We recently published a list of Jim Cramer’s Latest Calls: 10 Stocks to Buy and Sell Now. Since Textron Inc (NYSE:TXT) ranks 10th on the list, it deserves a deeper look.
Jim Cramer in a recent program on CNBC yet again talked about the importance of investing in individual stocks and said with discipline and patience beginner investors can beat the market by picking solid stocks with strong fundamentals.
“If you are willing to put in the work, regular people can trounce the averages as long as you are disciplined and you follow the rules,” Cramer said.
Talking about his stock-picking process, Cramer said that he likes to “start” hunting for stocks by going through the list of stocks making new highs. This is a good start, according to Cramer, because a lot of times momentum keeps pushing the same stocks higher and higher unless something fundamentally changes. Cramer said he does not recommend buying stocks when they are trading at new highs. Instead, he waits for a pullback.
“New high list is not a shopping list it’s an inspirational list. You keep an eye on those names and then wait for them to come down before you pull the trigger,” Cramer said.
Cramer said that you should only pile into stocks on a pullback if you believe they will rebound for reasons “unrelated to the broader market.”
For this article, we picked 10 key stocks Jim Cramer is talking about during his programs these days. With each stock, we have mentioned the number of hedge fund investors. 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).
Jordan Tan / Shutterstock.com
Textron Inc (NYSE:TXT)
Number of Hedge Fund Investors: 26
According to CNBC research, aircraft, defense, industrial company Textron Inc (NYSE:TXT) has historically performed in the beginning of the rate-cut cycles.
Cramer was surprised that the stock performs well during rate cuts, and said:
“I think it could work now that the Fed is cutting rates but keep in mind that Textron will get clobbered if the economy is truly in much worse shape than we think.”
Textron Inc (NYSE:TXT) has the following key business segments:
- Textron Aviation: Specializes in designing, manufacturing, and selling business jets, turboprop aircraft, and piston-engine planes for both civilian and military use.
- Bell: Produces military helicopters and tiltrotors, primarily serving U.S. defense contracts.
- Textron Systems: Provides defense products, including unmanned systems and weapons.
- Industrial: Focuses on selling specialized vehicles and machinery across various industries.
- Textron eAviation: Develops electric and sustainable aircraft solutions.
In the recently reported quarter, Textron Inc (NYSE:TXT) revenue rose to $3.5 billion from $3.4 billion last year, driven by Aviation and Bell segments.
However, the company’s Industrial segment faced headwinds, with revenue dropping 11% and profits plunging 46.8% year-over-year. The decline was driven by reduced demand in the automotive and consumer goods sectors, which management attributed to high interest rates and rising costs for raw materials and labor. Management isn’t anticipating a quick recovery in demand and is instead focusing on cost-cutting measures.
Textron Inc (NYSE:TXT) heavy reliance on U.S. government contracts poses another risk, particularly in the Bell segment, which has secured several key deals, including the DARPA X-Plane and U.S. Navy’s METS programs.
Overall, Textron Inc (NYSE:TXT) ranks 10th on Insider Monkey’s list titled Jim Cramer’s Latest Calls: 10 Stocks to Buy and Sell Now. While we acknowledge the potential of Textron Inc (NYSE:TXT), 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 TXT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
