We recently compiled a list of the Jim Cramer’s 10 Handpicked Stocks to Watch. In this article, we are going to take a look at where Signet Jewelers Limited (NYSE:SIG) stands against Jim Cramer’s other handpicked stocks.
In a recent episode of Mad Money, Jim Cramer expressed concern that there’s too much negativity in the market despite recent movements. He pointed out that while the Dow gained 38 points on Wednesday, the S&P fell 1.16%, and the NASDAQ dropped 3%, people seemed overly focused on what was going wrong. Although he’s not calling it a market bottom, he suggests it’s worth paying attention to what’s going right.
“On a day when the Dow inched up 38 points, the S&P dipped 1.16%, and the NASDAQ declined 3%, I’m willing to declare that there’s too much doom and gloom out there. Look, I’m not trying to call a bottom, let’s make that crystal clear, but I think it’s worth taking a hard look at what’s actually going right—not just what’s going wrong.”
Cramer emphasized that even though the market has been strong this year, heading into a historically tough election season and the worst month of the year means it’s not the time to declare everything is fine. He noted that according to his trusted S&P oscillator, which measures overbought or oversold conditions, the market isn’t oversold yet, so it’s risky to go all-in.
“Sure, the market’s up a lot this year as we head into a tricky election period and historically the worst month of the year. So, only a fool would ring the all-clear bell. Plus, we aren’t even oversold yet—at least not according to the S&P oscillator I swear by, which gauges whether there’s too much buying or selling compared to normal times. You don’t go all-in when the market is overbought like it is now; that rarely works.”
Cramer also countered the idea that a recession is inevitable due to the Federal Reserve’s struggle to control the economy. He agreed the economy is slowing, which is why consumer packaged goods and utility stocks are rallying while more sensitive sectors are struggling.
“At the risk of sounding too bullish, let me refute some of the biggest and baddest stories out there. First, let’s tackle the popular narrative that the economy is slowing at a faster pace than the Federal Reserve can control, leading to an inevitable recession. That’s why consumer packaged goods stocks and utilities are rallying while economically sensitive stocks have been crushed. I won’t deny that the economy is weakening.”
However, he stressed that a Fed rate cut is meant to counter economic weakness, not strength, and hoping for a rate cut while ignoring the downturn is unrealistic. He added that if the upcoming labor report is weak, recession-proof stocks may surge, but if it’s strong, hopes for a rate cut will fade.
“But let’s be realistic: You can’t hope for a Fed rate cut without acknowledging that there’s going to be some economic fallout. The Fed doesn’t cut rates when business is booming. That’s foolish thinking. Rate cuts are meant to combat economic weakness, not strength. If Friday’s labor report is weak, sure, we might see a huge rally in the so-called “recession-proof” stocks. But if the non-farm payroll number is too strong, forget about any rate cut hopes. You can’t have it both ways.”
Our Methodology
The article summarizes a recent episode of Jim Cramer’s Mad Money, where he discussed and recommended several stocks. This article focuses on ten companies that Cramer highlighted and examines how hedge funds perceive these stocks. The companies are ranked based on their level of hedge fund ownership, starting with the least owned and moving to the most owned.
At Insider Monkey we are obsessed with 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).
An elegant and modern jewelry store showcasing refined diamond jewelry.
Signet Jewelers Limited (NYSE:SIG)
Number of Hedge Fund Investors: 33
Jim Cramer is concerned not about the price of gold and silver but about the poor performance of Signet Jewelers Limited (NYSE:SIG). Despite this, he notes that Signet Jewelers Limited (NYSE:SIG) is priced at just seven times its earnings, indicating it is relatively cheap. Cramer has confidence in Gina Drosos, CEO of Signet Jewelers Limited (NYSE:SIG), who he believes is doing an excellent job. He recommends starting with a small investment in Signet Jewelers Limited (NYSE:SIG) now and potentially increasing it if the price drops further.
“What worries me isn’t the price of gold and silver but the fact that the stock has been acting terribly. But it sells at seven times earnings, and I think Gina Drosos does a terrific job. So, I’m in favor of starting a small position right here and adding more if it comes down. The last quarter was fine—it wasn’t great, it wasn’t bad—but the stock is very inexpensive.”
Signet Jewelers Limited (NYSE:SIG), the largest global retailer of diamond jewelry with brands such as Zales, Kay Jewelers, and Jared, is set for continued growth despite a minor revenue decline in Q2 2024. Signet Jewelers Limited (NYSE:SIG) reported $1.61 billion in revenue, down from $1.75 billion the previous year, but improved its gross margin to 36.7% and achieved an EPS of $1.55, surpassing expectations of $1.45.
This positive outlook is supported by an increased full-year earnings forecast and a strong focus on growing digital sales. Notably, the acquisition of Blue Nile in August 2024 has enhanced Signet Jewelers Limited (NYSE:SIG)’s online presence and broadened its appeal to a tech-savvy customer base. Furthermore, investments in a new CRM system are expected to improve customer personalization, loyalty, and repeat purchases.
Overall SIG ranks 8th on our list of Jim Cramer’s handpicked stocks to buy. 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.
