Jim Cramer Discussed 10 Stocks That Can Do Well in December

4. Warner Bros. Discovery, Inc. (NASDAQ:WBD)

Number of Hedge Fund Holders: 49

As per Cramer, Warner Bros. Discovery, Inc.’s (NASDAQ:WBD) stock performance is impacted by the change in the presidential administration and its improving balance sheet.

“Seven: Oh, here’s a wild one, Warner Brothers Discovery. Now this is bouncing for several reasons. First, its balance sheet is actually improving and it was the biggest worry… Second, its assets are worth so much more than the stock’s actually selling for. Third, this new administration will be a ratings bonanza for CNN. Finally, once Biden’s gone, media companies can merge again. That optionality is worth more to Warner Brothers than everything else combined.”

Warner Bros (NASDAQ:WBD) is a media and entertainment company that produces and distributes films, television programs, and streaming services, offering a wide portfolio of content across various platforms. During the third quarter, reported on November 7, it repurchased or repaid nearly $900 million in debt, with another $300 million maturing in the following week.

As reported, management continues to expect a year-over-year reduction in debt, although the decline will be more modest than initially anticipated due to some shortfalls and impairments. The company plans to use nearly all of its free cash flow to retire debt and aims to reach a long-term leverage target of 2.5 to 3 times. For the quarter, the company generated $0.6 billion in free cash flow, ending the period with $3.5 billion in cash and $40.7 billion in gross debt.

During the earnings call, David Zaslav, Warner Bros (NASDAQ:WBD) President and CEO, expressed confidence that the company’s stock price does not reflect the full value of its assets. Management remains focused on demonstrating the company’s fundamental strength and increasing its value. As part of this effort, the company has taken aggressive steps to reduce its expense base and improve its free cash flow conversion. To date, the company has successfully paid down over $16 billion in debt, with its strongest cash generation quarter still to come this year.