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 HP Inc. (NYSE:HPQ) 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 laptop, showing off the companys sleek notebook computers and workstations.
HP Inc. (NYSE:HPQ)
Number of Hedge Fund Holders: 42
Cramer said that he wants the truth from HP Inc. (NYSE:HPQ) about AI PCs as he remarked:
“Now here’s a really important one: After the close, HP reports, and I wanna know the truth here if the AI PC is really doing as well as expected, then eh, I don’t think it is and I think it might not be and we need to know why.”
HP (NYSE:HPQ) offers a wide range of personal computing devices, imaging and printing products, and related services, along with solutions in digital access, graphics, and 3D printing. The company’s CEO Enrique Lores previously voiced optimism about AI PCs, noting their potential to boost both average selling prices and sales volume for the company into the coming year.
It is worth noting that in August, during CNBC’s Mad Dash, Cramer talked about a “quizzical” piece by Morgan Stanley. Erik Woodring, an analyst at Morgan Stanley, lowered the rating on HP (NYSE:HPQ) stock to Equal-Weight from Overweight, while keeping the price target at $37. In a research note, Woodring explained that the previous Overweight thesis was grounded in the expectation that the market was undervaluing a rebound in PC revenue growth, stable print margins, and increased capital returns.
Cramer called it quizzical because he emphasized the increased momentum in technology. He highlighted a key line from the analysis that said, “Additionally, with second-hand PC demand trending a bit weaker than we previously thought” and expressed disbelief. Cramer said that the analysis took everyone by surprise. Cramer went on to say:
“Morgan Stanley has excellent research, obviously, in tech and they are saying that the price target [remains] unchanged at $37, but I didn’t like this piece. I didn’t like it because as far as I was concerned, I had thought that there was some momentum in AI PC. Now, we don’t really know. They say there’s some factory limit outperformance. I think it’s [a] slower rollout but I also think that maybe people are taking their time trying to figure out AI. I don’t know. This is, again, not something I expected [from] this piece.”
Overall HPQ ranks 6th on our list of the stocks featured in Jim Cramer’s game plan. While we acknowledge the potential of HPQ 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 HPQ 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.