We recently compiled a list of the Jim Cramer Discussed These 11 Stocks Recently. In this article, we are going to take a look at where Johnson & Johnson (NYSE:JNJ) stands against the other stocks.
Jim Cramer, the host of Mad Money, cautioned viewers on Wednesday about the risks of blindly following the crowd in the stock market. He emphasized that it is essential to avoid expecting the same outcome as everyone else, as there is a significant chance things will not play out as expected. This, he explained, is because many expectations are often already “priced in” to the market.
“… And that’s why you need to be extra wary of the IPO cycle. Let’s go over this. We’ve seen the pattern over and over again. We get this deluge of new deals, at first, many of them explode higher, but at the same time they’re flooding the market with new stock supply and that supply ultimately drags us down. I’ve said it a million times, the stock market is like any other market. It’s all about supply and demand.”
READ ALSO Jim Cramer Shed Light on These 10 Stocks and 10 Stocks on Jim Cramer’s Radar
When supply increases too rapidly, prices are likely to fall. He stressed that the enthusiasm surrounding IPOs, particularly when they make early investors substantial profits, creates an environment of palpable excitement. Cramer noted that when interest in these IPOs wanes, that initial exuberance quickly turns to frustration, which can cause broader market declines, not just in IPOs but across the board.
Such a cycle, Cramer noted, is nothing new. He pointed to 2020 and 2021 as prime examples of how a flood of IPOs and SPAC mergers, fueled by stimulus checks, led many people to invest in trendy stocks. He added:
“2020, we also had a ton of electric vehicle and charging station-related IPOs and SPAC mergers. At first, these stocks were unstoppable, although most of that was because this was a period of high-risk speculation where people were willing to give anything with the right buzzwords.”
Our Methodology
For this article, we compiled a list of 11 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on February 12. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, 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 smiling baby with an array of baby care products in the foreground.
Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 81
Cramer mentioned Johnson & Johnson (NYSE:JNJ) and emphasized analyzing why packaged goods stocks are gaining or declining.
“If you buy these stocks because you believe in the business but then they go higher as part of a sector rotation that has nothing to do with the business, you still gotta win. The bank isn’t gonna tell you that they can’t take that money because they don’t accept profits from rotations. But you don’t wanna get caught with your pants down because the market suckered you into believing that Procter and Gamble was going up based on the fundamentals, when really it was benefiting from rotation into the whole consumer packaged good stock sector, you know the Colgate, JNJ.
This is what I meant earlier about filtering out the signal from the noise and it is hard to do. Why? Because there’s something called confirmation bias. When you have a thesis and new evidence seems to prove your thesis correct, the natural thing is to believe you are right all along. You should approach that feeling with skepticism.”
Johnson & Johnson (NYSE:JNJ) is a healthcare company involved in the research, development, production, and promotion of a wide variety of healthcare products. At the beginning of the year, whilst discussing the company, Cramer said:
“The market has turned against these kinds of stocks viciously. Too slow growing. I think you can put either way though and make good money just by reinvesting their juicy dividends.
Doesn’t help that all pharma’s are under the microscope as President Biden rushed out a series of drugs that Medicare will try to get better prices for. This is the one part of the Inflation Reduction Act that actually reduces inflation at the expense of the drug companies.”
Overall JNJ ranks 6th on our list of the stocks Jim Cramer discussed recently. While we acknowledge the potential of JNJ 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 JNJ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article was originally published at Insider Monkey.
