We recently compiled a list of the Jim Cramer’s Game Plan This Week: 10 Stocks to Watch. In this article, we are going to take a look at where AutoZone, Inc. (NYSE:AZO) stands against the other stocks featured in Jim Cramer’s game plan for this week.
Jim Cramer, the host of Mad Money, recently discussed the current state of the market, touching on various factors including upcoming earnings reports and new inflation data. Reflecting on the November jobs report, which came in largely as expected, Cramer noted:
“After basically in line November jobs report, better than October, but with the unemployment rate still ticking up to 4.2%, I don’t think that does much to change the Federal Reserve’s rate cut calculus.”
On Friday, Cramer remarked that the market had a relatively calm session, with the Dow dipping by 123 points, the S&P gaining 0.25%, and the NASDAQ climbing 0.81%. He emphasized that nothing about Friday’s action surprised him, and he maintained his expectation for a 25-basis point rate cut later this month. Cramer added that he still anticipates the Fed will go ahead with this move despite the recent data.
READ ALSO Jim Cramer Discussed 10 Stocks That Can Do Well in December and Jim Cramer’s Lightning Round: 7 Stocks to Watch
Looking ahead, Cramer highlighted Wednesday’s upcoming release of the Consumer Price Index (CPI), which he noted could play a crucial role in the Fed’s decision-making. With the Federal Reserve meeting in just two weeks, he cautioned that there will be chatter about the Fed’s decision to cut rates.
“All of us still see high prices when we go to the supermarket, right? So we shouldn’t be surprised if the CPI comes in hot. At that point, why should the Fed really bother to cut? Be ready for that kind of chatter. Don’t worry, they’ll still cut.”
The following day, Thursday, will bring the release of the Producer Price Index (PPI), which Cramer pointed out is another important inflation measure. He again expressed concern that inflation needs to cool down in order to avoid complications. There has been ongoing speculation about whether the Fed could hesitate on rate cuts, which could derail the market’s expectations. Cramer remarked that if inflation remains elevated, the Fed might have no choice but to delay or even shelve rate cuts for next year.
“Bottom line: Look, I’m trying to get my arms around a market that takes up all sorts of crypto, lots of unprofitable companies, never too great a sign for those who want the Fed to cut repeatedly,” he said. “I want you to keep that in mind so you won’t be surprised if we get some overheated inflation numbers next week and the market gives up some of these extraordinary gains.”
Our Methodology
For this article, we compiled a list of 10 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 6. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, 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 technician in a mechanic’s uniform replacing an A/C compressor, signifying the company’s automotive replacement parts business.
AutoZone, Inc. (NYSE:AZO)
Number of Hedge Fund Holders: 47
Cramer mentioned that there are concerns about high tariffs that could affect AutoZone, Inc. (NYSE:AZO), as the company imports products from China.
“Tuesday morning, we get results from AutoZone, AZO. Here we have a company that imports aftermarket auto parts, including some from China, and any company that imports anything from China is viewed with tremendous skepticism right now, right here. AutoZone, though, has a gigantic buyback that kicks in on any weakness, so can it sidestep tariff worries? I can tell you from the disappointing portion of my Charitable Trust that you simply can’t own stocks with China exposure here. That’s been the case ever since the election. I don’t think anything has changed, so I don’t know. I used to love it, I can’t load the boat up here.”
AutoZone (NYSE:AZO) sells and distributes automotive replacement parts and accessories, offering a wide range of products for vehicles, including hard parts, maintenance items, and non-automotive products. It used part of its capital to repurchase $711 million of its stock during the fourth quarter of fiscal 2024.
At the end of the period, the company had nearly $2.2 billion remaining on its share buyback authorization. Management noted that since the initiation of the stock buyback program in 1998, the company has repurchased more than 100% of the shares that were outstanding at the time, all while continuing to invest in its existing assets and expand its operations. Since the beginning of the fiscal year, the company repurchased 6% of its outstanding shares.
On the matter of potential tariffs, Philip Daniele, AutoZone (NYSE:AZO) CEO, addressed concerns on the earnings call, stating that consumers would ultimately bear the cost if tariffs were imposed. He mentioned that, in anticipation of the impact these policies could have on the company’s margins, the company expects to raise prices even before the tariffs come into effect.
Overall AZO ranks 6th on our list of the stocks featured in Jim Cramer’s game plan this week. While we acknowledge the potential of AZO 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 AZO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
