We recently published a list of Jim Cramer’s Top 10 Must-Watch Stocks for Savvy Investors. In this article, we are going to take a look at where Blackstone Inc. (NYSE:BX) stands against Jim Cramer’s must-watch stocks for savvy investors.
Friday Madness
In a recent episode of Mad Money, Jim Cramer described September 6, Friday, as a dismal trading day following a critical non-farm payrolls report. Bulls hoped for weaker-than-expected hiring and steady wages to prompt the Federal Reserve to consider cutting rates. They got what they wished for, but this led to a surprising turn of events: instead of rallying, the market saw a sharp decline, with the Dow falling 410 points, the S&P dropping 1.73%, and the NASDAQ plummeting 2.55%.
“What an ugly day. Just hideous. We came into today knowing we’d have a critical non-farm payrolls report. If you were a bull, you wanted to see weaker-than-expected hiring with wages pretty much in line, because that’s what the Fed needs to see before it can start cutting rates. Voila, we got exactly what we wished for. Maybe we should have been careful, though, because as soon as we got what we wanted, the bulls vanished and the sellers came out of the woodwork, crushing practically everything. The Dow fell 410 points, the S&P plunged 1.73%, and the NASDAQ plummeted 2.55%.”
Cramer noted that September often brings significant profit-taking, making it historically the weakest month for the market. While this might seem like circular reasoning, it’s more plausible than suggesting that fear of a severe economic slowdown drives the sell-off. In fact, big tech companies, which are central to ongoing powerful trends like data centers and accelerated computing, should be seen as buying opportunities during market dips.
“This market has a September problem. Come September, we’re always hit with a tremendous amount of profit-taking, which is why it’s the weakest month of the year. I know that’s somewhat circular reasoning—we sell because we’ve always sold—but it makes more sense than saying people sold tech because they fear a hard landing. Tech, especially big tech, is something you buy, not sell, into weakness if you’re worried about a more severe slowdown.
Why? Well, because big tech is all about powerful secular themes that can keep going even during a recession—and we’re not getting one. I’m talking about the data center, accelerated computing—they’re not going anywhere. Nevertheless, when anything jars the big tech themes of the moment, the market’s reaction is swift, harsh, and horrible.”
Jim Cramer discussed the aftermath of NVIDIA’s recent report, noting that despite his belief that AI is not a bubble, the stocks related to AI have seen substantial gains, particularly in August. He pointed out that September often triggers increased selling, even when companies report results that meet expectations.
“Look at what happened after the company reported last night. I don’t believe AI is a bubble, but these stocks are still up a great deal, especially in August. And September tends to bring out sellers when you get just in-line numbers.”
The Upcoming Debate Between Harris and Trump
Jim Cramer also commented on the upcoming debate between Vice President Harris and former President Trump, scheduled for Tuesday night. He questioned how much the economy will be a focus, speculating that Trump might try to link Harris to recent inflation trends, while Harris may present herself as a more moderate alternative to President Biden.
“Tuesday night’s the great debate between Vice President Harris and former President Trump. I don’t know how much of a role the economy will play in the debate. If Trump’s on his game, he’ll try to tie Harris to the inflation we’ve experienced since COVID. I suspect that Harris will try to portray herself as more moderate than President Biden.
Either way, I doubt there’ll be anything specifically market-moving, even if the candidates say something newsworthy about their tax plans. Keep in mind that the winner in November likely won’t have the Senate votes to totally rework the tax code, whether we’re talking about Harris’s capital gains tax or Trump’s 19th-century-style tariffs.”
Jim Cramer Urges Investors: “Please Do Not Give Up the Ship Here”
Then he discussed the upcoming release of the Consumer Price Index (CPI) on Wednesday, which will provide another update on inflation. He emphasized that if inflation remains steady or decreases, the Federal Reserve will have more flexibility to lower interest rates and potentially avoid a recession, addressing concerns from many sellers. Cramer urged investors to stay confident and not to abandon their positions based on these uncertainties.
“Wednesday, we get another read on inflation—this time from the Consumer Price Index. What can I say? As long as inflation stays the same or goes lower, the Fed has plenty of leeway to cut interest rates and prevent a recession—the thing so many sellers are worried about. That’s why I keep telling you, please do not give up the ship here.”
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The Blackstone Group Inc. (NYSE:BX)
Number of Hedge Fund Investors: 58
Jim Cramer acknowledges that he lacks strong conviction about The Blackstone Group Inc. (NYSE:BX)’s short-term prospects, noting that the stock has recently risen from the $120s to the $130s. However, he is very impressed with The Blackstone Group Inc. (NYSE:BX)’s long-term potential, particularly praising Jonathan Gray and his team for their strategic moves in the data center sector this week.
“Near term, I don’t have a lot of conviction. Blackstone has had a very big run, from the 120s to the 130s. Longer term, I think Jonathan Gray and his team are simply brilliant, and their actions this week in the data center are very strong. I like it.”
In Q2 2024, The Blackstone Group Inc. (NYSE:BX) reported substantial revenue growth of 166.9% compared to the previous year. While its earnings per share (EPS) of $0.96 slightly missed estimates by $0.03, the company’s overall performance remains strong. This strength comes from its diverse investments in real estate, private equity, and credit markets, which help it handle market fluctuations well. The Blackstone Group Inc. (NYSE:BX) also offers a steady dividend yield of 2.34%. The Blackstone Group Inc. (NYSE:BX)’s stock has performed well, up about 4.7% year-to-date and trading around $137, close to its 52-week high of $145.16.
Analysts are positive, with a target price of $128.94, and they expect continued growth due to The Blackstone Group Inc. (NYSE:BX)’s expansion into new areas like infrastructure and life sciences. Although The Blackstone Group Inc. (NYSE:BX)’s high price-to-earnings ratio of 46.27 suggests it is priced at a premium, Blackstone’s strong leadership in alternative investments and its diversified revenue sources support a favorable outlook.
Baron Real Estate Fund stated the following regarding Blackstone Inc. (NYSE:BX) in its fourth quarter 2023 investor letter:
“We remain optimistic about the long-term prospects for Blackstone Inc. (NYSE:BX) and Brookfield because we believe both companies are likely to increase market share in a secular growth opportunity for alternative assets.
Institutional allocations to alternative investment assets such as real estate, infrastructure, and private equity are likely to continue to grow significantly in the years ahead because alternatives have a long track record of generating attractive relative and absolute returns with less volatility than several other investment options.
We are bullish on the long-term prospects for Blackstone and Brookfield. Both companies are led by exceptional management teams that attract and retain exceptional talent. They are two of the largest real estate managers in the world with impressive investment track records. Both Blackstone and Brookfield have global franchises, strong brands, and loyal customers. We believe the shares of both companies are attractively valued and are optimistic about the long-term potential for the Fund’s investments in both companies.”
Overall BX ranks 5th on our list of Jim Cramer’s must-watch stocks for savvy investors. While we acknowledge the potential of BX as an investment, our conviction lies in the belief that under the radar 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 BX 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.
