In this article, we’ll explore Jim Cramer’s Top 10 Must-Watch Stocks for Savvy Investors.
Friday Madness
In a recent episode of Mad Money, Jim Cramer described September 6, Friday, as a dismal trading day following a critical non-farm payrolls report. Bulls hoped for weaker-than-expected hiring and steady wages to prompt the Federal Reserve to consider cutting rates. They got what they wished for, but this led to a surprising turn of events: instead of rallying, the market saw a sharp decline, with the Dow falling 410 points, the S&P dropping 1.73%, and the NASDAQ plummeting 2.55%.
“What an ugly day. Just hideous. We came into today knowing we’d have a critical non-farm payrolls report. If you were a bull, you wanted to see weaker-than-expected hiring with wages pretty much in line, because that’s what the Fed needs to see before it can start cutting rates. Voila, we got exactly what we wished for. Maybe we should have been careful, though, because as soon as we got what we wanted, the bulls vanished and the sellers came out of the woodwork, crushing practically everything. The Dow fell 410 points, the S&P plunged 1.73%, and the NASDAQ plummeted 2.55%.”
Cramer noted that September often brings significant profit-taking, making it historically the weakest month for the market. While this might seem like circular reasoning, it’s more plausible than suggesting that fear of a severe economic slowdown drives the sell-off. In fact, big tech companies, which are central to ongoing powerful trends like data centers and accelerated computing, should be seen as buying opportunities during market dips.
“This market has a September problem. Come September, we’re always hit with a tremendous amount of profit-taking, which is why it’s the weakest month of the year. I know that’s somewhat circular reasoning—we sell because we’ve always sold—but it makes more sense than saying people sold tech because they fear a hard landing. Tech, especially big tech, is something you buy, not sell, into weakness if you’re worried about a more severe slowdown.
Why? Well, because big tech is all about powerful secular themes that can keep going even during a recession—and we’re not getting one. I’m talking about the data center, accelerated computing—they’re not going anywhere. Nevertheless, when anything jars the big tech themes of the moment, the market’s reaction is swift, harsh, and horrible.”
Jim Cramer discussed the aftermath of NVIDIA’s recent report, noting that despite his belief that AI is not a bubble, the stocks related to AI have seen substantial gains, particularly in August. He pointed out that September often triggers increased selling, even when companies report results that meet expectations.
“Look at what happened after the company reported last night. I don’t believe AI is a bubble, but these stocks are still up a great deal, especially in August. And September tends to bring out sellers when you get just in-line numbers.”
The Upcoming Debate Between Harris and Trump
Jim Cramer also commented on the upcoming debate between Vice President Harris and former President Trump, scheduled for Tuesday night. He questioned how much the economy will be a focus, speculating that Trump might try to link Harris to recent inflation trends, while Harris may present herself as a more moderate alternative to President Biden.
“Tuesday night’s the great debate between Vice President Harris and former President Trump. I don’t know how much of a role the economy will play in the debate. If Trump’s on his game, he’ll try to tie Harris to the inflation we’ve experienced since COVID. I suspect that Harris will try to portray herself as more moderate than President Biden.
Either way, I doubt there’ll be anything specifically market-moving, even if the candidates say something newsworthy about their tax plans. Keep in mind that the winner in November likely won’t have the Senate votes to totally rework the tax code, whether we’re talking about Harris’s capital gains tax or Trump’s 19th-century-style tariffs.”
Jim Cramer Urges Investors: “Please Do Not Give Up the Ship Here”
Then he discussed the upcoming release of the Consumer Price Index (CPI) on Wednesday, which will provide another update on inflation. He emphasized that if inflation remains steady or decreases, the Federal Reserve will have more flexibility to lower interest rates and potentially avoid a recession, addressing concerns from many sellers. Cramer urged investors to stay confident and not to abandon their positions based on these uncertainties.
“Wednesday, we get another read on inflation—this time from the Consumer Price Index. What can I say? As long as inflation stays the same or goes lower, the Fed has plenty of leeway to cut interest rates and prevent a recession—the thing so many sellers are worried about. That’s why I keep telling you, please do not give up the ship here.”
Our Methodology
The article reviews a recent episode of Jim Cramer’s Mad Money, where he discussed and recommended several stocks. It focuses on ten companies that Cramer featured and details how hedge funds view and invest in these companies. The article ranks these companies based on their ownership levels among hedge funds, from those least owned to those most owned.
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).
Jim Cramer’s Top 10 Must-Watch Stocks for Savvy Investors
10. GameStop Corp. (NYSE:GME)
Number of Hedge Fund Investors: 12
Last Friday, GameStop Corp. (NYSE:GME) saw a boost in its share price after Keith Gill, known as “Roaring Kitty,” posted a picture of “Toy Story” on X. Despite the buzz, Jim Cramer points out that GameStop Corp. (NYSE:GME), the original meme stock, frequently creates high expectations that don’t always materialize into meaningful results, such as earnings-per-share growth. Cramer suggests that GameStop Corp. (NYSE:GME) needs to present a solid long-term business strategy, or its quarterly report might once again fall short of expectations.
“Tuesday, GameStop reports, and that always seems to stir up animal spirits. In fact, GameStop Corp.(NYSE:GME) shares popped today after Keith Gill, aka “Roaring Kitty,” posted a picture of “Toy Story” on X. Yeah, seriously. The original meme stock always seems to have a lot of promise but never translates into anything real—like earnings-per-share growth. It’s time for the company to reveal a long-term business plan, or the quarter will just land with a thud again.”
GameStop Corp. (NYSE:GME) is currently facing financial challenges, as reflected in its recent performance and future projections. GameStop Corp. (NYSE:GME)’s Q2 2024 earnings report, due on September 10, 2024, is expected to reveal a significant drop in revenue to $900 million, compared to $1.16 billion a year earlier. Comparable store sales are predicted to decline by 23%, and GameStop Corp. (NYSE:GME) is forecasted to post a net loss of about $5.3 million, which is worse than the $2.8 million loss from the same quarter last year but an improvement from the $32.3 million loss in Q1 2024.
These issues are part of a broader trend affecting the retail sector, where consumers are cutting back on spending on non-essential items like video games. Despite these difficulties, GameStop Corp.(NYSE:GME) is trying to revitalize its brand by converting some stores into retro gaming locations that focus on older gaming consoles. This move could attract nostalgic customers and offer a new revenue stream.
GameStop Corp. (NYSE:GME)’s stock, which has risen by over 25% this year, shows some investor optimism despite the underlying problems. A bullish view would suggest that if GameStop Corp. (NYSE:GME) can successfully tap into the retro gaming trend and improve its operations, there could be potential for a turnaround. GameStop Corp. (NYSE:GME)’s history of volatility and its appeal to speculative investors might also contribute to future gains, provided the company can overcome its current financial challenges.
9. Eastman Chemical Company (NYSE:EMN)
Number of Hedge Fund Investors: 28
Jim Cramer believes that the CEO of Eastman Chemical Company (NYSE:EMN) is highly intelligent, noting that he has personally met with him. Cramer views Eastman Chemical Company (NYSE:EMN)’s stock as a strong investment in the plastics sector, especially considering its 3% dividend yield. In his opinion, it stands out as one of the better options available in the market for plastic stocks.
“Yes, the CEO of Eastman Chemical is a very smart guy. I’ve sat down with him, too, and I think the stock, with a 3% yield, is one of the better plastic stocks in the market.”
Eastman Chemical Company (NYSE:EMN) has reported strong financial results, with a 2% increase in sales revenue to $2.36 billion, thanks to higher sales in its Advanced Materials segment, despite a drop in raw material prices. Eastman Chemical Company (NYSE:EMN)’s adjusted earnings per share (EPS) improved to $2.15 from $1.99 last year, reflecting its ability to manage operations effectively and maintain pricing discipline.
Eastman Chemical Company (NYSE:EMN)’s focus on innovation, particularly in circular economy initiatives, supports a positive outlook. Eastman Chemical Company (NYSE:EMN)’s methanolysis facility in Kingsport is advancing in recycling difficult plastics and is expected to boost EBITDA by about $50 million in 2024. This effort not only promotes sustainability but also strengthens Eastman Chemical Company (NYSE:EMN)’s position in the growing market for recycling solutions.
Additionally, Eastman Chemical Company (NYSE:EMN) reported strong cash flows of $367 million in Q2 and returned $195 million to shareholders through dividends and share buybacks. With a forecasted full-year EPS between $7.40 and $7.85 and a cash flow target of $1.4 billion, Eastman Chemical Company (NYSE:EMN) shows robust financial health. Although there are some concerns about weak demand in the latter part of 2024, Eastman Chemical Company (NYSE:EMN)’s solid financial performance, commitment to sustainability, and shareholder returns make it an attractive investment opportunity.
ClearBridge Sustainability Leaders Strategy stated the following regarding Eastman Chemical Company (NYSE:EMN) in its Q2 2024 investor letter:
“Helping companies meet these new rules will be ClearBridge holding Eastman Chemical Company (NYSE:EMN), which makes a range of advanced materials, chemicals and fibers for everyday purposes, among them plastics for food packaging. In a recent engagement with Eastman Chemical we discussed two different chemical recycling technologies it has developed: polyester renewal technology (‘PRT’) and carbon renewal technology (‘CRT’). PRT recycles polyester-based materials such as soda bottles, carpet fibers and even clothing, breaking down their basic molecules until they are indistinguishable from materials made from virgin or nonrecycled content.
CRT operates in a similar way but can take a broader range of plastic types and replaces the use of coal as a feedstock to make fibers. Combining these two technologies gives Eastman a competitive advantage in molecular recycling, as it can take most types of waste plastics (Exhibit 1). Ironically, securing feedstock (i.e., waste plastic) has been a bottleneck to scaling molecular recycling as competitor technologies not using Eastman’s dual technologies often require the waste plastic to be separated purely according to grade, which waste and recycling companies do not readily offer. Eastman’s dual technology approach allows it to accept most plastic grades, making it less reliant on waste companies’ sorting…” (Click here to read the full text)