We recently published a list of Jim Cramer Thinks These 10 Stocks Deserve Your Attention. In this article, we are going to take a look at where Dell Technologies Inc. (NYSE:DELL) stands against other stocks that Jim Cramer thinks deserve attention.
In a recent episode of Mad Money, Jim Cramer advised investors to hold off on selling stocks, anticipating a rebound once the market’s downturn ended. This strategy proved effective as the average investor saw gains, with the Dow rising by 484 points or 1.16%, and the NASDAQ also climbing by 1.16%. This performance suggests that selling during Friday’s decline was not the best move.
“Last week, I advised you to hold off on selling everything and just wait, as I believed that once the pain ended, we would see a rebound. The average investor saw gains, with the Dow up 484 points, or 1.16%, and the NASDAQ also climbing 1.16%. While it might not be a full recovery, it shows that selling into Friday’s downturn wasn’t the best strategy.”
The previous week was challenging for economically sensitive stocks and tech stocks, despite the August employment report showing modest growth and a downward revision for July. The recent report seemed favorable for those hoping for Federal Reserve rate cuts, as it presented a balanced scenario of neither too strong nor too weak. Nonetheless, Wall Street reacted negatively, with investors moving away from cyclical stocks in favor of recession-proof sectors like consumer goods and pharmaceuticals. Industrials and semiconductors were particularly affected.
Jim Cramer observed that on Monday, recession-proof stocks such as pharmaceuticals, drug wholesalers, and medical devices continued to perform strongly. However, this trend is concerning as these stocks have surged significantly and might be due for a correction.
“Recession-proof stocks like pharmaceuticals, drug wholesalers, and medical devices continued to perform well, which is dangerous as these stocks have seen parabolic gains and could be due for a correction.”
According to Cramer, historically, when the Federal Reserve is about to cut rates, it’s a signal to shift investment strategies. With the Fed moving towards easing and a rate cut expected next week, Cramer suggests it’s time to reconsider holding recession-proof stocks. Instead, investors should look at more cyclical companies that could benefit from economic stimulation. While investing in cyclical stocks during a downturn can be challenging, anticipating a positive impact from the Fed’s rate cuts could make these stocks attractive.
“Historically, when the Fed is about to start cutting rates, we know that it’s time to shift focus. With the Fed leaning towards easing and an expected rate cut next week, it’s time to consider moving away from recession-proof stocks and investing in more cyclical companies. While it’s challenging to buy cyclical stocks during a slowdown, anticipating that the Fed will boost the economy can make them strong investment opportunities. It’s important to maintain diversification but be ready to adjust as needed.”
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Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Investors: 88
Jim Cramer highlighted that Dell Technologies Inc. (NYSE:DELL) is seeing an increase in its stock price because it will be added to the S&P 500 later this month. Cramer suggested that investors should not sell their shares in Dell Technologies Inc. (NYSE:DELL) just because of this recent strength. Citi analysts also pointed out that Dell Technologies Inc. (NYSE:DELL) has several upcoming catalysts, including a PC refresh cycle expected to continue into next year.
“Shares of Dell Technologies is getting a lift Monday on news that the it will be added to the S&P 500 later this month. I don’t think you need to sell Dell into strength here. Citi analysts said Monday they see multiple catalysts ahead for Dell including the PC refresh cycle into next year.”
Dell Technologies Inc. (NYSE:DELL) is positioned for long-term growth, with strong performance in AI-related sectors driving its bullish outlook. In Q2 2024, Dell Technologies Inc. (NYSE:DELL) reported $22.9 billion in revenue, thanks largely to a 10% growth in its Infrastructure Solutions Group (ISG), which benefited from increasing demand for AI-optimized servers. This suggests Dell Technologies Inc. (NYSE:DELL) is well-placed to capitalize on the broader adoption of AI across industries. Looking forward, Dell Technologies Inc. (NYSE:DELL) forecasts revenue between $91 billion and $95 billion for FY 2025, with earnings per share expected to range from $7.25 to $7.75, signaling confidence in its future performance.
Dell Technologies Inc. (NYSE:DELL) ‘s partnerships, particularly with NVIDIA Corporation (NASDAQ:NVDA) on AI-optimized servers, are seen as key drivers for boosting margins. While its Client Solutions Group saw a 12% decline in year-over-year revenue, Dell Technologies Inc. (NYSE:DELL) expects AI-driven investments to fuel improvements moving forward. Analysts remain optimistic, maintaining strong “buy” ratings and raising price targets, underscoring Dell Technologies Inc. (NYSE:DELL) ‘s potential as a solid long-term investment opportunity in the tech sector.
Overall, DELL ranks 5th on our list of Jim Cramer Thinks These 10 Stocks Deserve Your Attention. While we acknowledge the potential of DELL, 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 the ones on our list 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.