Jim Cramer’s Lightning Round: 7 Stocks to Watch

5. Dow Inc. (NYSE:DOW)

Number of Hedge Fund Holders: 31

A caller asked Cramer’s thoughts on Dow Inc. (NYSE:DOW), highlighting that the stock was recently dropped by the Dow Jones Industrial Average. Here’s what Mad Money’s host had to say:

“This is a tough one. I think that Jim Fitterling does a great job, but it needed China. It needs pricing to go up, it needs a much stronger economy. It yields 6.29. A lot of people bought it in the ‘50s thinking that it wouldn’t break down through the 5% level. If you don’t have growth and you sell at 21 times earnings, you’re not gonna be able to do anything. At these prices, I’m willing to put a position on but understand that the yield turned out to be not the kind of protection that we thought.”

Dow (NYSE:DOW) provides a wide range of materials science solutions for various industries, through its subsidiaries, offering products such as ethylene, propylene, coatings, and adhesives. It was removed from the Dow Jones Industrial Average (DJIA) before the opening of trading on November 8.

According to S&P Dow Jones Indices, the decision was influenced by the fact that Dow Inc. had become the smallest company in the index by market capitalization. During its third-quarter earnings call, management acknowledged that it had been facing subdued demand in several of its end markets and regions. The company noted that the greatest challenges were being experienced in Europe and China.

Management commented that consumer spending remained under pressure due to ongoing inflation, and infrastructure demand, especially in residential construction, was notably low. Management also noted that in China, new home prices had dropped for the 15th consecutive month. Dow (NYSE:DOW) also observed that auto production in China had fallen for the fourth month in a row, a reflection of both weak domestic demand and the impact of European tariffs on exports.

It should be noted that CEO Jim Fitterling, talking about the future, stated that the company’s financial stability will sustain its growth investments, which are aimed at higher-value sectors and regions, especially those with strong demand and where the company holds a cost advantage. These investments are projected to generate over $3 billion in underlying earnings by 2030.