We recently compiled a list of the Jim Cramer’s Game Plan: 12 Stocks in Focus This Week. In this article, we are going to take a look at where Morgan Stanley (NYSE:MS) stands against the other stocks featured in Jim Cramer’s game plan.
Jim Cramer, the host of Mad Money, recently discussed some of the week’s important market events, focusing on earnings reports from different companies, including major banks and new data from the Labor Department.
Cramer expressed hope that the wildfire situation would bring some positive news. He acknowledged the challenges natural disasters bring, but pointed out that government and insurance companies are working to stabilize the situation. While Cramer made it clear that he doesn’t support exploiting tragedy for profit, he also noted that some retailers tend to benefit during such times as people begin rebuilding.
He mentioned that while some of these stocks have already seen gains, there may still be room for growth, especially as insurance payouts and government funds flow toward reconstruction efforts.
“How about the other side of the trade? Here I’m talking about earnings. Can great earnings triumph over a sour bond market? We’re going to find out for certain because this is a week we associate with bank earnings and there’s a lot of misconceptions about the banks. We know that when they make the wrong bets on the bond market, like two years ago, their stocks can take some real nasty hits. But when their bond portfolios are good, like they are today, they can withstand or even profit from higher rates so let’s not write these stocks off.”
READ ALSO 7 Consumer Goods and Retail Stocks on Jim Cramer’s Radar and Jim Cramer Talked About These 9 Nuclear Power and Quantum Computing Stocks
Regarding the JPMorgan Healthcare Conference, Cramer noted that this is a major event where nearly every drug and healthcare company presents updates. He expects some exciting developments, despite current economic conditions. However, he cautioned that drug stocks are still highly sensitive to interest rates, which, in many cases, are more influential than even a company’s pipeline or earnings. Cramer discussed the Producer Price Index (PPI) and the Consumer Price Index (CPI), which are scheduled for release on Tuesday.
“It needs to come in cooler if there’s any hope that interest rates could reverse and the Fed can regain some of its lost credibility, stemming from cutting in a hurry when we now know there was no need to do so. I think it’s possible that these numbers are gonna be cooler than the labor report, but not enough to justify our appeal of today’s losses.”
Wednesday’s market action would bring more attention to bank earnings, Cramer explained, noting that banks would likely receive an initial boost from higher interest rates, particularly through products like certificates of deposit, which offer lower rates than what banks can earn by investing in the bond market. While this provides a short-term benefit, it could make these stocks worth holding in the interim.
“Bottom line: If you’re a bull or at least trying to make sense of this market, well, you know a market that goes down on seemingly good news, all I can say is that the stock market that gets surprised may seem like it’s reacting inappropriately until you see its master, the bond market, explain everything by the direction of interest rates. For now, that’s the key determinant of the entire stock market, even as there are pockets of positivity that can escape the bond market’s tyranny.”
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 January 10. 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).
A panoramic view of a financial institution, representing the number of corporations who trust the company’s services.
Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 55
Cramer expects Morgan Stanley (NYSE:MS) to report solid earnings on Thursday.
“Thursday we have more of the same. This time, Bank of America, U.S. Bancorp, Morgan Stanley, and PNC Financial. I actually expect all these to be good too.”
Morgan Stanley (NYSE:MS) is a financial services firm offering a variety of financial products, including capital raising, financial advisory, brokerage, and investment management services. Through the first nine months of the year, the company achieved $200 billion in organic growth. In the third quarter of 2024, the company saw a rise in advisory revenues, which totaled $546 million. This increase was driven by a modest uptick in completed M&A transactions, with particular strength in the Europe, Middle East, and Africa (EMEA) region.
CEO Ted Pick discussed several key trends in the financial markets, particularly in the IPO and private equity sectors. He highlighted that sponsors in the IPO market currently have approximately $1.3 trillion in available capital, referred to as “dry powder.” He also pointed out that portfolio companies in the market amount to between $3 trillion to $4 trillion, spanning around 10,000 firms.
Morgan Stanley’s (NYSE:MS) Pick noted a significant shift in market behavior, emphasizing that, for the first time in nearly 15 years, capital deployment in private equity is outpacing fundraising. Despite the challenges faced by these markets, he expressed optimism about the eventual return of IPOs, particularly from larger companies, as the IPO market gradually gains momentum.
Overall MS ranks 8th on our list of the stocks featured in Jim Cramer’s game plan. While we acknowledge the potential of MS as an investment, 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 MS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.