We recently published a list of Jim Cramer Latest Portfolio: 10 Stocks to Buy and Sell. Since Texas Instruments Inc (NASDAQ:TXN) ranks 2nd on the list, it deserves a deeper look.
Jim Cramer in his latest program talked about how the China factor is affecting US stocks. He said that companies that have exposure to China are getting hammered and he does not see that changing “anytime soon.”
Cramer said that currently there are many “pernicious forces working against the bulls.” The CNBC host said many growth stocks are declining right when interest rates are around the corner. He said that companies that don’t benefit from rate cuts are going down. Cramer also mentioned weak earnings reports which show companies having challenged client bases. Cramer mentioned a consumer products company that was recently hammered because of weakness in China.
Cramer thinks the problem in China is twofold: there’s a government that does not like America or American businesses while the population is “cash-strapped” even if they “like our country.”
Cramer said “China is so darn complicated.” He said at one point the Chinese government was “so business friendly” that Western companies thought it’s “insane” not to go there. But since the Trump administration, the country has been engaged in trade wars with the US.
Cramer said the Chinese government “took advantage of us on trade.”
For this article we watched several latest programs of Jim Cramer and picked 10 important stocks he’s talking about. With each stock we have mentioned its hedge fund sentiment. 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).
Texas Instruments Inc (NASDAQ:TXN)
Number of Hedge Fund Investors: 49
Jim Cramer in a latest program praised Texas Instruments’ latest earnings.
Cramer said that historically Texas Instruments has been “spiteful” of Wall Street and their conference calls were “very uncomfortable.”
“But that’s gone. The contemptuous attitude is gone.”
Cramer said the upcoming CapEX meeting of Texas Instruments is going to be “very positive.”
UBS recently published a list of high-quality stocks that also pay dividends. Texas Instruments Inc (NASDAQ:TXN) made it to the list. The stock has a 2.61% dividend yield as of July 3.
Texas Instruments Inc’s (NASDAQ:TXN) valuation has been a concern for many amid a lack of strong growth catalysts. The stock’s forward P/E is 37.80, much higher than the industry median of 24. The average analyst price target on the stock is $181, which is lower than its July 3 closing price of $198. According to data from Yahoo Finance, Wall Street expects Texas Instruments Inc’s (NASDAQ:TXN) earnings to fall by 6% over the next five years on a per-annum basis.
Texas Instruments Inc (NASDAQ:TXN) makes most of its revenue from Industrial applications, Automotive and Personal Electronics. During the first quarter earnings call the management said the industrial segment was down “upper-single digits. The automotive market was down mid-single digits. Personal electronics was down mid-teens. Next, communications equipment was down about 25%.”
“First, we saw personal electronics was the first market that went into the correction. It really is — was the first to come out in the last few quarters, I’d describe it as behaving more seasonal. If you go to the other end of the spectrum, we have, had industrial, which has been declining sequentially from some time. And over the last few quarters, we’ve been talking about how there’s some asynchronous behavior inside of the 12, 13 sectors that we have there. That continued inside of the quarter. So we have got some of the later-cycle sectors that are continuing to decline and declining at double-digit rates. But there are some that are beginning to — begin to slow in the declines and even a couple that grew sequentially.”
Madison Investors Fund stated the following regarding Texas Instruments Incorporated (NASDAQ:TXN) in its Q2 2024 investor letter:
“At semiconductor manufacturers Analog Devices and Texas Instruments Incorporated (NASDAQ:TXN), sales and profits continue to decline due to weak demand, as well as customers and distributors reducing inventory after building it up during the supply chain induced shortages a few years back. However, the shares of both companies appreciated nicely during the quarter as the cycle appears to be bottoming, and investors better appreciate the industry’s secular demand characteristics. We believe this sets the conditions for a nice rebound in profits for these companies over the coming years.”
Overall, Texas Instruments Inc (NASDAQ:TXN) ranks 2nd on Insider Monkey’s list titled Jim Cramer Latest Portfolio: 10 Stocks to Buy and Sell. While we acknowledge the potential of Texas Instruments Inc (NASDAQ:TXN) 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 TXN 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.