We recently compiled a list of the 10 Stocks That Have Jim Cramer’s Attention. In this article, we are going to take a look at where Abbott Laboratories (NYSE:ABT) stands against the other stocks that have Jim Cramer’s attention.
On a recent episode of Mad Money, Jim Cramer notes that after a significant rally in the past two weeks, the market took a hit ahead of the Federal Reserve’s upcoming meeting in Jackson Hole. The Dow fell 170 points, the S&P dropped 43 points, and the NASDAQ tumbled 1.67%. This downturn marks a return to reality, which can be harsh.
“After the monster move we’ve had in the last two weeks, that’s why, on the eve of the big Federal Reserve powwow in Jackson Hole, the averages got slammed. It’s back to reality, and reality can sting.”
Previously, after a dramatic unwind of the Yen carry trade, the market quickly collapsed but then rebounded strongly over eight days. According to Cramer, during that period, anything that was doing well surged, and there was optimism that anything struggling would improve once the Fed started cutting rates. However, that optimism has faded.
“If you remember, after the sudden unwind of the Yen carry trade, the market experienced a sharp decline followed by a remarkable 8-day rebound. During that time, stocks that were performing well surged, and there was hope that struggling stocks would improve once the Fed began cutting rates. However, that was then, and this is now.”
Now, we’re experiencing what Cramer refers to as the “buyer’s remorse” phase. Stocks that had risen on hope alone are now falling sharply. Even the prospect of the Fed stepping in hasn’t been enough to prevent the decline.
“Since the winning streak ended, we’re entering what I call the “buyer’s remorse” phase. Stocks that had been climbing based on hope alone are now falling hard. Even the prospect of Fed intervention isn’t enough to prevent this decline. The selling might be exaggerated because the Fed is set to speak in Jackson Hole, and Wall Street has already factored in the possibility of a September rate cut—beyond that, it’s unlikely the Fed will announce multiple rate cuts, as some bulls hope.”
Cramer dismisses the first two explanations for the current market weakness: the idea that the Fed’s actions are too late or that the Fed can’t fix the economy. He believes the Fed’s interventions still have a significant impact, although companies with poor balance sheets might struggle.
“There are also concerns that the Fed might be too late to make a difference, or that traders fear a potential Democratic sweep in November could lead to higher corporate tax rates—bad for earnings—and increased scrutiny on price gouging in supermarkets and drugstores.
I don’t fully buy into the first two explanations. Not everything can be saved by the Fed, as some companies aren’t very sensitive to economic changes. Also, it’s never too late for a rate cut; delays might occur, but the turn is not canceled, except for companies with poor balance sheets. Those companies, burdened with debt, deserve to struggle if they can’t manage their obligations effectively.”
The third explanation, political concerns, seems more plausible to Cramer. He points out that investors initially saw President Biden as less favorable to the stock market due to his pro-labor stance. However, recent discussions suggest that a potential Harris presidency might be even more challenging for businesses. Harris is seen as critical of companies raising prices and could push for measures against price gouging, which might be difficult to achieve.
“The third, politics-is-trickier. Before this week, many investors saw President Biden as unfavorable to the stock market due to his pro-labor stance. However, Vice President Harris, coming from California with ties to the tech industry and connections like her brother-in-law Tony West, General Counsel at Uber, was thought to be more business-friendly.
Recent discussions suggest that a Harris presidency might be even tougher on businesses than Biden’s administration. There is a strong focus on criticizing food and drug companies for raising prices, even though the Biden administration attempted to control the prices of some heavily used drugs. Harris’s potential efforts to curb price gouging might face challenges, as large retailers like Walmart and Costco have already done a great job of pushing suppliers to reduce prices to pre-COVID levels.”
Cramer is also concerned about a recent prediction from market expert Larry Williams, which adds to his apprehension about the market’s future.
“On the campaign trail, Harris might not recognize the distinction between good and bad actors, opting instead to broadly criticize big businesses for taking advantage of the pandemic. These factors might explain some of today’s market weakness, but what concerns me most is a recent prediction from market expert Larry Williams. I respect Larry’s insights and prefer not to contradict him.
Jim Cramer said Larry Williams predicted that the rally was “kaput.” This term, implying that the rally might be over, is especially worrying considering it was used after the eighth day of gains. Despite this winning streak, the market didn’t surpass its previous highs. Larry’s charts also indicated that the S&P 500 might face difficulties in the coming week, particularly due to Nvidia, which he considers a crucial stock in the market.
“Larry sent us his thoughts on Monday, and he used a term that made me concerned. He said that the rally was “kaput.” Mind you, this was on the eighth day. The word “kaput” has some ominous connotations, right? Especially because we didn’t take out the highs of the averages despite the 8-day win streak. Worse, Larry’s charts showed tough sledding for the S&P 500 next week, led by the most important stock in the entire market—maybe the most important stock I’ve ever seen.”
Jim Cramer notes that with the market currently overbought—reflected in the S&P short-range oscillator reading of plus five—Larry’s view that the rally could be over seems plausible. Wall Street’s favorite GPU maker experienced a sharp drop recently, despite its strong performance leading up to the quarter. The stock’s sudden reversal was difficult to watch.
“Given that the market’s overbought—plus five on the S&P short-range oscillator that I follow—the idea that the rally is kaput has some resonance. It doesn’t help that Nvidia ran up rapidly into the quarter and expectations have gotten out of hand. The stock did a horrible reversal today—just painful to watch.”
Our Methodology
In this article, we analyze a recent episode of Jim Cramer’s Mad Money, where he highlighted ten stocks. We also review hedge fund opinions on these stocks and rank them based on hedge fund ownership, from the least to the most.
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 operating room with a doctor monitoring a patient’s vital signs during surgery with a medical device.
Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Investors: 69
Jim Cramer addressed concerns about Abbott Laboratories (NYSE:ABT) when asked by a viewer. He acknowledged the ongoing lawsuits, noting that there is one more expected to conclude in September, which will be in the same jurisdiction as a previous case where Abbott Laboratories (NYSE:ABT) faced a large verdict. Cramer anticipated that Abbott Laboratories (NYSE:ABT) might lose this upcoming lawsuit as well, but he still views Abbott positively because it is a strong company.
“Okay, I got the whole lawsuit thing down. We’ve got one more lawsuit that’s done in September. It’s going to be in the same jurisdiction as the bad one where they got the very big verdict. I think that verdict is going to be brought down. I think they’ll lose the next ones too, but we’re holding on to it for the trust. Why? Because Abbott’s a great company.
In the end, these are product liability suits—they are not mass tort actions like J&J. I think we’ll come out ahead of the game. They’ve got four great product lines that are selling fabulously. The market is still too overbought, people. We got too hopeful, so now we might need to take a brief respite. There’s nothing wrong with that—maybe little buyers’ remorse.”
Abbott Laboratories (NYSE:ABT)’s latest earnings report showed a 10.2% revenue increase, thanks to strong performance in diagnostics and medical devices. Abbott Laboratories (NYSE:ABT) also exceeded expectations for earnings per share (EPS), demonstrating effective cost management and operational efficiency. A major highlight is the launch of the AVEIR™ DR dual-chamber leadless pacemaker in Canada, which is set to enhance Abbott Laboratories (NYSE:ABT)’s position in the cardiac care market.
Additionally, the continued strong demand for Abbott Laboratories (NYSE:ABT)’s FreeStyle Libre system supports growth in its diabetes care segment. Abbott Laboratories (NYSE:ABT)’s solid financial health is backed by a promising pipeline of new products and reliable dividend payments, setting it up for sustained growth. Analysts are confident in Abbott Laboratories (NYSE:ABT)’s future, with a recent price target upgrade to $143 from Barclays adding to the positive sentiment.
Aristotle Atlantic Core Equity Strategy stated the following regarding Abbott Laboratories (NYSE:ABT) in its Q2 2024 investor letter:
“We sold Abbott Laboratories (NYSE:ABT) given the full valuation and the complexity of its combined businesses. While we like the company’s continuous glucose monitoring business FreeStyle Libre and its aggregate medical device business, we are less excited about the prospects for its nutritional business and established pharmaceuticals business. Recent news of a large jury award at an infant formula competitor has us concerned that the overhang of this litigation could be an ongoing negative for Abbott for some time.”
Overall ABT ranks 4th on our list of stocks that have Jim Cramer’s attention. While we acknowledge the potential of ABT 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 ABT 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.
