We recently published a list of Must-See: Jim Cramer’s 10 Best Stock Picks for Investors Right Now. In this article, we are going to take a look at where Moderna, Inc. (NASDAQ:MRNA) stands against other Jim Cramer’s best stocks for investors.
In a recent episode of Mad Money, Jim Cramer discussed how the slowing economy might lead the Federal Reserve to ease its policies. He expects the Fed to cut interest rates, but it’s unclear whether the reduction will be 25 or 50 basis points. This decision is crucial as it could significantly impact the market.
“At last, the economy has slowed enough that the Fed can take its foot off the brakes and step on the gas. That’s why we’re starting our game plan in the middle of next week when the Federal Reserve renders its verdict: 25 or 50 basis points. We don’t typically have a lot of drama in this business, but this one counts as a nail-biter because we really don’t know how big the rate cut will be. We just know they’re going to cut.”
Cramer pointed out that Friday’s market performance was strong, with the Dow gaining 297 points, the S&P rising by 0.54%, and the Nasdaq increasing by 0.65%. This marked the best two weeks of the year for the S&P and the Nasdaq, suggesting that the market might be anticipating a larger rate cut of 50 basis points. Stocks sensitive to interest rates, particularly in housing, surged in response.
“Today’s rally saw the Dow gaining 297 points, the S&P advancing 0.54%, and the Nasdaq climbing 0.65%, capping off the best two weeks of the year for both the latter two indices. The S&P and the Nasdaq suggest the Fed might actually go for 50. That’s a double rate cut. I know this because the stocks most sensitive to interest rates, particularly housing and housing-related names, soared today.”
Cramer also cautioned that if the housing market rally continues, it could lead to a sell-off if only a 25 basis point cut is announced. He pointed out that traders are currently pricing in a higher chance of a 50 basis point cut, according to the CME Group’s FedWatch tool. If the Fed opts for a smaller cut, traders who bought in anticipation of a larger reduction might sell off their stocks, potentially causing market volatility.
“To use a little NFL fantasy football lingo, they soared presumably in anticipation of something huge from Jay Powell and company. All aboard! I still find myself betting on a quarter-point cut, though. It’s not that we don’t need a half-point cut, as the economy is slowing pretty quickly, especially for the lower-income cohort. However, I’ve always believed that the Fed should be measured when it cuts rates at this stage of the business cycle.
The biggest risk is that inflation might flare up again if you cut too much, and a 50 basis point cut all at once makes that a lot more likely. Plus, a double rate cut signals that something may be very wrong with the economy—something we don’t know about, something lurking. So going for 50 could inspire panic, and there’s simply no reason for the Fed to take that chance when it can simply hit us with a series of thoughtful 25 basis point cuts that neither reignite inflation nor cause panic.”
Jim Cramer warned that if the housing market rally keeps going, it might lead to a sell-off if the Federal Reserve announces only a 25 basis point rate cut. If the Fed delivers a smaller cut, traders who anticipated a bigger reduction might start selling their stocks, which could lead to increased market volatility.
“Now, if the housing rally continues at this pace, these stocks run the risk of being too hot to handle for a mere 25 basis point cut, and we’ll get a sell-off in response. Keep in mind how the CME Group’s FedWatch tool, which tracks interest rate expectations based on the Fed Funds Futures Market, indicates that traders are now pricing in a much higher probability of a double rate cut, currently at 45%. That’s much higher than it was a week ago. These traders could indeed be disappointed if the Fed decides to be more measured. They could be your enemy come Wednesday at 2 p.m. as they dump what they bought incorrectly, and that is what happens. That’s what traders do, they let the stocks go.”
Finally, Jim Cramer believes that this week is critical for the market. He advised that if the market declines after a 25 basis point cut, investors should remember the strong performance of the past week. This week’s gains could be a sign of more positive developments as the Federal Reserve continues to ease its monetary policy.
“When I look at next week, I can only conclude that we’re finally at the moment we’ve all been waiting for. So let me give you the bottom line: if we sell off on a 25 basis point rate cut, remember this phenomenal week, because there will be plenty more like it as the easing process continues and progresses.”
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 scientist surrounded by vials and beakers in a modern laboratory, proudly displaying a vaccine.
Moderna Inc. (NASDAQ:MRNA)
Number of Hedge Fund Holders: 39
Jim Cramer reported that Moderna Inc. (NASDAQ:MRNA)’s shares fell by 10% after the company announced it would cut costs by $1.1 billion. Along with this, Moderna Inc. (NASDAQ:MRNA) revealed plans to launch 10 new products by 2027. Moderna Inc. (NASDAQ:MRNA) is navigating challenges as its Covid vaccine business declines. Moderna Inc. (NASDAQ:MRNA)’s second commercially available product, RSV vaccines for seniors, was approved four months ago.
“Moderna shares dropped 10% after the biotech announced $1.1 billion in cut costs. It also announced plans for 10 new products by 2027. Moderna is trying to figure out the future as its Covid vaccine business rapidly declines. The company’s second commercially available product, RSV shots for seniors, was approved four months ago.”
Moderna, Inc. (NASDAQ:MRNA) presents a strong investment case due to its promising vaccine pipeline, progress in cancer treatment, and solid financial position. Moderna, Inc. (NASDAQ:MRNA)’s technology is expanding beyond COVID-19 vaccines. Notable developments include a next-generation COVID-19 vaccine (mRNA-1283), a successful Phase 3 trial for a combined flu and COVID-19 vaccine, and FDA approval for its RSV vaccine.
Moderna, Inc. (NASDAQ:MRNA)’s collaboration with Merck & Co., Inc. (NYSE:MRK) on mRNA-based cancer treatments, like the melanoma therapy mRNA-4157, also shows potential for new revenue streams. Even though Moderna Inc. (NASDAQ:MRNA) has faced a decline in COVID-19 vaccine sales this year, it remains financially healthy, with expected cash and investments around $9 billion by year-end. This strong financial base supports continued research and growth.
Analysts are optimistic, forecasting Moderna Inc. (NASDAQ:MRNA) could reach between $70 and $105. Overall, despite current short-term challenges, Moderna, Inc. (NASDAQ:MRNA)’s long-term potential in vaccines and therapeutics makes it a compelling investment.
Overall MRNA ranks 8th on our list of Jim Cramer’s 10 best stocks for investors. While we acknowledge the potential of MRNA 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 MRNA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
