We recently compiled a list of the Jim Cramer’s Game Plan: 13 Stocks in Focus. In this article, we are going to take a look at where Bath & Body Works, Inc. (NYSE:BBWI) stands against the other stocks in Jim Cramer’s game plan.
Jim Cramer, the host of Mad Money, recently discussed the crucial events on Wall Street this week and emphasized the importance of watching upcoming earnings reports. He pointed out that the Thanksgiving period often brings a surge of optimism to the market. However, Cramer expressed concern that this enthusiasm is getting out of hand.
“Thanksgiving tends to unleash the animal spirits of the market in a very positive way. I’m no killjoy… but there’s getting to be a little too much speculation for me and if we don’t deal with it, if I don’t talk about it, it’s gonna become a problem.”
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Cramer also turned his attention to Bitcoin, commenting on the growing buzz around the cryptocurrency. He expressed his hope that Bitcoin would finally reach the $100,000 mark so the conversation could move on. According to Cramer, the surge in Bitcoin’s price is largely tied to speculation fueled by the President-elect’s idea of creating a strategic Bitcoin reserve. He noted that many people who had missed out on Bitcoin when it was trading lower are now justifying their purchases at these higher levels.
“As long as it’s legal, I’m all in but understand, I have nothing to offer on Bitcoin’s $100,000 price tag, nor does anybody else, by the way, except to say this: This is what happens when there are more buyers than sellers.”
Turning to broader market trends, Cramer acknowledged that stock trading tends to slow down during the rest of the holiday week. However, he highlighted that Wednesday would bring the latest personal consumption expenditures (PCE) report from the government. This report, a key inflation measure for the Federal Reserve, could give a clue as to whether the Fed will consider another rate cut before the year ends.
Cramer noted that the economy has been running hotter than the Fed would prefer, which has led to speculation that a rate cut in December might not be necessary. The situation is particularly challenging, he explained, because long-term interest rates, including mortgage rates, have been rising since the Fed began its rate cuts. Normally, these rates would decrease in such an environment, so if the PCE report shows a cooler inflation reading, it could fuel another rally. On the other hand, if the report is hot, Cramer suggested it could trigger a downturn in some of the more speculative stocks.
“If you have huge profits in the month of November, could you do me a favor? I would show a little thanks next week and take something off the table in your most risky positions.”
Our Methodology
For this article, we compiled a list of 13 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on November 22. 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 female customer browsing a variety of body care products in a retail store.
Bath & Body Works, Inc. (NYSE:BBWI)
Number of Hedge Fund Holders: 36
Cramer pointed out Bath & Body Works, Inc.’s (NYSE:BBWI) last two forward outlooks that led to a decline in the stock. Here’s what Mad Money’s host had to say:
“Retail earning season continues on Monday with Bath & Body Works. These guys held e-commerce competitors much longer, they had them at bay much longer than other mall-based retailers, but the stock’s been out of favor for a couple of years now. Believe it or not, the company’s last two quarters have been okay, but both times, Bath & Body Works gave discouraging forward outlooks that crushed the stock. It’s fallen from the low $50s at the end of May to around $30 now. Have expectations finally come down enough? If they can give us some positive commentary on the holidays, then it would go a long way in this market.”
Bath & Body Works (NYSE:BBWI) is a prominent retailer specializing in home fragrances, body care, soaps, and sanitizers. Operating under several brand names, the company is recognized for offering a wide range of personal care and home fragrance products. For the third quarter, it reported net sales of $1.61 billion, marking a 3.0% increase from the same period in 2023. Despite the increase in sales, the company’s earnings per diluted share for the third quarter were $0.49, slightly down from $0.52 in the prior year.
The third-quarter operating income stood at $218 million, a decrease from $221 million in 2023. Similarly, net income also dropped to $106 million from $119 million last year. Amidst a challenging retail environment and softer demand in the market, the company introduced a new winter fragrance collection that includes products like Winter Candy Apple and Frosted Coconut Snowball.
These new offerings are part of Bath & Body Works’ (NYSE:BBWI) strategy to remain competitive and appeal to customers during the holiday season. CEO Gina Boswell explained that the company is leveraging its flexible business model and primarily U.S.-based supply chain, and the company feels confident in its ability to navigate a turbulent retail landscape and a shorter holiday season. Boswell expressed satisfaction with the company’s strong performance and the momentum it is gaining as it enters the crucial holiday season.
Overall BBWI ranks 10th on our list of the stocks featured in Jim Cramer’s game plan. While we acknowledge the potential of BBWI 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 BBWI 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.