Jim Cramer, host of Mad Money, recently observed that consumers are no longer focused on brand names but are instead prioritizing companies that offer the best value. Cramer noted that there is a noticeable shift happening in the market, saying:
“We’ve become a nation of cheapskates. I say that as a compliment. Nobody gets away with charging too much anymore, not in this country, no matter what industry, perhaps even the drug industry.”
He pointed out that this shift is happening rapidly, and many companies are being left behind as consumer behavior changes. Cramer said that he has observed this shift firsthand in various settings, including grocery stores, online, malls, and even the stock market.
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Cramer went on to explain that Americans are increasingly fed up with high prices. He said:
“The American people are tired of paying up. They feel gouged, they feel betrayed. They feel that the only thing about brand loyalty is that it isn’t worth a dime. They want a better deal. They’ll eagerly switch lifetime habits in order to save some money because prices are up so much that you feel like an idiot if you’re paying up.”
Reflecting on the market dynamics, Cramer shared his insights from Wednesday’s trading session. Cramer noted that the Dow gained 139 points, the S&P remained flat, and the Nasdaq dipped 0.11%, while the midday trading was much more challenging. He emphasized that the trend toward value is not confined to retail alone but is expanding into other sectors, including tech.
At the end, Cramer summed up the situation by saying:
“Prices have gotten so high over the past few years that we’re losing our loyalty to brands. These days, this whole country is about one thing: The Benjamins.”
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on November 20. 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).
8. Brinker International, Inc. (NYSE:EAT)
Number of Hedge Fund Holders: 41
Talking about Brinker International, Inc. (NYSE:EAT), Cramer commented on Chili’s low prices and its deals, expressing disbelief that such an offer still exists in 2024.
“We have all sorts of data about how going out to dinner costs a lot more than it did pre-COVID, but people hate that. You know what? They really like companies that are trying to do something about it. Hence why Texas Roadhouse and Brinker, home of Chili’s, are just crushing the numbers… There’s [a] one-word reason why Brinker and Texas Roadhouse are up 189% and 58% for the year, respectively, and that’s value.”
Brinker (NYSE:EAT) owns, develops, operates, and franchises casual dining restaurants. The company operates the Chili’s Grill & Bar and Maggiano’s Little Italy restaurant brands. For the first quarter of fiscal 2025, it reported sales of $1.127 billion, marking an increase from $1.002 billion in the same period of fiscal 2024. This growth was largely driven by a 13.0% rise in comparable restaurant sales, with Chili’s seeing a 14.1% increase and Maggiano’s a 4.2% increase.
According to the company, the sales boost at Chili’s was primarily attributed to menu price adjustments and higher customer traffic. The company highlighted that certain menu items, such as the “Big Smasher” burger and Triple Dipper, are proving popular with guests. Additionally, it noted that the “3 for Me” combo meals offer value that resonates well with customers.
Following these results, Brinker (NYSE:EAT) raised its full-year fiscal 2025 guidance, projecting annual revenues to range between $4.7 billion and $4.75 billion, with adjusted diluted EPS expected to fall between $5.20 and $5.50.
7. Texas Roadhouse, Inc. (NASDAQ:TXRH)
Number of Hedge Fund Holders: 45
After recently visiting a Texas Roadhouse, Inc.’s (NASDAQ:TXRH) restaurant, Cramer was impressed by the surprisingly affordable meal offerings, which he found hard to believe in 2024.
“We have all sorts of data about how going out to dinner costs a lot more than it did pre-COVID, but people hate that. You know what? They really like companies that are trying to do something about it. Hence why Texas Roadhouse and Brinker, home of Chili’s, are just crushing the numbers… There’s [a] one-word reason why Brinker and Texas Roadhouse are up 189% and 58% for the year, respectively, and that’s value.”
Texas Roadhouse (NASDAQ:TXRH) is a prominent casual dining chain with both domestic and international locations. It also franchises restaurants under the brands Texas Roadhouse, Bubba’s 33, and Jaggers. For the 39-week period ending September 24, the company reported notable growth. Comparable restaurant sales increased by 8.8% at company-owned locations and 7.7% at domestic franchise restaurants.
During this period, average weekly sales at company restaurants were $155,807. This marked an increase from the previous year when average weekly sales were $144,583. The restaurant margin percentage also improved, rising to 17.2% from 15.4% in the prior year. It was owed to an increase in restaurant margin dollars, primarily driven by higher sales.
Texas Roadhouse’s (NASDAQ:TXRH) EPS increased by 37.0%, largely due to the higher restaurant margin dollars. The company also opened 22 company-owned restaurants and 9 franchise locations during the period. Looking ahead to 2025, the company plans to continue expanding with a target of opening approximately 30 company-owned restaurants across all its brands.
