We recently published an article titled Jim Cramer’s Thoughts On These 8 Stocks and the Packaged Goods Playbook. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against the other stocks.
Jim Cramer, the host of Mad Money, recently took a deep dive into the challenges facing the consumer packaged goods sector, offering his perspective on the factors driving the decline of these stocks.
“The recent decline in the consumer packaged goods stocks, I find it breathtaking… Why is this happening? The truth is, there are a host of reasons, and every time you think that things have gotten better, they seem to have gotten worse, much worse than you’ve imagined.”
READ ALSO Jim Cramer’s Thoughts on These 9 Stocks and Jim Cramer Discussed 10 Stocks Leading the Dow Higher in 2025
Cramer noted that many companies within the sector seem to believe that younger consumers will settle for smaller portions of food and that this might mitigate some of the challenges. While Cramer acknowledged that this shift in consumer behavior is part of the equation, he argued that many companies are overlooking the significant impact of GLP-1 weight loss drugs. These medications, which curb cravings for junk food, pose a serious threat, as Cramer sees them as something that could be widely adopted in the United States. He then added:
“Oh, and let’s not forget about the problem of tariffs. You’re getting some sudden price increases for many goods. Someone has to pay for the tariffs. These companies hope it will be you because if it’s not you, it’s them.”
Another significant challenge for companies in the packaged goods space is the difficulty of raising prices. Cramer explained that while many companies try to increase prices, they often face fierce competition from major retailers and online marketplaces, which offer private-label products that consumers increasingly recognize as being just as good as the branded alternatives.
While private labels are not seeing explosive growth at the moment, Cramer pointed out that they are exerting pressure on all prices, including those of established brands. Furthermore, Cramer observed that the price hikes implemented during the COVID-19 pandemic have led to consumer fatigue, with many shoppers now seeking better value.
“I don’t know what turns around the consumer packaged goods stocks, mergers would make sense. This new antitrust department probably blessed the concentration. Maybe the companies that slash prices the deepest ultimately win. No matter, this moment is untenable. The stocks can’t find their footing, just too many forces against them. These used to be safety stocks for heaven’s sake, but they’re safe no more.”
Our Methodology
For this article, we compiled a list of 8 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).
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com, Inc. (NASDAQ:AMZN) was mentioned during the episode, and here’s what Cramer had to say:
“If you’re in the consumer packaged goods business, you have a hard time raising prices because when it goes up too much, you’re gonna get bushwhacked by an Amazon or a Costco, both of which offer really terrific private label products that many shoppers know, that are as good as the originals.… We’re comfortable with Amazon trash bags.”
Amazon (NASDAQ:AMZN) offers a diverse range of services, including e-commerce, advertising, and subscription-based offerings. Fred Alger Management stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is a renowned online retailer and leader in cloud computing. The company’s Amazon Web Services (AWS) division offers utility-scale cloud solutions that support corporate America’s digital transition. During the quarter, Amazon’s shares contributed to performance as the company reported better-than-expected fiscal third-quarter results, with revenues and earnings beating analyst estimates. Operating margins expanded to 11%, driven by efficiency gains in logistics and robust AWS performance. Notably, AWS revenue growth accelerated during the quarter, along with recording its highest-ever operating margin of 38.1%, driven by easing cloud cost optimizations, renewed workload migrations, and an increasing contribution from AI workloads. On their earnings call, management highlighted plans to increase capital expenditures to enhance their technology infrastructure, catering to the surging demand for AI-driven computing.”
Overall AMZN ranks 5th on our list of the stocks Jim Cramer recently discussed. While we acknowledge the potential of AMZN 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 AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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.
