Jim Cramer, the host of Mad Money, recently examined the latest market trends, highlighting some important themes where stocks have faced challenges, especially those reliant on business with China.
He pointed out that certain stocks often experience significant drops after earnings reports, a trend he has observed consistently. However, Cramer cautioned that finding buying opportunities from these dips is not always as simple as it may seem. While these stocks might appear attractive when they get hit, he emphasized that they are typically impacted unjustifiably, suggesting that if you buy them whenever they drop, you would likely see positive returns. He added:
“So you’re probably saying, can it really be that easy? I mean, why aren’t I a millionaire? Well, I’ll tell you why. Because there are landmines, real landmines in the yellow brick road times when the dips are milling at the beginning so I’m gonna spell those out for you too.”
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One of the first questions Cramer believes investors should ask themselves is whether a stock is tied to China in any way. This dependency, he mentioned, has severely impacted many companies recently. Cramer also pointed out that retailers, especially department stores, have taken a hit, as well as companies in the chemical sector, which heavily rely on Chinese demand. According to Cramer, these businesses need orders from China to stay afloat, making them vulnerable to fluctuations in that market.
Another factor Cramer highlighted is the growing impact of GLP-1 drugs, which have the potential to curb cravings for certain food products. Cramer pointed to beloved brands like Hershey, Oreos, and Fruit Loops, among others, which are now facing challenges as these drugs reduce consumer desire for such treats. He noted that with demand for these products waning, the stocks of companies producing them are suffering.
“Bottom line: Always remember that there are indeed Teflon stocks in any market. The key? Don’t buy them unless and until they get knocked down and then remember they’ll get up again. You are never gonna keep them down.”
Jim Cramer Discussed These 12 Stocks Recently
Our Methodology
For this article, we compiled a list of 12 stocks that were discussed by Jim Cramer during the episode of Mad Money on February 5. 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).
Jim Cramer Discussed These 12 Stocks Recently
12. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 91
Cramer said that Vertiv Holdings Co (NYSE:VRT) does “fit the bill” but has been down in the trenches for some time now.
“Vertiv fit the bill because of its data center affiliation but that’s become a battleground too. We don’t need no stinking battlegrounds.”
Vertiv (NYSE:VRT) focuses on creating and maintaining essential digital infrastructure solutions and lifecycle services for data centers, communication networks, and a variety of commercial and industrial sectors. When Cramer was recently asked about the company, he said:
“Okay, look, Vertiv… You need to know that the chairman of Vertiv is Dave Cote. He was my former next-door neighbor. He’s a brilliant industrialist. The stock is down very big. It’s involved with data centers, indeed. It’s actually a data center play and I think the stock has come down enough that I think you should buy some. But… not all, and not all at once. This is a wild trader and if it’s a wild trader, you don’t need to stick your neck out.”
11. Ferrari N.V. (NYSE:RACE)
Number of Hedge Fund Holders: 36
Ferrari N.V. (NYSE:RACE) is a well-known Italian company that designs and sells luxury performance sports cars, including special editions and custom creations, while also offering racing cars and a range of after-sales services such as repair and maintenance. During the episode, Cramer commented, “I thought Ferrari might work, but that thing’s gotten way too high. In the end, it is a car company.”
During a November episode of Mad Money, Cramer mentioned Ferrari (NYSE:RACE) and said:
“I’m actually talking about Ferrari, which is a monster of a stock. Everything luxury, and I mean everything, has been doing poorly because of China. See, it doesn’t matter for Ferrari because Ferrari’s more of an American stock. It would be shocking if it didn’t have more upside surprise. People keep betting against it, that’s been a sucker’s bet.”
Ferrari (NYSE:RACE) stock has gone up more than 25% over the past year.
