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.
6. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 49
Cramer mentioned how Target Corporation’s (NYSE:TGT) stock was recently slaughtered and plunged $33 or over 21% on Wednesday.
“I love Target. I think it’s so much fun to shop there. But in this new sell, sit at home and order worldwide, why do I really care how much fun Target is?… Target’s off 14% (for the year), most likely still falling.”
Target (NYSE:TGT) faced a challenging third-quarter performance. The company’s earnings fell short of both revenue and earnings expectations, marking its most significant earnings miss in two years. The results, which were announced on November 20, caused a drop in the company’s stock price. Sales during the quarter grew by only 1.1% year-over-year, and EPS of $1.85 did not meet analysts’ forecasts.
As per the company, this underperformance was attributed to various ongoing challenges, particularly pressures on profitability. The company cited higher costs associated with digital fulfillment and price reductions on thousands of items as key factors contributing to the earnings miss. Furthermore, net earnings in Q3 dropped by 12.1%, falling from $971 million in the same period last year to $854 million.
Target’s (NYSE:TGT) gross margin rate for the quarter was 27.2%, a slight decline from 27.4% in 2023. This decrease was linked to the rising costs of managing higher inventory levels, an increase in digital sales volume, and the ongoing development of new supply chain facilities. Management also noted that the company’s two discretionary categories, Home and Hardlines, experienced continued softness during the quarter. Consumer spending in these categories remained cautious, further contributing to the company’s struggles.
5. The TJX Companies, Inc. (NYSE:TJX)
Number of Hedge Fund Holders: 63
Cramer noted that The TJX Companies, Inc. (NYSE:TJX) reported an impressive earnings report for Q3 on November 20. Here’s what he said:
“… Right now, people only have loyalty to value and that’s the kind of country we’ve become. The value of a belt, thank you, or a shirt or underwear or jeans from TJX, shot the lights out this very morning. They buy excess inventory from struggling retailers for next to nothing, then mark up the goods ever so slightly, giving you amazing bargains. TJX keeps building a lot of stores because they can’t keep up with demand… Anyway, TJ Maxx, I love it.”
TJX (NYSE:TJX) is an off-price retailer, recognized for its wide range of offerings that include family apparel, home goods, jewelry, and more. Recently, the company reported its third-quarter results for fiscal year 2025, revealing strong performance that surpassed analysts’ expectations. It posted diluted EPS of $1.14, exceeding the consensus estimate. Net sales for the quarter also experienced growth, rising to $14.1 billion, reflecting a 6% increase compared to the same period in the previous year.
TJX’s (NYSE:TJX) expansion efforts remained a key focus during this period. The company opened a net total of 56 new stores, bringing its global store count to 5,057 locations. In addition to the increase in store count, the company is also making progress through new joint ventures and store launches in strategic international markets. It is working on expanding its presence in Spain and has plans to venture into Mexico.
4. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 75
Cramer highlighted how Costco Wholesale Corporation (NASDAQ:COST) has maintained an impressive deal over the years, saying:
“… There’s a reason why Costco has tens of millions of members… We’re loyal to the cause of low prices and Costco has instilled that loyalty in a very visible way… They can offer great deals because they carry a smaller selection of products. Enormous bulk gives them a lot of leverage.”
Costco (NASDAQ:COST) is a well-established membership-based warehouse retailer that offers a wide array of products, both branded and private-label. The company is known for its bulk sales model, which provides shoppers with significant value. For the fourth quarter of fiscal 2024, it reported an impressive 90.5% global renewal rate for memberships. Paid memberships rose by 7.3% year-over-year, reaching a total of 76.2 million.
A notable shift in the membership demographic has occurred since the pandemic, with a growing number of younger members. Management highlighted that half of the new signups in fiscal 2024 were individuals under 40, which presents a promising long-term growth opportunity as this demographic continues to shop at Costco.
In the fourth quarter of fiscal 2024, Costco (NASDAQ:COST) saw an increase in shopping frequency, with traffic rising by 6.4% worldwide and 5.6% in the U.S. Management also highlighted that the company’s mobile app was downloaded 3.5 million times during the quarter, which pushed the total number of downloads to around 39 million.
3. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 88
Comparing Walmart Inc. (NYSE:WMT) and Target, Cramer remarked:
“Our loyalty to value means that if you wanna buy Dixie paper bowls, Kellogg’s Fruit Loops, Dawn dish soap, and Tide Pods and then have them delivered, we’d much rather pay $48 and 13 cents from Walmart than $62 and 96 cents at Target. Yes, those are actual prices. Actual goods that were bought today and that’s too big a differential. Walmart’s scale and smarts are simply besting Target in the price arena… I am loyal to value and Walmart is offering me value and that’s why Walmart stock could be up 66% for the year and still climbing.”
Walmart (NYSE:WMT) is a global leader in retail and eCommerce, offering a wide range of products from groceries and health items to home goods, electronics, apparel, and private label merchandise. In its third-quarter earnings report, it revealed strong performance in its U.S. e-commerce segment, which saw a 22% growth in sales. This growth was fueled by higher customer engagement and expanded delivery and pickup options.
The company’s global e-commerce operations also experienced a 27% increase, further reflecting the success of its online strategy. The company’s commitment to price leadership contributed to a 21-basis-point increase in its gross margins, with its “Everyday Low Prices” approach continuing to resonate with customers. John David Rainey, Executive Vice President and Chief Financial Officer, emphasized the importance of maintaining low prices for customers, noting that the company continues to lower prices across its assortment of both national and private brands in the U.S.
During the quarter, Walmart (NYSE:WMT) implemented price rollbacks on approximately 6,000 items, including around 3,000 grocery items. Additionally, nearly 2,000 price rollbacks from the past year have now been converted into long-term price reductions, reinforcing the company’s commitment to value for its customers.
2. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 106
Here’s what Cramer had to say about Eli Lilly and Company (NYSE:LLY):
“You see the kind of bargain hunting I’m talking about everywhere these days, even in pharma… How could the price of one class of drugs be so important? I think it’s because there’s a scarcity of GLP-1s, even with Eli Lilly… going all out. It’s only going to get better though because Lilly’s spending billions to build more plants in order to meet the demand for the wonder drug. No one else can do that. They aren’t rich enough. The GLP-1s, they represent value because it’s not just about diabetes and weight loss, they’re lifesavers… GLP-1’s not some simple hack drug, it’s a revolution in healthcare. No wonder Eli Lilly can charge such a huge premium. It’s valuable.”
Eli Lilly (NYSE:LLY), a prominent global pharmaceutical company, is known for its broad portfolio of treatments, including insulin products for diabetes and therapies for obesity and type 2 diabetes. The company’s diabetes drug Mounjaro and its sibling medication for chronic weight management, Zepbound, have quickly become major contributors to its success.
In its most recent third-quarter earnings report, Eli Lilly saw a 20% year-over-year increase in revenue, reaching $11.4 billion. Mounjaro alone generated $3.11 billion in sales, marking a striking 121% growth compared to the same period last year. Zepbound earned nearly $1.26 billion in sales during this quarter.
In September, Eli Lilly (NYSE:LLY) committed nearly $2 billion to expand its manufacturing operations in Ireland. This brings the total investments in building, upgrading, and acquiring manufacturing facilities since 2020 to over $20 billion. In addition to this $20 billion commitment, the company also unveiled a separate $4.5 billion investment in October to create the Lilly Medicine Foundry.
This unique facility will focus on research and development for manufacturing process design and the production of high-quality investigational medicines for its clinical trials. The Lilly Medicine Foundry is set to open in late 2027 in Lebanon, Indiana.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
Cramer mentioned that he never really considered value when it came to tech. Instead, he focused on whether it offered a better solution. He explained that the price of products was primarily determined by one factor: how much the customer was willing to pay. According to him, customers appeared largely indifferent to cost when it came to technology. Talking about NVIDIA Corporation (NASDAQ:NVDA), he said:
“But now with NVIDIA, the largest company in the world, by the way, we’re seeing something wholly different. We’re seeing a company with a product that’s incredibly expensive on the one hand, but incredibly cheap on the other. If you’re a cloud service provider and you give NVIDIA forty Gs for a version of its latest and greatest chip of Blackwell, you can make five times that. Insanely expensive as a product, dirt cheap as an investment. We keep hearing that NVIDIA’s charging too much or the demand is topping out or the stock’s overvalued, but the proof is in the pudding.
And CEO Jensen Huang has repeatedly told me about this five-to-one ratio, profit to cost ratio. That’s not just talk, this quarter backed it up. NVIDIA reported a sizable top and bottom line beat, healthy guidance for the current quarter. Blackwell, that latest invention, full production, which was a huge worry going into earnings. Maybe that worry was contrived, ginned up, perhaps. Jensen says the demand for the current chips and anticipation for the new one, is ‘incredible.’
Of course, there’s sellers, grumpy, clueless people who keep hoping for another one-day gain of 20% like we had last year on earnings and they’re disappointed. I say let them sell…
The cloud service providers, Amazon, Google, Oracle, Microsoft, simply can’t resist buying these high-end chips. Not because they feel compelled to keep up with the competition, that was another bear canard, but because forty Gs for one of these is a bargain. I’m sick of the bears telling me there aren’t enough uses or that things are maxed out at NVIDIA. I say, do some darn homework. The so-called expensive Blackwell is about making money with your money. NVIDIA’s about value.”
NVIDIA (NASDAQ:NVDA) reported exceptional financial results for the third quarter, far exceeding expectations with $35.1 billion in sales, reflecting a significant 94% increase from the same period last year. The company’s data center segment played a central role in this impressive growth, contributing $30.8 billion, which marks a remarkable 112% year-over-year increase. A large portion of the revenue from this segment came from GPU sales, a key area of strength for the company.
In particular, the company’s Blackwell GPU line has seen robust demand. According to NVIDIA (NASDAQ:NVDA) CEO Jensen Huang, demand for Blackwell GPUs has been “staggering”. The company shipped 13,000 GPU samples to customers during the third quarter alone.
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA) 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 NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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