We recently compiled a list of the Jim Cramer Recently Discussed These 7 Stocks. In this article, we are going to take a look at where Freeport-McMoRan Inc. (NYSE:FCX) stands against the other stocks Jim Cramer recently discussed.
Jim Cramer, host of Mad Money, recently shared his thoughts on how geopolitical concerns, particularly the recent nuclear threat, can significantly impact investor behavior. He pointed out that when such threats arise, investors typically become more cautious and often seek safer investments, such as U.S. Treasury bonds.
Cramer referred to this phenomenon as a “flight-to-quality,” a pattern that has become particularly noticeable in the context of rising bond yields. He commented:
“We’ve had a bad bond market of late with rates going up and this Russian new concern changed the direction of bonds as these flight-to-quality buyers drove bonds up and interest rates lower.”
Cramer explained that fast traders are well aware of how to react to rising long-term interest rates. Their instinct is to invest in tech stocks, regardless of whether bond rates are actually decreasing. According to Cramer, it’s a predictable move that, when bond prices rise and yields fall, investors inevitably turn to tech stocks.
This holds true even in cases where investors are seeking out treasuries because of a flight to quality or because inflation is easing. He emphasized that, whenever there is a rally in bonds and a dip in bond yields, it’s almost automatic that tech stocks will see increased investment. He added:
“Next time nukes are threatened and you see a flight-to-quality, remember this, the highest quality is the Magnificent Seven.”
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Cramer also discussed how the market might react to potential trade policy changes, particularly the threat of tariffs under President-elect Donald Trump. He referred to an analysis by Jessica Inskip, the director of investor research at StockBrokers.com, which suggested that the market was largely unaffected by Trump’s pre-election threats of tariffs.
“The charts interpreted by Jessica Inskip suggest that tariffs had little impact on the market until they actually materialized during Trump’s first term, all the saber-rattling beforehand didn’t do much damage. Even when the tariffs actually hit and the market sold off, we eventually erased those losses the moment that the Fed stopped raising interest rates. So until the tariffs actually hit, Inskip says, you can take a page from Taylor Swift and Shake It Off… I think she’s got a real good point.”
Our Methodology
For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during the recent episodes of Mad Money. 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 large open-pit copper mine with heavy machinery extracting minerals from the earth.
Freeport-McMoRan Inc. (NYSE:FCX)
Number of Hedge Fund Holders: 74
Discussing copper stocks like Freeport-McMoRan Inc. (NYSE:FCX), Cramer said:
“I don’t like the copper stocks and copper doesn’t yield a lot here, 1.36. I don’t like Freeport-McMoRan. I just don’t wanna own, I don’t wanna own them. I mean, you know, their time has come and gone.”
Freeport-McMoRan (NYSE:FCX) is involved in the extraction of mineral resources across North America, South America, and Indonesia. The company primarily focuses on exploring copper, gold, molybdenum, silver, and various other metals. According to S&P Global on November 6, Donald Trump’s victory in the U.S. presidential election caused a drop in copper prices, primarily due to the prospect of high tariffs, potential rollbacks of energy transition policies, and a strengthening U.S. dollar.
Ole Hansen, head of commodity strategy at Saxo Bank, mentioned on November 6 that “the risk of China tariffs and attempts to kill the [Inflation Reduction Act] are likely to weigh on prices, especially copper.” Analysts predict that tariffs could dampen global growth and reduce demand for metals, which would put downward pressure on industrial metal prices.
Colin Hamilton, a commodities analyst at BMO Capital Markets, stated that the tariffs could hinder growth and delay progress on metals-intensive net-zero goals, particularly due to the absence of viable alternatives to China’s technological dominance in energy transition technologies.
However, in the short term, Hansen believes copper prices could rebound following the sharp decline on November 6, as any new tariffs are likely to take several months to be implemented. He added, “But, overall, the global economy will hold its breath.”
Overall FCX ranks 2nd on our list of the stocks Jim Cramer recently discussed. While we acknowledge the potential of FCX 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 FCX 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.