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 Liberty Energy Inc. (NYSE:LBRT) 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.”
READ ALSO Jim Cramer’s Lightning Round: 8 Stocks to Watch and Jim Cramer Is Focused on These 15 Stocks This Week
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 worker in protective gear near a large natural gas exploration machinery.
Liberty Energy Inc. (NYSE:LBRT)
Number of Hedge Fund Holders: 23
Cramer dived into Liberty Energy Inc.’s (NYSE:LBRT) CEO’s views and discussed the stock’s recent performance.
“Let me say from the outset that I think the world of Liberty Energy, the oil service company run by Chris Wright, who’s Trump’s pick for Energy Secretary. It’s the fourth largest oil service company in North America, covering all the major basins. I like fracking. I like oil service companies that help extract fossil fuels from land.
Their August slide deck titled ‘Liberty Energy and Energy Realities’ is a terrific document… The energy and geopolitics section will make you feel proud of what Liberty does and more important, the way fracking has changed the balance of power worldwide. You will feel safer. You are safer. Oh, but then there’s that last page in the deck, the conclusion page. And here, Wright, and I, we part company. The conclusions reached, I find are downright antediluvian and would be condemned by every single contemporary oil executive I’ve ever met… First conclusion Wright reaches: there is no climate crisis. Now every other oil person I’ve met is worried about a climate crisis…
No climate crisis? Gimme a break. Second: there is no energy transition. Not only do most oil CEOs accept that there’s an energy transition, they’re all preparing for it… How about this third conclusion? Net Zero 2050 is the sinister goal. I mean, really? I mean, sure the document adds Zero Energy Poverty 2050 is a superior goal. Oh, sinister? I’m calling that an ill-advised description…
What matters to you is that in my nearly 20 years doing Mad Money, Wright’s ethos is different from every CEO’s, both on camera and off. And you’re watching someone who’s… [a] champion of what the oil and gas industry has done for our security and our power as a nation… I’m not seeing this Liberty Energy at [the] top of the 52-week high list. In fact, it’s less than one point above a 52-week low. Down more than seven bucks from its 52-week high of $24.75. It’s selling at less than 10 times earnings. It has far underperformed the XLE, that’s the largest energy ETF.”
Liberty Energy (NYSE:LBRT) offers hydraulic fracturing and related services, including wireline, proppant delivery, data analytics, and well site logistics, to onshore oil and gas companies in North America. As per Bloomberg, CEO Chris Wright is known for his outspoken support of the oil and gas industry. Wright does not have experience in Washington, but he has been a vocal advocate for the crucial role that fossil fuels play in driving economic growth and reducing poverty.
President-elect Donald Trump has made a note of his career, which includes pioneering efforts that contributed to the American Shale Revolution, a movement that was instrumental in propelling the United States toward energy independence. According to Trump, Wright’s work in the energy industry has made him a key figure in shaping the modern landscape of energy production and policy.
Overall LBRT ranks 7th on our list of the stocks Jim Cramer recently discussed. While we acknowledge the potential of LBRT 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 LBRT 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.