We recently compiled a list of the Jim Cramer’s Latest Lightning Round: 10 Stocks to Watch. In this article, we are going to take a look at where Humana Inc. (NYSE:HUM) stands against the other stocks to watch according to Jim Cramer.
The host of Mad Money, Jim Cramer, shared his insights on the persistent issue of inflation. He emphasized that companies need to lower their prices to entice consumers in today’s economic climate. Cramer pointed out the hesitation many companies exhibit in reducing prices.
Cramer said:
“Companies are so reluctant to take prices down because they don’t want to hurt their treasured gross margins but I think it may be time for a giant reset.”
While prices may have stabilized and no longer surged as they once did, Cramer warned that this does not imply they are decreasing. He believes many companies are failing to recognize the necessity for price rollbacks.
He gave a few examples from the liquor industry, where some producers have said that declining sales shifts are because of consumer preferences toward healthier lifestyles rather than acknowledging high prices.
Cramer went on to say:
“Funny enough, if you keep prices low, you can indeed make it up in volume because the consumer is a lot smarter than some of these companies are ever willing to admit.”
Cramer mentioned that both consumers and Wall Street are responding positively to companies that have opted for discounts or price reductions. He talked about the decision by McDonald’s to extend its $5 value meal, which has successfully attracted lower-income customers, and it led to an increase in its stock value.
Cramer mentioned that giants like Amazon, Costco, and Walmart have seen substantial stock gains this year. Cramer believes that businesses willing to reduce prices can compensate for their margins through increased sales volume.
Cramer speculated:
“I think we’ll look back on 2024 as the year when consumers took matters in their own hands and actually said no to inflated prices.”
He warned that companies that fail to adapt may face dire consequences, including leadership changes and plummeting stock prices. Talking about the consequences, he said:
“The result? Fired CEOs and crushed stock prices for all those who refused to heed the thunder, the thunder of those angry consumers who finally just said no to the scourge of inflation.”
Our Methodology
For this article, we compiled a list of 10 stocks that Jim Cramer talked about during the lightning rounds of his Mad Money episodes on October 1 and 2. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 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 closeup of an elderly patient happily receiving a specialty healthcare product.
Humana Inc. (NYSE:HUM)
Number of Hedge Fund Holders: 71
Humana Inc. (NYSE:HUM) offers medical and specialty insurance products in the U.S. It provides a range of medical and supplemental benefit plans tailored for individual clients. Among its responsibilities is the administration of the Limited Income Newly Eligible Transition prescription drug program, in partnership with the Centers for Medicare and Medicaid Services (CMS).
Additionally, the company holds contracts to deliver Medicaid, dual-eligible, and long-term support services across various states. Talking about Humana (NYSE:HUM), Cramer said “You know what, if you can’t price the product, get out of the business. Sorry, that’s the way I feel”.
Recently, the company reported a significant decrease in the number of members enrolled in its Medicare Advantage plans that received four stars and above in the CMS Star Ratings system. Within the Star Ratings system, the Centers for Medicare and Medicaid Services (CMS) grants annual bonus payments to plans rated four stars or higher. Plans that achieve better ratings can qualify for larger bonuses.
Citing preliminary 2025 MA Star Ratings data, the company mentioned that there are approximately 1.6 million members, or around 25% of the total enrollment in plans rated four stars or higher, a stark decline from nearly 94% in 2024.
On October 2, BofA analyst Kevin Fischbeck downgraded the company stock to Underperform from Neutral with a price target of $247, down from $376.
Diamond Hill Capital stated the following regarding Humana Inc. (NYSE:HUM) in its Q2 2024 investor letter:
“Other top Q2 contributors included Humana Inc. (NYSE:HUM) and Boston Scientific Corporation. Shares of health insurance company Humana rebounded from their recent downturn, which was tied to investors’ concerns about weaker-than-expected Medicare Advantage rates for 2025 and was the byproduct of an overall difficult operating environment.”
Overall HUM ranks 1st on our list of the stocks to watch according to Jim Cramer. While we acknowledge the potential of HUM 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 HUM 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.