We recently published a list of 8 Stocks on Jim Cramer’s Radar. In this article, we are going to take a look at where The Home Depot, Inc. (NYSE:HD) stands against other stocks on Jim Cramer’s radar.
Jim Cramer, the host of Mad Money, recently broke down the market’s performance on Tuesday, discussing how President Donald Trump’s early days in office might be influencing investor sentiment. He speculated that the stock rally could be tied to a belief among investors that Trump’s promises on tariffs may be harsher than his actual actions, leading to optimism.
Cramer pointed out that during Trump’s first presidency, investors learned to buy stocks during moments of market volatility caused by his aggressive rhetoric. He noted that Trump’s frequent saber-rattling would often prompt sell-offs, but those moments, when stocks of companies he criticized dropped, turned out to be prime opportunities to invest.
Cramer explained that this pattern of buying the dips was exactly what played out on Tuesday. After months of discussing high tariffs, Trump’s inaugural speech struck a more tempered tone, and he avoided threatening severe trade barriers. According to Cramer, this shift in rhetoric surprised many, especially given how aggressive his stance had been in the past.
“Maybe four years is a long time ago, but people seem to forget the Trump drill. The president loves the stock market. He always loves to send signals that all hell is going to break loose and when it doesn’t, well guess what? The market flies.”
READ ALSO Jim Cramer Discussed 9 Stocks for This Week’s Game Plan and 9 Stocks on Jim Cramer’s Radar
Cramer also suggested that this latest market rally is driven by the prospect of tariffs, especially on tariffs that are smaller than initially forecasted. He mentioned that these could increase if foreign countries don’t comply with U.S. demands. Furthermore, Cramer highlighted the role of new projects such as Stargate, an AI infrastructure initiative backed by OpenAI, Oracle, and SoftBank. He noted that this project, which will involve new data centers likely outfitted with Nvidia technology, was another contributing factor to the market’s upbeat performance. Cramer noted that the presence of major tech leaders at the inauguration further reinforced optimism.
“Will it stay this way? What did we learn about Trump the first time around? You could never be sure. The difference on day one? He knows business people, Silicon Valley. He knows how things work. You may like him. You may hate him. But the bottom line? If you’re a tech titan, Trump will take your call. In fact, he’ll call you. Biden, I don’t know if he knew who they even were and he certainly didn’t bother to call them. In the end, I think he preferred to sue them. If you own stocks, which is why you watch me, Trump’s method is a heck of a lot better for your portfolio.”
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 21. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A home improvement store overflowing with a variety of products and supplies.
The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 82
While Cramer was on the subject of housing, he explained that The Home Depot, Inc. (NYSE:HD), one of the largest and most recognized retailers in the home improvement sector, is part of his Charitable Trust portfolio because he believes the company will perform well in a lower interest rate environment. He mentioned that he and his team have been buying shares since September 2024, expecting positive results as interest rates decline. He went on to say:
“While we haven’t exactly gotten that lower-rate environment, Home Depot’s stock has held up pretty well these past few months. It’s actually up modestly since September… I think it’d be one of the best stocks in the Dow. Last year, Home Depot did a relatively large deal. It put this $18.25 billion acquisition of SRS Distribution, which let them move further into the part of the market where Builders FirstSource operates, that’s the professional space.
The deal’s already benefiting Home Depot when the company last reported earnings in November, its sales were up 6% year over year, despite the fact that still cautious do-it-yourselfers, well, the shoppers, they went into Home Depot less and spent less per transaction than in the year before. That didn’t matter because they did so much professional business. Home Depot also called out hurricane-related demand in the quarter, but I think it’s going to play out over multiple quarters or even multiple years like the fires in the Southland.”
Cramer reiterated that both Builders FirstSource and Home Depot (NYSE:HD) are stocks that rely on lower interest rates to perform well. He emphasized that if someone believes long-term rates will continue to rise, these stocks could face challenges. However, he said that if someone believes that the rise in long-term rates is mostly over, then both Builders FirstSource and Home Depot should be considered strong buying opportunities. Cramer hammered his point with a clear “buy buy buy” buzzer sound as he expressed his confidence in these stocks. Lastly, he added:
“Bottom line, once the macro backdrop is right, then Builders FirstSource and Home Depot stand to benefit… from both the persistent housing shortage and now the additional business that will come from the vast rebuilding efforts underway in multiple states impacted by natural disasters recently. So if you’re in the camp that expects lower rates, those are two terrific stocks to buy right now.”
Overall, HD ranks 8th on our list of stocks on Jim Cramer’s radar. While we acknowledge the potential of HD 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 HD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
