We recently published a list of Jim Cramer’s Top 10 Must-Watch Stocks for Savvy Investors. In this article, we are going to take a look at where Signet Jewelers Limited (NYSE:SIG) stands against Jim Cramer’s must-watch stocks for savvy investors.
Friday Madness
In a recent episode of Mad Money, Jim Cramer described September 6, Friday, as a dismal trading day following a critical non-farm payrolls report. Bulls hoped for weaker-than-expected hiring and steady wages to prompt the Federal Reserve to consider cutting rates. They got what they wished for, but this led to a surprising turn of events: instead of rallying, the market saw a sharp decline, with the Dow falling 410 points, the S&P dropping 1.73%, and the NASDAQ plummeting 2.55%.
“What an ugly day. Just hideous. We came into today knowing we’d have a critical non-farm payrolls report. If you were a bull, you wanted to see weaker-than-expected hiring with wages pretty much in line, because that’s what the Fed needs to see before it can start cutting rates. Voila, we got exactly what we wished for. Maybe we should have been careful, though, because as soon as we got what we wanted, the bulls vanished and the sellers came out of the woodwork, crushing practically everything. The Dow fell 410 points, the S&P plunged 1.73%, and the NASDAQ plummeted 2.55%.”
Cramer noted that September often brings significant profit-taking, making it historically the weakest month for the market. While this might seem like circular reasoning, it’s more plausible than suggesting that fear of a severe economic slowdown drives the sell-off. In fact, big tech companies, which are central to ongoing powerful trends like data centers and accelerated computing, should be seen as buying opportunities during market dips.
“This market has a September problem. Come September, we’re always hit with a tremendous amount of profit-taking, which is why it’s the weakest month of the year. I know that’s somewhat circular reasoning—we sell because we’ve always sold—but it makes more sense than saying people sold tech because they fear a hard landing. Tech, especially big tech, is something you buy, not sell, into weakness if you’re worried about a more severe slowdown.
Why? Well, because big tech is all about powerful secular themes that can keep going even during a recession—and we’re not getting one. I’m talking about the data center, accelerated computing—they’re not going anywhere. Nevertheless, when anything jars the big tech themes of the moment, the market’s reaction is swift, harsh, and horrible.”
Jim Cramer discussed the aftermath of NVIDIA’s recent report, noting that despite his belief that AI is not a bubble, the stocks related to AI have seen substantial gains, particularly in August. He pointed out that September often triggers increased selling, even when companies report results that meet expectations.
“Look at what happened after the company reported last night. I don’t believe AI is a bubble, but these stocks are still up a great deal, especially in August. And September tends to bring out sellers when you get just in-line numbers.”
The Upcoming Debate Between Harris and Trump
Jim Cramer also commented on the upcoming debate between Vice President Harris and former President Trump, scheduled for Tuesday night. He questioned how much the economy will be a focus, speculating that Trump might try to link Harris to recent inflation trends, while Harris may present herself as a more moderate alternative to President Biden.
“Tuesday night’s the great debate between Vice President Harris and former President Trump. I don’t know how much of a role the economy will play in the debate. If Trump’s on his game, he’ll try to tie Harris to the inflation we’ve experienced since COVID. I suspect that Harris will try to portray herself as more moderate than President Biden.
Either way, I doubt there’ll be anything specifically market-moving, even if the candidates say something newsworthy about their tax plans. Keep in mind that the winner in November likely won’t have the Senate votes to totally rework the tax code, whether we’re talking about Harris’s capital gains tax or Trump’s 19th-century-style tariffs.”
Jim Cramer Urges Investors: “Please Do Not Give Up the Ship Here”
Then he discussed the upcoming release of the Consumer Price Index (CPI) on Wednesday, which will provide another update on inflation. He emphasized that if inflation remains steady or decreases, the Federal Reserve will have more flexibility to lower interest rates and potentially avoid a recession, addressing concerns from many sellers. Cramer urged investors to stay confident and not to abandon their positions based on these uncertainties.
“Wednesday, we get another read on inflation—this time from the Consumer Price Index. What can I say? As long as inflation stays the same or goes lower, the Fed has plenty of leeway to cut interest rates and prevent a recession—the thing so many sellers are worried about. That’s why I keep telling you, please do not give up the ship here.”
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An elegant and modern jewelry store showcasing refined diamond jewelry.
Signet Jewelers Limited (NYSE:SIG)
Number of Hedge Fund Investors: 33
Cramer points out that Signet Jewelers Limited (NYSE:SIG) has had a strong performance in previous quarters, though the last report was poorly received. He commends CEO Gina Drosos for her efforts to turn Signet Jewelers Limited (NYSE:SIG) around, noting that she has been a guest on his show multiple times. Despite some ongoing challenges, Cramer believes Signet Jewelers Limited (NYSE:SIG)’s stock is currently undervalued. However, he also warns that the stock’s high volatility means it might be too risky for more cautious investors.
“Now, it’s a very quiet time for corporate earnings, but not on Thursday. At the open, we hear from Signet Jewelers. Signet is a total hot-button story because we’ve seen a terrific string of quarters—until the last one, which was definitely poorly received. I think CEO Gina Drosos has really turned the company around. She’s been on the show many times, and while there are some hiccups, I believe the stock is relatively inexpensive. That said, Signet is such a wild trader that I’d put it in the category of “not for the squeamish.”
In its Q2 2024 earnings report, Signet Jewelers Limited (NYSE:SIG) exceeded analyst expectations with adjusted earnings per share (EPS) of $1.55, though this was down from $2.68 a year ago. Signet Jewelers Limited (NYSE:SIG)’s sales were $1.61 billion, which was lower than the previous year’s $1.75 billion but still better than expected. Same-store sales fell by 12%, reflecting broader challenges in the retail sector. Despite this, Signet Jewelers Limited (NYSE:SIG) has raised its full-year EPS forecast to between $9.55 and $10.14, showing optimism about its future performance.
Signet Jewelers Limited (NYSE:SIG) has been effectively managing economic challenges through cost-saving measures, investments in digital capabilities, and a focus on engagement jewelry. Its strong cash flow supports ongoing dividend payments and business investments. For Q3 2024, Signet Jewelers Limited (NYSE:SIG) expects sales to be between $1.36 billion and $1.41 billion. While consumer spending is currently weak, Signet Jewelers Limited (NYSE:SIG)’s ability to surpass earnings expectations and improve its annual outlook highlights its potential for long-term growth, supported by its strong brand and digital retail strategies.
Overall SIG ranks 8th on our list of Jim Cramer’s must-watch stocks for savvy investors. While we acknowledge the potential of SIG as an investment, our conviction lies in the belief that under the radar 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 SIG 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.
