We recently compiled a list of the Jim Cramer Recommends These 10 Stocks. In this article, we are going to take a look at where The Estee Lauder Companies Inc. (NYSE:EL) stands against the other stocks recommended by Jim Cramer.
In a recent episode of Squawk on the Street, Jim Cramer discussed how global markets have become more interconnected than ever. He compared this to 1987, when Japan’s influence on U.S. stocks was clear, with Japanese investors driving up prices in sectors like waste management and railroads. This connection between markets was strong then, and it’s even stronger now.
“Obviously, we went down on Japan, and we went up on Japan. This is somewhat reminiscent of 1987, when, if Japan was up, they’d come over and flood our markets. Sometimes they didn’t care; they’d just start buying stocks, often starting with waste management and Browning-Ferris. “
Cramer explained that the weakening dollar further enhances this global link, benefiting companies that sell internationally, such as Coca-Cola. He also observed a significant shift in investor behavior—where people once looked for reasons to stay out of the market, they now seem more inclined to stay in, finding optimism even in bad news. This change in attitude mirrors today’s market environment, where good news lifts stocks, and even bad news is met with hope for a recovery.
“Back in the day, you’d wonder why Browning-Ferris was up, and the answer would be, ‘Large buyer, large buyer, large buyer.’ Eventually, you’d go out for a beer, and it turns out it’s Tokyo. They loved the rails. There was such craziness back then, but now, we’re even more linked. And with the dollar continuing to weaken, it’s good that we’re linked for companies like that.”
Jim Cramer noted the irony of discussing September as a traditionally bad month for the market. He pointed out that when people focus too much on a specific month being negative, it often doesn’t turn out that way. Cramer also mentioned that despite this expectation, the market had been up significantly, making last week’s market behavior seem unusual.
“Well, it’s funny. You talked about September being a bad month last week, so maybe we get there in a roundabout way. I know that when you single out a month, that’s often when it doesn’t happen. But I also know that we’re up big, and last week seemed odd.”
Our Methodology
For this article, we reviewed a recent episode of Jim Cramer’s Squawk on the Street and his post on the key things to watch in the stock market for Monday. We selected ten stocks that he mentioned and included information on hedge fund sentiment for each. The stocks are ranked by the number of hedge funds that own them, from lowest to highest.
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).
A close-up of a makeup artist carefully applying Makeup Products to an clients face.
The Estee Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Investors: 47
The Estee Lauder Companies Inc. (NYSE:EL) is well-positioned for ongoing success thanks to its strong lineup of established brands like Estée Lauder, Clinique, MAC, La Mer, and Bobbi Brown, and its presence in over 150 countries. The Estee Lauder Companies Inc. (NYSE:EL)’s focus on expanding into emerging markets, where rising middle-class incomes and growing demand for premium beauty products offer substantial growth opportunities, supports its positive outlook.
Jim Cramer reports that The Estee Lauder Companies Inc. (NYSE:EL)’s longtime CEO, Fabrizio Freda, will retire next year. This announcement came on the same day The Estee Lauder Companies Inc. (NYSE:EL) released disappointing guidance for fiscal 2025. Cramer noted that the leadership change is timely, considering The Estee Lauder Companies Inc. (NYSE:EL)’s ongoing struggles.
“Estee Lauder ’s longtime CEO, Fabrizio Freda, is set to retire next year. The cosmetics maker announced the move on the same day it issued disappointing fiscal 2025 guidance. In my Sunday column for Investing Club members, I wrote that it was time for a change at the top given Estee Lauder’s prolonged struggles.”
The Estee Lauder Companies Inc. (NYSE:EL)’s solid financial performance, marked by steady revenue growth, profitability, and strong cash flow, demonstrates effective management and operational efficiency. The Estee Lauder Companies Inc. (NYSE:EL)’s strategic investments in digital and e-commerce capabilities have also boosted its ability to tap into the online beauty market.
Baron Durable Advantage Fund stated the following regarding The Estée Lauder Companies Inc. (NYSE:EL) in its fourth quarter 2023 investor letter:
“The Estée Lauder Companies Inc. (NYSE:EL) is a leading manufacturer, marketer, and retailer of prestige beauty products globally. Shares continued underperforming in the fourth quarter after management cut the company’s outlook for the fiscal year ending 6/30/2024. This downward revision was mainly driven by a worsening outlook in China, business disruptions in Israel and other parts of the Middle East, and worsening F/X headwinds. Estee Lauder’s disproportionate exposure to the Chinese consumer and the travel retail channel in Asia relative to peers continues to place pressure on both growth and margins. We decided to exit our position and reallocate to ideas in which we have greater conviction.”
Overall EL ranks 7th on our list of the best stocks to buy according to Jim Cramer. While we acknowledge the potential of EL 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 EL 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.
