We recently compiled a list of the Jim Cramer’s Latest Lightning Round: 10 Stocks to Watch. In this article, we are going to take a look at where AMN Healthcare Services, Inc. (NYSE:AMN) stands against the other stocks to watch according to Jim Cramer.
The host of Mad Money, Jim Cramer, shared his insights on the persistent issue of inflation. He emphasized that companies need to lower their prices to entice consumers in today’s economic climate. Cramer pointed out the hesitation many companies exhibit in reducing prices.
Cramer said:
“Companies are so reluctant to take prices down because they don’t want to hurt their treasured gross margins but I think it may be time for a giant reset.”
While prices may have stabilized and no longer surged as they once did, Cramer warned that this does not imply they are decreasing. He believes many companies are failing to recognize the necessity for price rollbacks.
He gave a few examples from the liquor industry, where some producers have said that declining sales shifts are because of consumer preferences toward healthier lifestyles rather than acknowledging high prices.
Cramer went on to say:
“Funny enough, if you keep prices low, you can indeed make it up in volume because the consumer is a lot smarter than some of these companies are ever willing to admit.”
Cramer mentioned that both consumers and Wall Street are responding positively to companies that have opted for discounts or price reductions. He talked about the decision by McDonald’s to extend its $5 value meal, which has successfully attracted lower-income customers, and it led to an increase in its stock value.
Cramer mentioned that giants like Amazon, Costco, and Walmart have seen substantial stock gains this year. Cramer believes that businesses willing to reduce prices can compensate for their margins through increased sales volume.
Cramer speculated:
“I think we’ll look back on 2024 as the year when consumers took matters in their own hands and actually said no to inflated prices.”
He warned that companies that fail to adapt may face dire consequences, including leadership changes and plummeting stock prices. Talking about the consequences, he said:
“The result? Fired CEOs and crushed stock prices for all those who refused to heed the thunder, the thunder of those angry consumers who finally just said no to the scourge of inflation.”
Our Methodology
For this article, we compiled a list of 10 stocks that Jim Cramer talked about during the lightning rounds of his Mad Money episodes on October 1 and 2. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 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 healthcare professional in scrubs, busy at work at a hospital.
AMN Healthcare Services, Inc. (NYSE:AMN)
Number of Hedge Fund Holders: 21
AMN Healthcare Services, Inc. (NYSE:AMN) is engaged in delivering workforce solutions and staffing services tailored to healthcare facilities throughout the United States. The company operates through three segments, Nurse and Allied Solutions, Physician and Leadership Solutions, and Technology and Workforce Solutions.
Through the Nurse and Allied Solutions segment, it offers services, including travel nurse staffing, local and international placements, as well as allied staffing solutions.
The Physician and Leadership Solutions segment provides a range of services, including locum tenens staffing, interim leadership staffing, executive searches, and permanent physician placements.
Through the Technology and Workforce Solutions segment, the company addresses needs for language services, vendor management systems, and workforce optimization solutions. It offers its services through brands such as Nursefinders, HealthSource Global Staffing, and B.E. Smith.
During his Mad Money episode, Cramer mentioned the previous CEO of the company, Susan R. Salka, and said:
“…since she left, the party’s over. Now, of course, labor costs are not good but she had control over these things, and I don’t think the company’s doing that well.”
Under Salka’s leadership, AMN Healthcare (NYSE:AMN) expanded to become the largest total talent solutions provider in the healthcare workforce sector. This period saw the successful integration of over 20 acquisitions.
AMN Healthcare (NYSE:AMN) management’s recent financial projections point to challenges ahead, with forecasted revenue for the third quarter of 2024 expected to be 20-23% lower compared to the previous year, and 8-10% lower sequentially.
Specifically, the Nurse and Allied Solutions segment is projected to see a decline of 32-34% year-over-year. Furthermore, revenue from the Technology and Workforce Solutions segment is forecasted to decrease by 10-12% year-over-year.
During the second quarter’s earnings call, management commented that current market dynamics reveal that many large clients are reducing their reliance on contingent labor due to strong permanent hiring trends and decreased employee attrition.
Overall AMN ranks 7th on our list of the stocks to watch according to Jim Cramer. While we acknowledge the potential of AMN 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 AMN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
