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.
10. PVH Corp. (NYSE:PVH)
Number of Hedge Fund Holders: 27
Cramer mentioned that even companies like PVH Corp. (NYSE:PVH) are not foolproof these days.
“Let’s expand it. Does it sell in department stores? Capri, PVH, Tapestry, sold… Nothing’s foolproof.”
PVH (NYSE:PVH) is an apparel company that designs and markets a wide range of branded products, including clothing, footwear, accessories, and home goods for men, women, and children under its own and licensed brands. During Cramer’s Stop Trading, two days ago, Cramer discussed the company briefly as he said:
“… It could be actual, but PVH, for many years, was the master licensee for all of Trump’s men’s apparel, exclusive relation with Macy’s, great relationship, and very nice business. So perhaps, I know that the relationship ended in 2015 when Trump ran for president the first time. PVH has no other business relationship with the president since then, but that would be kind of a nice way to say, hey, listen, we’re wise, you know, even we’re gonna slap you on the tie. But so just keep that in mind.”
9. Tapestry, Inc. (NYSE:TPR)
Number of Hedge Fund Holders: 38
Tapestry, Inc. (NYSE:TPR) was discussed during the episode and this is what Cramer said about the company:
“Let’s expand it. Does it sell in department stores? Capri, PVH, Tapestry, sold… Nothing’s foolproof.”
Tapestry, Inc. (NYSE:TPR) is a luxury brand company that provides a diverse selection of lifestyle products, such as handbags, accessories, footwear, fragrances, jewelry, home items, and clothing. In December 2024, Cramer noted the positive effect of FTC’s decision to shut down the company’s acquisition of Capri Holdings.
“Tapestry’s a rebounding apparel company and its stock is on fire thanks to Lina Khan, FTC. Yes, something you almost never hear, something positive. See, she blocked or the FTC blocked Tapestry from acquiring Capri Holdings, which owns Michael Kors. Jimmy Choo, Versace. The market hated that deal. So when Wall Street cheered, when Lina Khan shot it down, and that’s allowed, well, it’s allowed Tapestry to prosper. It’s become an up stock.”
8. Capri Holdings Limited (NYSE:CPRI)
Number of Hedge Fund Holders: 57
Cramer noted that even companies like Capri Holdings Limited (NYSE:CPRI) are suffering due to department stores.
“Let’s expand it. Does it sell in department stores? Capri, PVH, Tapestry, sold… Nothing’s foolproof.”
Capri (NYSE:CPRI) designs, markets, and sells branded apparel, footwear, and accessories for both men and women, offering a wide range of products, including clothing, eyewear, jewelry, fragrances, and footwear under its major brands.
Riverwater Partners stated the following regarding Capri Holdings Limited (NYSE:CPRI) in its Q4 2024 investor letter:
“The worst performer in Q4 was Capri Holdings Limited (NYSE:CPRI), which owns the brands Versace, Jimmy Choo, and Michael Kors. Capri’s stock sold off drastically after a judge sided with the Department of Justice claim that a proposed merger with Tapestry Inc. (TPR) would create a monopoly in the “affordable handbag space.” The sell off cost the portfolio 123 bps in contribution to return. The holding was sized on the low end of our range so the only positive takeaway is that it never became a full position.”
7. Macy’s, Inc. (NYSE:M)
Number of Hedge Fund Holders: 38
Cramer commented on Macy’s, Inc. (NYSE:M) and said:
“Department stores, of any kind, doesn’t matter… Macy’s? No, thank you. Although I sure wish it wouldn’t sell.”
Macy’s (NYSE:M) is a well-known omnichannel retailer that provides a diverse range of products, such as apparel, accessories, cosmetics, and home furnishings, through its brands like Macy’s, Bloomingdale’s, and bluemercury. Cramer mentioned the company before its earnings report release in December 2024 and said:
“We also have some corporate news that could help explain something that’s been a real mystery, maybe to me, maybe to you. I’m talking about what happened, what went wrong at Macy’s where an employee apparently had millions in delivery expenses hidden. Now shareholders are entitled to know what really happened here. I don’t think the company’s fully explained them at all, and we wanna know exactly before we pay any attention to the forecast. We got to understand what went wrong. We need answers about how someone got away with this and more important, does the company now have the systems to try to catch anything like this malfeasance? I don’t know.”
Since its earnings release, Macy’s (NYSE:M) stock has gone down around 5%.
6. Kohl’s Corporation (NYSE:KSS)
Number of Hedge Fund Holders: 30
Kohl’s Corporation (NYSE:KSS) is a retailer that provides a variety of branded apparel, footwear, accessories, beauty, and home products through both physical stores and online platforms, featuring various brands. Discussing the company, Cramer mentioned that department stores are facing hard times these days and said, “Department stores, of any kind, doesn’t matter. Kohl’s? Oh boy, try saving that one.”
On February 4, Jefferies reduced its price target for Kohl’s (NYSE:KSS) from $15 to $12 and maintained a Hold rating on the stock. The firm warned that a “storm is brewing” in the U.S. consumer discretionary sector, as inventory levels are rising for the first time in two years, soon surpassing sales growth. Based on historical trends over the past 22 years, the firm noted that when inventories exceed sales growth, gross margins tend to shrink, and stock returns underperform. As a result, Jefferies lowered its estimates for Kohl’s (NYSE:KSS).
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Cramer said that Apple Inc. (NASDAQ:AAPL) is under similar kind of pressure from the Chinese Communist Party as it did from the US Justice Department.
“We’re worried about Apple now, which has to be one of the largest employers in the entire People’s Republic. The Chinese Communist Party is now going after Apple for the service dream almost as hard as the US Justice Department did under Biden.”
Apple (NASDAQ:AAPL) designs and sells a wide range of consumer electronics, including smartphones, computers, tablets, and wearables, along with various accessories and services. It also offers subscription-based services like Apple Music, Apple TV+, and Apple Arcade, and operates platforms such as the App Store and Apple Pay. Earlier in January, Cramer said:
“I’m about to be facetious. I want you to hear this. It’s facetious but here’s what we’re gonna hear. Let’s see. We have horrendous Chinese cell phone orders, no lift from new AI, a surprising slowdown in service revenues, lackluster Vision Pro sales, and of course, a radical chop to the forecast for the rest of the year, all way below the consensus. There, that’s everything I’ve heard about Apple for the last two weeks.
Since the year began, I just keep hearing that over and over again but if everyone knows it’s gonna be worse than expected, can it still be worse than expected? How could it be a surprise if everyone expects the worst and we get the worst? Will the stock still get clocked? Kind of, yeah because Apple’s priced for slightly better-than-expected set of numbers and we won’t get one but so why not dump it?”
Cramer recommended holding Apple (NASDAQ:AAPL) stock, highlighting the company’s strong management and the long-term benefits of keeping it rather than trading.
4. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 86
Cramer highlighted that Merck & Co., Inc. (NYSE:MRK) has been suffering because of China as he remarked:
“Oh, let’s not forget how well Merck could be doing if the Chinese government didn’t slow play the rollout of the Gardasil vaccine for no particular reason other than forget it… it’s China… I mean honestly, what the heck happened there?”
Merck (NYSE:MRK) provides pharmaceutical products across various health areas, including oncology and vaccines, and develops veterinary medicines. The company also collaborates with other firms on cancer therapies and novel treatments. In January, Cramer said:
“They (the company) also have a shot, Gardasil, that protects against HPV. It’s [a] very common STD, that can cause cervical cancer. It’s a true lifesaver. Women have been using it for years. [The] Chinese government recently approved it for men too. But for some reason, Merck’s having a problem with its Chinese distribution and women. Weird situation going on over there. Right now, the stock’s well-ensconced a few points around 52-week low.”
3. Danaher Corporation (NYSE:DHR)
Number of Hedge Fund Holders: 98
Discussing Danaher Corporation (NYSE:DHR) during the episode, Cramer said:
“The one… sharp as a tack people, actually Danaher, who’ve lost their way and don’t even know it, have been bashed by China.”
Danaher (NYSE:DHR) creates and produces a wide variety of products and services across multiple sectors, providing solutions for therapeutic development, clinical diagnostics, and laboratory research. In December 2024, Cramer commented on the company and said:
“Full disclosure, this is a name that we have been battling for a few years now. The position was established in early 2022, which was bad timing because I didn’t appreciate the scale of the inventory glut issue. But we stuck with Danaher because we have tremendous respect for the company. I always believed that once the temporary headwinds cleared, this one would bounce right back. It still has a high price-to-earnings multiple though so it got annihilated today, down five bucks or 2% on the poorly received Fed meeting.”
Cramer then expressed confidence in Danaher (NYSE:DHR), highlighting that despite the lack of government stimulus in the healthcare sector, he expects a recovery next year, particularly driven by China’s rebound.
2. The Estée Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Holders: 49
The Estée Lauder Companies Inc. (NYSE:EL) was mentioned during the episode. Here’s what Mad Money’s host had to say:
“First, you have to ask, is it dependent upon China in any way, shape, or form? That’s been the kiss of death for a really good casino company, Wynn Resorts, and for Estee Lauder, the mess of a cosmetics company.”
Estée Lauder (NYSE:EL) produces and distributes a diverse array of skincare, makeup, fragrance, and hair care products worldwide, featuring well-known brands like Estée Lauder and Clinique. The company stock was down over 50% in 2024.
Aristotle Atlantic Partners, LLC stated the following regarding The Estée Lauder Companies Inc. (NYSE:EL) in its Q3 2024 investor letter:
“We sold The Estée Lauder Companies Inc. (NYSE:EL), as Chinese consumer headwinds continue to present an unpredictable pace of recovery. And while Estée has taken action to reduce costs and drive a profit recovery plan, it is apparent that a certain level of volume will be necessary to make that plan successful, and that is difficult to predict with a high degree of certainty. China-driven travel retail business continues to be slower than anticipated, pushing out the expected timing of a recovery. Despite the weakness in share price, Estée continues to trade at a premium multiple, and consensus estimates may prove aggressive should Chinese consumer weakness linger. Lastly, with a pending transition in both the CFO and CEO roles, we see the potential for another reset as the new management team takes over.”
1. Wynn Resorts, Limited (NASDAQ:WYNN)
Number of Hedge Fund Holders: 52
Cramer bluntly put that China turned out to be damaging to Wynn Resorts, Limited (NASDAQ:WYNN) as he said:
“First, you have to ask, is it dependent upon China in any way, shape, or form? That’s been the kiss of death for a really good casino company, Wynn Resorts, and for Estee Lauder, the mess of a cosmetics company.”
Wynn Resorts (NASDAQ:WYNN) designs, develops and operates integrated resorts, offering luxury accommodations, gaming spaces, spas, retail, dining, and entertainment venues across multiple properties, including high-end hotels, private gaming salons, and convention facilities. According to TheStreet, in August 2021, Cramer explained the downtrend in the stock as he said:
“Wynn, it hasn’t performed as I’d like, hasn’t panned out at all, frankly. But I think that’s about the change because the facts have changed, and you have to change with those… The stock got socked, one-two punch by Delta and by the People’s Republic of China putting restrictions on Macau… I think people will be looking for stocks that are not Chinese-based that can still capture the Chinese rally as well as for travel and leisure stocks that haven’t moved that much yet versus when they traded pre-Delta. And of course, here I’m thinking about Vegas. And that’s Wynn.”
Since then, Wynn Resorts (NASDAQ:WYNN) stock has seen a decline of over 15%.
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READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article was originally published at Insider Monkey.
