We recently compiled a list of the Jim Cramer’s Game Plan: Top 14 Stocks to Watch. In this article, we are going to take a look at where Starbucks Corporation (NASDAQ:SBUX) stands against the other stocks.
Jim Cramer, the host of Mad Money, recently shared his thoughts on the upcoming earnings season, emphasizing that investors should tread carefully and avoid making any big moves.
“When people think about an exciting time for stocks, they think of the next two weeks, that’s when some of the most important consequential companies on Earth report, practically at the same time. Throw in the actions of the new president and all I can say is, we’re not gonna have any idea what the heck we’re doing until we have time, probably at night to sift through all the data points and study all the conference calls.”
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Cramer stressed that the current week, in particular, is too difficult for snap judgments. He warned that the Federal Reserve’s decision on Wednesday will only add to the uncertainty. At one point, it seemed like the market could expect a rate cut, which would push stocks higher, but then Amex reported that its customers were spending at a rapid pace. He said:
“But when American Express says today that its millions of customers are spending like mad, the Fed can’t possibly give us a rate cut, can it?”
He added that if the Fed does lower rates on Wednesday, it would likely be because Chairman Jerome Powell has caved to President Trump’s demand for immediate cuts. In this complex situation, Cramer advised investors to just sit tight and not act, pointing out that it would be a “no-win situation” for Powell.
As if the pressure of earnings reports and the Fed’s decision were not enough, Cramer also noted that this week would feature the release of the Fed’s favored inflation measure, the Personal Consumption Expenditures (PCE) price index. However, Cramer does not expect good news, given the high level of consumer spending.
“The exhausting bottom line: Look it’s a sheer hell week. Our heads will be spinning, swivel-like, lazy Susan even, as each day you can expect a flood of earnings and a sound bite from President Trump that upsets whatever order there might be. Like I always say, don’t try to make decisions during this part of earnings season, just listen. It’s too hard and I don’t want you to lose money just because this is one of eight super exciting weeks of the year.”
Our Methodology
For this article, we compiled a list of 14 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 24. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A barista pouring freshly brewed coffee from an espresso machine to a cup in a bustling cafe.
Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 76
Cramer expressed faith in Starbucks Corporation’s (NASDAQ:SBUX) CEO and mentioned that the stock might be worth buying after the earnings call.
“After the close, we hear Brian Niccol lay out his vision for Starbucks. Now, we own the stock for the Charitable Trust, and I think it might be worth buying after we hear the new plan. I believe in Brian, he did an incredible job turning around Chipotle and I bet he can do the same thing with Starbucks.”
Starbucks (NASDAQ:SBUX) is a prominent global player in coffee roasting, marketing, and retail, offering a diverse range of beverages, beans, and food items across its stores. On January 27, Stifel analyst Chris O’Cull increased the price target for the stock to $114 from $110 while maintaining a Buy rating on the stock. The firm has a positive outlook, particularly if investors can purchase shares at a discount due to concerns over coffee tariffs. O’Cull believes Starbucks shares are likely to rise as U.S. comparable sales show improvement, which Stifel anticipates will become evident in the coming months.
Recently, Starbucks’ (NASDAQ:SBUX) Chairman and CEO, Brian Niccol, outlined the company’s ongoing transformation efforts aimed at revitalizing the brand. The focus has been on improving the in-store experience. Marketing has shifted from discounts to emphasizing the brand’s story and coffee expertise, while pricing transparency has been improved by eliminating non-dairy milk upcharges.
Additionally, the company has set a goal of reducing wait times to four minutes and extended coverage hours in over 3,000 stores. The company also aims to promote 90% of retail leadership roles internally within three years. While the initial focus has been on U.S. and Canadian stores, the company is now looking at the global role, structure, and size of its support teams to further its transformation.
Overall SBUX ranks 4th on our list of stocks to watch according to Jim Cramer. While we acknowledge the potential of SBUX 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 SBUX 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.
