Last Wednesday, Jim Cramer, the host of Mad Money, questioned whether the market was still following a clear and predictable business cycle, suggesting there were “huge conflicting currents” that made the economy difficult to navigate. Reflecting on his early days in the industry, Cramer explained that back then, understanding the business cycle was important.
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“If business was too strong, the Fed might raise rates, pull things off. If business was too weak, you might have some rate cuts. You always had to pay attention to these things, right, because you didn’t wanna fight the Fed.”
But on that particular day, with the Dow gaining 71 points, the S&P advancing by 0.24% to reach a new all-time record, and the Nasdaq edging up by 0.07%, Cramer began to reconsider whether the traditional concept of the business cycle had become outdated.
Cramer went on to highlight the puzzling movements in specific sectors, especially food and beverage and drug stocks, which showed some unexpected gains. These industries, often seen as immune to economic cycles, seemed to defy the typical patterns.
He pointed out that in light of the current administration’s stance on food policy, especially with a health and human services secretary who has expressed disdain for processed foods and vaccinations, it was not just a cycle affecting these sectors anymore, it felt more like a targeted attack on the industries themselves. Cramer wondered, “What if RFK Jr. wakes up tomorrow and says, ‘I’m banning Fruit Loops’ or stopping weight loss shots?”
“I mean, everyone in this administration seems to think that the federal government could do whatever it wants. That’s not, that’s not how our system works or at least it’s not how the Constitution says it works, but the blight’s very much with us, even with today’s reprieve.”
Jim Cramer Recently Shed Light on These 9 Stocks
Our Methodology
For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on February 19. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Jim Cramer Recently Shed Light on These 9 Stocks
9. AGCO Corporation (NYSE:AGCO)
Number of Hedge Fund Holders: 16
AGCO Corporation (NYSE:AGCO) manufactures and distributes a wide range of agricultural equipment, including tractors, harvesters, seed-processing systems, and livestock production equipment, along with implements and systems used for planting, soil cultivation, and crop protection.
Cramer mentioned the company during the episode of Mad Money and said, “I think you just go buy the stock of AGCO tomorrow, farm equipment maker, would come on, comes on on the show all the time. Pretty good.”
Over the past year, AGCO (NYSE:AGCO) stock has lost over 10%. Additionally, on February 7, Baird analyst Mircea Dobre reduced the price target for the company stock to $116 from $119 while maintaining an Outperform rating on the stock. The firm stated that the first half of 2025 will largely depend on progress in destocking.
8. Deere & Company (NYSE:DE)
Number of Hedge Fund Holders: 57
Deere & Company (NYSE:DE) manufactures and distributes a wide range of equipment, including tractors, harvesters, mowers, and construction machinery, while also providing financial services related to equipment sales and leases. Mentioning the company, Cramer said, “Then there’s the Ag cycle. Deere stock can’t stop.”
Deere (NYSE:DE) recently reported a decline in financial performance for the first quarter of fiscal 2025, with net income dropping to $869 million, or $3.19 per share, down from $1,751 million, or $6.23 per share, in the same quarter of 2024. The company saw a 30% decrease in worldwide net sales and revenues, which amounted to $8.508 billion, compared to $12.155 billion in the first quarter of 2024. Net sales for the quarter were $6.809 billion, a significant drop from $10.486 billion in the prior year.
7. J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT)
Number of Hedge Fund Holders: 46
Cramer highlighted J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) when discussing the tariffs on Mexico.
“Plus, talk about being in the crosshairs of the tariffs. Do we wanna own a rail that runs from Mexico to here or a trucking company like J.B. Hunt, if we’re getting into a tariff war in Mexico? To me, this group feels like it’s practically in a recession cycle today.”
J.B. Hunt (NASDAQ:JBHT) provides a wide range of transportation, delivery, and logistics services, using a fleet of company-owned equipment and resources. Before the company reported earnings in January, Cramer said:
“After the close, we get results from one of my favorite companies, J.B. Hunt, it’s the giant trucker. I see this company as more of a barometer of business because it does such a tremendous job of breaking down the strong and weak parts of the economy line by line by line.
These days the transports everyone wants though are the airlines. Just look at the positive reaction to Delta’s numbers this morning. I think we need to keep in mind that when you get really strong earnings like the ones from Delta, they can indeed transcend the market’s negative gravitational pull.”
6. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Holders: 93
Commenting on Union Pacific Corporation (NYSE:UNP) during the episode, Cramer said:
“Union Pacific didn’t seem all that exciting either. Coal’s weak, chemicals’ horrible, those are the ones that go into plastic.”
Union Pacific (NYSE:UNP) provides transportation services for a broad range of products, including agricultural goods, chemicals, metals, petroleum, and automobiles, serving various industries such as agriculture, construction, and manufacturing. As we mentioned in our article, Jim Cramer Discusses These 13 Stocks & Rejects The AI PC Super Cycle, Cramer commented on the company and said:
“Yes, let’s talk about the railroad. I mean it’s a gigantic railroad. Reported excellent numbers. Jim Vena is now running it. . . The operating ratio which of course you want to go lower was superb. And David I’ve got to tell you, they’ve got strong core pricing gains for industrials which I think is where you’re gonna do very well. Premium strength to, in international West Coast imports. This is really good and they, intermodal growth. I’ve got to tell you, this just may be one of the great reports. Now I’m gonna go a step too far. Alright. But the President is an old energy guy. West Virginia, Wyoming, Pennsylvania. The three biggest coal producers, Wyoming at the top, okay. Coal. I think coal’s gonna come back in fashion…
[When asked why?] Well those three states went for Trump. . .natural gas is, I think is going to five. And at that point they switch. Because there’s really coal all over the country and we’re going to export a lot. . . And by the way, coal was thirty percent of how we heated things in ten years ago and now it’s down to fifteen percent.”
5. Norfolk Southern Corporation (NASDAQ:NSC)
Number of Hedge Fund Holders: 63
Making note of the bearish trends in transports, Cramer mentioned Norfolk Southern Corporation (NASDAQ:NSC) and stated:
“On the other hand, you got groups like the transports. They’re just getting clocked. At a conference call today, Norfolk Southern, one of the big East Coast railroads, traced out a soft picture.”
Norfolk Southern (NASDAQ:NSC) provides rail transportation, handling a diverse range of materials such as agricultural products, chemicals, metals, and automotive goods. Before the company posted its earnings result in October 2024, Cramer said:
“Now, we have so many winners reporting, but there’s one lagger that I figure could break out here, Norfolk Southern. It’s got a new CEO, Mark George, who I think will bring some financial discipline to this great railroad. Norfolk Southern could put up some excellent numbers. Previous CEO should get some credit for that, by the way.”
4. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 123
Cramer highlighted that JPMorgan Chase & Co. (NYSE:JPM) is among those banking stocks that rose recently and said:
“And there’s the banking cycle. Now that’s en fuego, it’s smoking. I mean, it’s crazy. The lack of Democratic regulatory headwind and the slower rate cut cycle, good for them. Wells Fargo, Goldman Sachs, JPMorgan screaming higher. Doesn’t hurt that the whole industry seems very confident that the Trump regulators will be more bank-friendly than the Biden regulators. Well, no kidding, who wouldn’t be?”
JPMorgan Chase (NYSE:JPM) offers a wide range of financial services, including consumer banking, investment banking, lending, and asset management, catering to individuals, small businesses, corporations, and institutional clients. The company recently reported a strong performance in the fourth quarter of 2024, with net income reaching $14.0 billion, or $4.81 per share.
For the full year 2024, JPMorgan Chase (NYSE:JPM) achieved a record net income of $58.5 billion, or $19.75 per share. Excluding significant items, the company’s net income for the year stood at $54.0 billion, or $18.22 per share.
3. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 81
Talking about the banking cycle, Cramer mentioned The Goldman Sachs Group, Inc. (NYSE:GS) and said:
“And there’s the banking cycle. Now that’s en fuego, it’s smoking. I mean, it’s crazy. The lack of Democratic regulatory headwind and the slower rate cut cycle, good for them. Wells Fargo, Goldman Sachs, JPMorgan screaming higher. Doesn’t hurt that the whole industry seems very confident that the Trump regulators will be more bank-friendly than the Biden regulators. Well, no kidding, who wouldn’t be?”
Goldman Sachs (NYSE:GS) is a financial services company known for its specialization in investment banking, wealth management, and a broad range of other financial services. Cramer has shown consistency in his bullishness when it comes to the company and a few weeks ago, he commented:
“I think Goldman is incredible. The stock sells at 13 times earnings. It’s doing amazingly well. I think it is a solid buy. I saw it down at one point today, so low.”
2. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 96
Wells Fargo & Company (NYSE:WFC) was mentioned during the episode and here’s what Mad Money’s host had to say:
“And there’s the banking cycle. Now that’s en fuego, it’s smoking. I mean, it’s crazy. The lack of Democratic regulatory headwind and the slower rate cut cycle, good for them. Wells Fargo, Goldman Sachs, JPMorgan screaming higher. Doesn’t hurt that the whole industry seems very confident that the Trump regulators will be more bank-friendly than the Biden regulators. Well, no kidding, who wouldn’t be?”
Wells Fargo (NYSE:WFC) is a global financial services company that provides a wide range of banking, investment, mortgage, and financial products. Oakmark Funds stated the following regarding the company in its Q4 2024 investor letter:
“Wells Fargo & Company (NYSE:WFC) was the top contributor during the quarter. The U.S.-headquartered diversified bank’s stock price rose after reporting what we see as solid third-quarter earnings where the company’s efficiency ratio continued to improve as expenses were well controlled. The fee income segment also performed well, growing 12%. In addition, Wells Fargo had the opportunity to repurchase $3.5 billion in shares during the period, bringing the full-year repurchase to roughly $16 billion. In November, the stock price continued its upward trend following the U.S. presidential election as investors are optimistic that the financials sector will benefit from looser regulations and lower corporate taxes, thus stimulating a better environment for dealmaking. We continue to believe that Wells Fargo is a competitively advantaged bank that can use its superior business mix and return potential to unlock further value.”
1. Toll Brothers, Inc. (NYSE:TOL)
Number of Hedge Fund Holders: 64
Cramer discussed the recent contrasting cycles in the market, specifically addressing the bearish trend in the housing sector. He pointed out that Toll Brothers, Inc. (NYSE:TOL), one of his preferred home builders, recently reported a mixed quarter, and as a result, its stock took a significant hit. Cramer noted that the downturn was not isolated to just Toll Brothers, the entire homebuilding sector experienced a similar decline. He added:
“Wow. Conference call was instructive because it showed there are cracks developing with lower average housing prices around the country. Some very soft markets, something that’s not supposed to happen when the Feds cut rates.
Mortgage rates are still way too high for this group. I want you to listen [to] what CEO, Doug Yearley, on the conference call said, “Those areas where the buyers are a bit more hesitant, I think it’s number one. Those areas that have had more significant price appreciation through the Covid years than other areas so instead of a 40 or 50%… percentage price increase over the last five years, there are end markets where there [has] been a 60%, 70%, 80%… and a 100% price increases, that includes Florida, primarily Austin, Texas. Those prices have to come down. That’s, that’s raw inflation. Those have to come down before we beat inflation in this country. Toll Brothers created the entire industry.”
Toll Brothers, Inc. (NYSE:TOL) specializes in designing and constructing high-end homes, such as condominiums and single-story residences, while also developing communities that offer a range of amenities.
While we acknowledge the potential of Toll Brothers, Inc. (NYSE:TOL) 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 TOL 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 was originally published at Insider Monkey.
