Jim Cramer, host of Mad Money, discussed the current state of business cycles last Wednesday, emphasizing how they were far from synchronized. He pointed out that different sectors were performing in contradictory ways, making it difficult for the Federal Reserve to determine its next move. While some industries are flourishing, others are struggling, and a few appear to be in serious decline.
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Cramer said that the chaotic landscape created a curious backdrop for the Nasdaq and the S&P 500, which continued to reach new highs, even as challenges persisted beneath the surface. Cramer noted that many of the stocks in these major indices were performing particularly well at the moment.
“And that’s why it feels so weird that the Nasdaq and the S&P 500 keep bumping up to new highs and yet so much bad is happening underneath. So many of the stocks in these indices are simply not that hot, including even some of the Mag seven. But that could change on a dime.”
Cramer also warned that the market could shift dramatically if the president takes action, a move he has been known to make frequently, for better or worse. According to Cramer, such actions could completely disrupt entire business cycles. Despite the overall market uncertainty, Cramer identified one clear winner: the travel and leisure sector.
“The most insanely positive cycle out there is travel and leisure. This one’s mostly a holdout from the days of COVID when we discovered that we were long on money and short on time. I think the best of the bunch are all worth buying into weakness. The airlines are breathtaking. I’ve never seen anything like it.”
Jim Cramer Suggested Buying These 8 Stocks on Weakness
Our Methodology
For this article, we compiled a list of 8 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 Suggested Buying These 8 Stocks on Weakness
8. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 71
Highlighting that travelers use American Express Company’s (NYSE:AXP) services, Cramer said:
“Need a way to pay, need a way to book? Okay, that means buying Expedia, Booking Holdings, while using your American Express card. They have no quit in them.”
American Express (NYSE:AXP) provides a variety of payment services, such as credit and charge cards, banking, expense management, travel, and merchant solutions, along with fraud protection and customer loyalty initiatives. Recently, Cramer talked about the trend of the stock getting hit when it reports but then sees gains afterward.
“I’ve seen this happen endlessly with American Express, AXP, too. It’ll creep up and the fact that the millennials and the gen-whatevers love it, and then it reports on a sleepy Friday, it always reports on Friday, and everyone runs from it like it’s got the bubonic plague. But two weeks later, American Express is up from where it was before the quarter and people have forgotten why they sold it.”
7. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 99
Talking about Booking Holdings Inc. (NASDAQ:BKNG) during the episode, Cramer said:
“Need a way to pay, need a way to book? Okay, that means buying Expedia, Booking Holdings, while using your American Express card. They have no quit in them.”
Booking Holdings (NASDAQ:BKNG) is a major provider of both online and traditional travel services, as well as restaurant reservations and other related services. Over the past 12 months, the company stock rose over 43%. Back in October 2024, Cramer commented:
“Here’s one that makes a big splash every time. It’s called Booking Holdings. Yes, the old Priceline. It’s been ages since this company didn’t have a smashing quarter. Then everybody speculates about whether the consumer is still traveling.”
6. Expedia Group, Inc. (NASDAQ:EXPE)
Number of Hedge Fund Holders: 72
Cramer commented that Expedia Group, Inc. (NASDAQ:EXPE) is among those that “have no quit in them”.
“Need a way to pay, need a way to book? Okay, that means buying Expedia, Booking Holdings, while using your American Express card. They have no quit in them.”
Expedia (NASDAQ:EXPE) is an online travel company offering a wide range of travel services through various brands, providing both B2C and B2B solutions, along with metasearch, advertising, and loyalty programs to enhance its offerings.
Aristotle Atlantic Partners, LLC stated the following regarding Expedia Group, Inc. (NASDAQ:EXPE) in its Q4 2024 investor letter:
“ExpediaExpedia Group, Inc. (NASDAQ:EXPE) contributed to performance in the fourth quarter of 2024. In early November, the company reported better-than-expected EBITDA and EPS for the third quarter. Full-year guidance for 2024 was increased. The vacation rental business, Vrbo, returned to modest growth after a few quarters of decline. The balance sheet is close to target leverage ratio. There is a share repurchase authorization for approximately 13% of outstanding shares.”
5. Royal Caribbean Cruises Ltd. (NYSE:RCL)
Number of Hedge Fund Holders: 58
Discussing Royal Caribbean Cruises Ltd. (NYSE:RCL) during the episode, Cramer stated:
“We go to a cruise… a Disney cruise or buy the stock of Royal Caribbean, keeps beating the numbers and beating numbers and beating numbers. Again, the cruise lines haven’t been cyclical since Covid.”
Royal Caribbean (NYSE:RCL) operates various cruise services through its brands, including Royal Caribbean International, Celebrity Cruises, and Silversea Cruises, offering a diverse selection of itineraries. In October 2024, Cramer commented on how well the company is doing now that cruises are loved again and said:
“The cruise lines are as loved now as they were hated during COVID and the best performer of the group, as I say almost every night because you get a lot of questions about these, is Royal Caribbean, RCL. Cruises are a tremendous bargain, while hotel rooms, rates, and other forms of entertainment have just gotten to be too expensive. By the way, airline tickets, wow. There’s not a lot of new capacity coming on in the fleet business. They take forever to build these ships. Forever. Bookings are explosive. You can still buy the stock.”
4. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 108
Cramer noted the skepticism around The Walt Disney Company’s (NYSE:DIS) cable business despite the company’s success.
“You need someplace to go, don’t you? I keep hounding you to buy the stock of Disney because it’s doing so well. Yet all people seem to care about is that some weak link in the cable business that I think is gonna pick up this quarter anyway. Theme parks, yes, they are expensive, but it doesn’t seem to stop people from going to them.
We go to a cruise… a Disney cruise or buy the stock of Royal Caribbean, keeps beating the numbers and beating numbers and beating numbers. Again, the cruise lines haven’t been cyclical since Covid.”
Disney (NYSE:DIS) is a global entertainment powerhouse involved in producing and distributing films and TV shows, offering streaming platforms, and managing theme parks and resorts. The company also provides sports entertainment and live event services.
3. Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders: 54
Airbnb, Inc. (NASDAQ:ABNB) was mentioned during the episode, and here’s what Mad Money’s host had to say:
“When you travel, you need someplace to stay, don’t you? There are two stocks that are roaring in this cycle. Marriott and Airbnb, they just reported excellent numbers. These were cyclical stocks before Covid. Now they’re secular, meaning they seem to have growing, growth no matter what.”
Airbnb (NASDAQ:ABNB) runs a widely recognized platform that links hosts with guests, offering various types of accommodations and experiences. The marketplace is available via both online and mobile platforms. Oakmark Funds stated the following regarding the company in its Q4 2024 investor letter:
“Airbnb, Inc. (NASDAQ:ABNB) is an online marketplace to list, discover and book unique accommodations worldwide. The company benefits from a strong network effect between its guests and hosts. We believe there is a long growth runway as global travel is an attractive market, and alternative accommodations have been taking share. We anticipate Airbnb will drive further growth by creating more valuable services for both sides of its network, which includes the potential for paid placement, which has created significant economic value for comparable market places. In our view, management is aligned shareholders and well qualified to lead Airbnb as the company attempts to capture these growth opportunities. Short-term concerns about the macro travel environment and declining margins stemming from growth investments allowed us to purchase shares at a discount to our estimate of business value.”
2. Marriott International, Inc. (NASDAQ:MAR)
Number of Hedge Fund Holders: 69
Cramer highlighted that Marriott International, Inc. (NASDAQ:MAR) has been rising recently and also reported solid earnings results.
“When you travel, you need someplace to stay, don’t you? There are two stocks that are roaring in this cycle. Marriott and Airbnb, they just reported excellent numbers. These were cyclical stocks before Covid. Now they’re secular, meaning they seem to have growing, growth no matter what.”
Marriott International, Inc. (NASDAQ:MAR) operates and franchises a range of hotels, residences, timeshares, and yachts worldwide, under several well-known brands. A few weeks ago, agreeing with a caller that the company is the top name in lodging and hotel, Cramer commented:
“They are, and I don’t even mind that the stock is three points off its high. You buy some and then you let it go down. It is at 30 times earnings. That is a high multiple for Marriott but the travel thesis is so strong, you don’t know when you’re gonna get in, but you buy some. You don’t buy all of it right now, you buy some. That’s the prudent way to do it.”
1. United Airlines Holdings, Inc. (NASDAQ:UAL)
Number of Hedge Fund Holders: 86
Highlighting the rebound in travel and leisure stocks like United Airlines Holdings, Inc. (NASDAQ:UAL), Cramer said:
“Old hands like me are used to seeing the airlines collapse once or twice a decade. Not anymore. You don’t need to think this went through. You just need… the obvious. You go, go buy United, it’s up 10% year-to-date.
I think it can challenge its old high of $116 given that people seem to want to travel no matter what. We’re well past the initial post covid boom here. I think it can absolutely justify paying eight times earnings for United.”
United Airlines Holdings, Inc. (NASDAQ:UAL) is a well-known airline company that provides both passenger and cargo transport services. Earlier in January, Cramer was full of praises for the company as he said:
“… Simply astounding, it’s United Airlines. For the first time in my life, I’ve seen a trade morph into an investment and that’s what United did. The stock’s up 135%… once the airline started removing capacity. United cut back 3% of its promised midyear capacity, I couldn’t believe it. Of course, I can’t explain the whole run.
Problem with Boeing, the production there kept some airlines from being, they were capacity constraints. They couldn’t get the planes they needed. Plus, the long on money short on time thesis that burst on the scene post-Covid never really quit. Oh, and get this, United still sells for less than eight times this year’s earnings. It can actually power higher. It might be a good buy. I would wait for a 5 to 8% pullback.”
While we acknowledge the potential of United Airlines Holdings, Inc. (NASDAQ:UAL) 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 UAL 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.
