Jim Cramer, host of Mad Money, provided insights on Friday about this week’s Federal Reserve meeting, key earnings reports, and the retail sales numbers due to be released. According to Cramer, the market is in a holding pattern at the moment, with investors growing increasingly uneasy. “When the market bides its time, guess what, people tend to get a little nervous,” he remarked.
“I think the Wall Street’s gotten a little too negative frankly, as we get oversold and we’re getting there. But I’ve been warning about stocks going to excessive levels for two weeks now, so I can’t be all that positive until we see a couple days where bond yields actually go lower with the stock market.”
Cramer pointed out that retail sales figures will be released on Tuesday, and although they are coming out just before the Fed’s meeting, they will likely stir significant debate. This is especially true given the unusual timing of Black Friday this year, with a compressed shopping period between Thanksgiving and Christmas. He speculated that the bond market had a rough week, and if retail sales come in cooler than expected, it could provide a much-needed counterbalance, perhaps offering a potential buying opportunity after the Fed meeting.
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Looking ahead to Wednesday, Cramer noted that the Federal Open Market Committee is widely expected to cut interest rates by 25 basis points. While he cautioned that nothing is certain, he emphasized that numerous Fed officials have indicated that a rate reduction is likely. He added:
“Every little signal from the Federal Reserve brings out predictions causing many people to sell good stocks when they are freaked out. You also have people who just can’t let it go, dogs with bones. As soon as we get the Fed rate cut, well, guess what? They’re immediately focused on the next cut. I think this is absurd.”
Cramer clarified that while he does see the Fed as important, he believes investors should not get bogged down by every minor shift in central bank policy. He reminded viewers that the Fed operates based on data, not ideology. He acknowledged that there could be dissent within the Federal Open Market Committee, but he cautioned against making investment decisions solely based on what the Fed might do next.
“Contrary to popular belief, there’s more to investing than monetary policy and I wish everyone knew that. They don’t.”
Moving on to Friday, Cramer highlighted that the personal consumption expenditures (PCE) inflation data would be released, offering the first look at the latest inflation numbers.
“Finally, on Friday, we get our first look at the next set of inflation data, that’s called the personal consumption expenditures number. Remember, my view is that we’ll continue to get endless chatter about what the Fed might do or not. So if this number runs hot, you’re gonna hear a lot of doomsaying, and why do I put it up there then? Well, because maybe it’s a good opportunity to buy something on weakness because other people will be freaked out by what the doomsayers say.”
In summary, Cramer believes we’re entering a seasonally strong period for stocks, though recent performance in some sectors has been underwhelming. He noted that while the Santa Claus rally typically provides a boost toward the end of the year, it’s important to wait for the Fed’s meeting to pass before making any significant moves.
Jim Cramer’s Game Plan for This Week: 8 Stocks in Focus
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 13. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
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Jim Cramer’s Game Plan for This Week: 8 Stocks in Focus
8. Darden Restaurants, Inc. (NYSE:DRI)
Number of Hedge Fund Holders: 28
Cramer commented that Darden Restaurants, Inc. (NYSE:DRI) must attract more customers who are seeking the best value.
“Thursday morning: Well, Darden tells us how it’s doing and I gotta tell you, this one’s still being driven by Olive Garden. I think the market’s actually moved away from the formerly important restaurant chain. Instead, it’s focused on the results of Texas Roadhouse and Brinker, both of which offer great value and are being rewarded with tremendous numbers and then much higher stock prices. I wanna find out if Darden gets the consumers pushing back against high prices. They have to tell us what they’re doing to entice these people who seem to be going elsewhere for casual dining, pretty much for people who want to spend no more than $11 per dinner.”
Darden (NYSE:DRI) owns and operates full-service restaurants in the U.S. and Canada under various brands, Olive Garden and LongHorn Steakhouse among them. In the first quarter of fiscal 2025, the company faced challenges within its Fine Dining segment. Despite a slight 2% increase in revenue, the segment experienced a 6% decline in same-restaurant sales, and profits dropped by 5.3%. During the earnings call for that quarter, management emphasized the company’s intention to price below both its competitors and inflation over time.
They pointed to Olive Garden as a prime example, noting that over the last five years, the brand has maintained pricing 800 basis points below the full-service industry average and 700 basis points below grocery inflation. However, management also acknowledged that there is room for improvement in how the Olive Garden team communicates this value to customers.
7. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 30
Cramer expressed concern about General Mills, Inc. (NYSE:GIS), noting that Robert F. Kennedy Jr.’s focus on healthy eating could threaten a key profit driver for the company.
“We have some big earnings reports on Wednesday, starting with General Mills, which caught an upgrade today thanks to accelerating pet food sales. Actually, I’m more worried about sugar cereal and I say that having interviewed incoming Health and Human Services Secretary-designate Bobby Kennedy (Robert F. Kennedy Jr.) on the floor of the New York Stock Exchange yesterday. I think that his chief objective is not vaccines, it’s healthier eating and he seemed to confirm that yesterday when I spoke with him. If that’s the case, then General Mills could be in trouble because, well, sugared cereal is a major profit generator for the company.”
General Mills (NYSE:GIS) manufactures and markets a wide range of branded consumer foods globally, including cereals, snacks, meal kits, frozen foods, and pet food products. Recently, it found itself navigating the shifting regulatory landscape concerning food dyes, especially in its popular cereal products, as reported by Bloomberg.
As the company looks ahead to the possibility of a new Trump administration, it has proactively engaged with federal regulators about potential changes to food dye regulations. This comes amid mounting scrutiny led by figures such as Robert F. Kennedy Jr., who is known for his stance against synthetic dyes in food. Kennedy, who is poised to lead the Department of Health and Human Services, has called for the removal of artificial dyes, which could impact products like Cheerios, Cocoa Puffs, and Lucky Charms. The company is preparing for potential challenges, understanding that such scrutiny could significantly affect its operations.
General Mills (NYSE:GIS) has also been focused on innovation. Earlier in the year, the company increased its innovation efforts by launching 40% more major products than it did in the prior year. This push included a strong performance in the cereal category, where General Mills introduced the five largest new products in the U.S. market.
6. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Discussing the dispute between Arm Holdings plc (NASDAQ:ARM) and Qualcomm, Cramer said:
“There’s a ton of just regular corporate news next week. On Monday, for instance, a trial begins, people aren’t talking about it but I will, in a Delaware federal court between Qualcomm and Arm Holdings. It’s a patent dispute involving high-performance processors and if Arm wins, it’ll take away Qualcomm’s license to use important chips and cell phones and laptops. Now, the smart money is betting on a settlement, which I think would be good for everyone.”
Arm (NASDAQ:ARM) is a key player in the semiconductor industry, specializing in designing and licensing CPU products and related technologies. While it doesn’t manufacture chips, its designs are used by semiconductor companies and manufacturers. The company generates revenue by licensing its CPU architectures and collecting royalties on products that incorporate its designs.
In 2022, the company filed a lawsuit against Qualcomm after Qualcomm acquired Nuvia. The dispute arose from Qualcomm’s failure to negotiate a new licensing agreement, affecting its chip designs. Arm alleges that technology for Microsoft’s Copilot+ laptops is based on Nuvia’s chip architecture, further escalating tensions.
Additionally, Arm (NASDAQ:ARM) plans to cancel Qualcomm’s architectural license, which allows Qualcomm to use Arm’s intellectual property in its chip designs. This cancellation, with a 60-day notice given in October, could significantly disrupt Qualcomm’s operations, particularly its chip division, a major revenue driver. A Qualcomm spokesperson criticized Arm’s actions as baseless threats meant to pressure Qualcomm, undermine its CPU performance, and raise royalty rates.
As the trial approaches in December, Qualcomm argues that Arm’s attempt to terminate the agreement is unjustified and seeks to disrupt the legal process. Qualcomm is confident its rights will be upheld and criticized Arm’s anticompetitive actions.
5. Carnival Corporation & plc (NYSE:CCL)
Number of Hedge Fund Holders: 54
Cramer said that the cruise industry is the most bullish one in the S&P 500 and predicted that Carnival Corporation & plc (NYSE:CCL) will surpass expectations.
“We also get numbers from Carnival. Now Carnival is, this is a cruise line. This has got to be the most bullish industry in the S&P 500 at this moment. Cruises remain the most popular form of travel and leisure activities post-Covid. They’re a great bargain. I think the estimates will be beaten. Right now, you can throw darts at this group and make money. I just booked myself a cruise for next year. Nothing lasts forever, but the love for this group currently knows no bounds.”
Carnival (NYSE:CCL) is a major player in the leisure travel industry, offering cruise services to a global customer base. In 2024, the company has experienced remarkable growth, with record revenues, a surge in demand, and advancements toward its long-term goals. As per the company’s management, the positive trends observed in the third quarter of 2024 are expected to continue into the fourth quarter.
It projects a 5% growth in yield for the fourth quarter, slightly lower than the 8.7% increase reported in the third quarter. Despite this, the company has raised its full-year net income forecast to $1.76 billion, a $210 million increase from previous expectations. This upward revision reflects a 10.4% increase in yield, improved cruise cost per available lower berth day, and a $70 million benefit from favorable fuel prices and currency fluctuations.
Looking ahead, Carnival (NYSE:CCL) plans a modest capacity increase of 0.7% for 2025, while also aiming to boost pricing by managing inventory levels more effectively. With an EBITDA forecast of $6 billion for September 2024, the company expects a significant reduction in its net debt-to-EBITDA ratio.
4. FedEx Corporation (NYSE:FDX)
Number of Hedge Fund Holders: 55
Cramer thinks that FedEx Corporation (NYSE:FDX) will report good tidings when it announces its second-quarter fiscal 2025 earnings report.
“The transports have been picking up of late, which tells me maybe we gotta be a little more hopeful when the great FedEx reports. This company’s been working hard to take out costs and it’s still working aggressively to improve gross margins. I think we’ll hear good things… This is the period where people are most nervous about it because of the upcoming holiday.”
FedEx (NYSE:FDX) offers transportation, e-commerce, and business services, including express transportation, small-package delivery, freight transportation, and various business support services. The company is undergoing significant restructuring as part of its DRIVE transformation plan, which is expected to result in $2.2 billion in permanent cost reductions for the fiscal year.
Rajesh Subramaniam, President, Chief Executive Officer, and Director, mentioned that the company has implemented new pricing strategies, including adjustments to demand and fuel surcharges, which are expected to positively impact the company’s performance in the upcoming quarters. It also updated its financial outlook for fiscal 2025. The company now expects low single-digit percentage revenue growth year over year, which is lower than its previous forecast of a low-to-mid single-digit percentage increase.
In terms of earnings, FedEx (NYSE:FDX) revised its forecast for earnings per diluted share to a range of $17.90 to $18.90 before accounting adjustments related to retirement plans, compared to its earlier expectation of $18.25 to $20.25 per share. Despite these revisions, the company reaffirmed its forecast for capital spending, which is set at $5.2 billion.
3. Lennar Corporation (NYSE:LEN)
Number of Hedge Fund Holders: 68
Cramer pointed out that Lennar Corporation (NYSE:LEN) could face challenges and highlighted housing stocks declining after Toll Brothers reported disappointing earnings.
“We have some big earnings reports on Wednesday… After the close, we hear from two bellwethers, there’s Micron, the semiconductor company, which you know I like very much, and Lennar, the huge home builder, which I also share affection for… Lennar, okay, that’s trickier. This week saw the housing stocks just get clubbed after Toll Brothers reported a less than perfect quarter before getting downgraded by JP Morgan. One two punches Friday morning. That sent the group cascading. It’s a casualty of the frail bond market, which is not cooperating with the Fed’s rate cut agenda. Mortgage rates are stubbornly high and we just aren’t getting the turnover we would’ve expected by now.”
Lennar (NYSE:LEN) is a U.S.-based homebuilder involved in the construction and sale of single-family homes, residential land development, and multifamily rental property management. On December 13, JPMorgan analyst Michael Rehaut reduced the price target on the stock to $173 from $192 and maintained a Neutral rating on the stock.
After holding a positive outlook on the homebuilder sector for the past two years, the firm is adopting a “more cautious, less constructive approach” for 2025. JPMorgan forecasts a “significantly” less favorable demand/supply environment, predicting margin and return on equity contraction for builders in the coming year. Additionally, the analyst points out that stock valuations remain high, according to a research note. This shift in ratings reflects the firm’s 2025 outlook, as key demand drivers for housing, such as interest rates, employment growth, and affordability, are not expected to improve substantially in 2025.
On December 12, Freddie Mac published the results of its Primary Mortgage Market Survey, revealing that the average 30-year fixed-rate mortgage stood at 6.60 percent. Freddie Mac (the Federal Home Loan Mortgage Corporation) is a government-backed entity that buys, guarantees, and securitizes home loans. Sam Khater, Freddie Mac’s Chief Economist, noted that the 30-year fixed-rate mortgage decreased for the third consecutive week. He explained that the drop in mortgage rates, strong consumer income growth, and a positive stock market have led to increased homebuyer demand in recent weeks. However, he also pointed out that while the housing market outlook is improving, the progress is limited due to ongoing affordability challenges faced by homebuyers.
For the fourth quarter, the company expects new orders in the range of 19,000 to 19,300. Deliveries are projected to be between 22,500 and 23,000, with an average sales price of approximately $425,000. The gross margin percentage on home sales is anticipated to remain flat compared to the third quarter.
2. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 75
Cramer stated that NIKE, Inc. (NYSE:NKE) has to introduce more innovation to stay competitive with its rivals.
“After the close, we believe we’re gonna get a revelatory report from Nike. Now, the new CEO Elliott Hill, he’s an old Nike hand by the way, will have to lay out a story about how to reignite this brand globally, which is undersold from Adidas, Hoka, Deckers, Hoka of Deckers, and then On Holdings, which we’ve had on a bunch of times. I think Nike has to do more than just say it’ll work harder with its partners. That’s a hackneyed statement, doesn’t hold any water with me anymore. The company needs to show innovation, dazzling innovation, the kind that makes us feel like fools for even thinking of abandoning Nike. It’s amazing how much damage the previous CEO did to this once unassailable brand. It won’t be undone easily and we’ll need both, a roadmap with a line of sight to the end of the number cuts and a sense of newness.”
NIKE (NYSE:NKE) designs, develops, markets, and sells athletic footwear, apparel, equipment, accessories, and services, including performance gear for various sports activities. It has been facing challenges in managing the right balance between direct-to-consumer sales and its broader sales strategy. Company executives admitted that they overemphasized direct and online sales, which left the brand unprepared for the return of in-store shopping as pandemic lockdowns eased.
As the company reduced sales through large retail partners and redirected inventory to its own channels, it experienced a significant drop in revenue. In fiscal Q1 of 2025, revenue fell by 10% year-over-year, with sales coming in below expectations. In October, Matthew Friend, chief financial officer, acknowledged that the company had made mistakes by focusing too heavily on direct sales and said teams were engaging closely with partners to address these issues.
Additionally, in October, NIKE (NYSE:NKE) replaced its CEO with Elliott Hill, a long-time company veteran. Hill previously ran Nike’s product and marketplace division. The upcoming fiscal Q2 2025 earnings call ought to provide further insights into the new strategic direction under Hill’s leadership.
1. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 107
Ahead of Micron Technology, Inc.’s (NASDAQ:MU) first-quarter fiscal 2025 earnings report on December 18, Cramer said:
“We have some big earnings reports on Wednesday… After the close, we hear from two bellwethers, there’s Micron, the semiconductor company, which you know I like very much, and Lennar, the huge home builder, which I also share affection for. Micron had a nice rally today and I think you can tell a good story about the entire line of chips after a period of subpar performance, not just the high bandwidth chips.”
Micron (NASDAQ:MU) is a company that specializes in designing, developing, and manufacturing memory and storage products. According to the company’s management, the demand outlook for dynamic random access memory (DRAM) in the calendar year 2024 has improved. This improvement is largely attributed to the strength in data center servers and consistent performance in other market segments, which aligns with prior expectations.
As a result, the company has raised its forecast for DRAM bit demand growth in 2024 to the high-teens percentage range. In addition, the company anticipates that NAND bit demand growth will remain steady in the mid-teens percentage range for the same year. Looking further ahead, it expects the bit demand growth for both DRAM and NAND flash memory in 2025 to be in the mid-teens percentage range as well.
For the first fiscal quarter of 2025, Micron (NASDAQ:MU) has projected revenue to be approximately $8.7 billion, with a margin of plus or minus $200 million. In terms of profitability, the company expects its gross margin to fall within a range of 39.5%, with a variation of plus or minus 100 basis points.
While we acknowledge the potential of Micron Technology, Inc. (NASDAQ:MU) 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 MU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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