Class A (NYSE:UAA). The biggest stake in Under Armour Inc Class A (NYSE:UAA) is owned by Anand Parekh’s Alyeska Investment Group which owns a $44 million stake in Under Armour Inc Class A (NYSE:UAA).
Under Armour ranks 2nd in our list of the 7 Stocks Jim Cramer is Bearish On.
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Disclosure: None. This article is originally published at Insider Monkey.