In this article, we will discuss the 10 cheap stocks to buy now according to Jim Cramer. If you want to explore similar stocks, you can also take a look at 5 Cheap Jim Cramer Stocks to Buy Now.
“The Initial Move Is Almost Always A Head Fake”
On March 22, the Fed raised interest rates by 25 basis points, in-line with market consensus. On March 25, Mad Money host Jim Cramer weighed in on this move by the Fed and what he sees for the markets ahead. Cramer was expecting a quarter-point rate hike from the Fed, however, he thinks that the Fed “was a bit more hawkish” than he anticipated in light of the banking crisis. Cramer noted that though the Fed is suggesting moving interest rates higher than the current level, the Fed funds futures indicate 8 cuts by the back half of 2023.
Cramer pointed out an interesting pattern that the markets have followed over the past year after every FOMC meeting since March 2022. Cramer thinks that this pattern can be insightful and can potentially guide the direction of the market in the near-term. Cramer noted that before the March 2022 rate hike, the intraday average movement of the S&P 500 in either direction was 1.15%. He defined this as the baseline and pointed out that out of 9 times the Fed has raised interest rates, 7 times the S&P 500 exhibited a bigger move than its intraday average. Cramer’s analysis shows that the initial 3-day move of the markets, after the Fed’s rate hike, reverses in the following 3 months. This has held true for 7 out of 8 times over the Fed’s hiking cycle, that began in March 2022. Cramer thinks that “the initial move is almost always a head fake”.
While the pattern is noteworthy, Jim Cramer thinks that it is “dangerous to predict we’re going to rally over the next 3 months”, especially amid the banking crisis. The key takeaway for investors according to Cramer is that “the initial reaction of the Fed’s rate hikes has been wrong, every time, over the past year”.
We have compiled a list of the best cheap stocks to buy according to Jim Cramer. Some cheap stocks that Jim Cramer is recommending to buy right now include Devon Energy Corporation (NYSE:DVN), Nucor Corporation (NYSE:NUE), and Stellantis N.V. (NYSE:STLA).
Our Methodology
To come up with the best cheap stocks to buy now according to Jim Cramer, we watched Mad Money episodes aired over the past 2 weeks. We noted down every stock Jim Cramer recommended buying and sourced their trailing twelve-month price-to-earnings ratios from Yahoo Finance. We narrowed down our selection to stocks that had a TTM PE ratio of less than 15, as of March 28, and listed them in descending order of this metric. We have also mentioned the hedge fund sentiment for each stock, which was sourced from Insider Monkey’s proprietary database of over 900 elite money managers.
10 Cheap Jim Cramer Stocks to Buy Now
10. M&T Bank Corporation (NYSE:MTB)
Number of Hedge Fund Holders: 42
PE Ratio (TTM) as of March 28: 10.28
As of March 28, M&T Bank Corporation (NYSE:MTB) is trading at a PE multiple of 10x and is offering a forward dividend yield of 4.41%. Jim Cramer likes M&T Bank Corporation (NYSE:MTB) and said that it is a “very good bank” in one of his lightning rounds.
On March 27, Citi analyst Keith Horowitz upgraded M&T Bank Corporation (NYSE:MTB) to Buy from Neutral and revised his price target on the stock to $155 from $178. M&T Bank Corporation (NYSE:MTB) is placed tenth on our list of the best cheap stocks to buy now according to Jim Cramer.
M&T Bank Corporation (NYSE:MTB) was spotted on 42 investors’ portfolios at the end of Q4 2022. These funds disclosed collective stakes worth $846.7 million in the company.
As of December 31, Citadel Investment Group is the top shareholder in M&T Bank Corporation (NYSE:MTB) and has disclosed a position worth $298.4 million.
9. Enterprise Products Partners L.P. (NYSE:EPD)
Number of Hedge Fund Holders: 24
PE Ratio (TTM) as of March 28: 10.20
At the end of Q4 2022, Enterprise Products Partners L.P. (NYSE:EPD) was held by 24 hedge funds. These funds disclosed positions worth $242.4 million in the company, up from $221.6 million in the previous quarter when 21 hedge funds held stakes in the company. The hedge fund sentiment for the stock is positive.
On March 2, Scotiabank analyst Tristan Richardson started coverage of Enterprise Products Partners L.P. (NYSE:EPD) with an Outperform rating and a $31 price target.
In one of his recent episodes, Jim Cramer recommended Enterprise Products Partners L.P. (NYSE:EPD) to one of his callers over Energy Transfer L.P. (NYSE:ET). Cramer noted that while Energy Transfer L.P. (NYSE:ET) is offering a higher yield than his preference, he still prefers Enterprise Products Partners L.P. (NYSE:EPD) over Energy Transfer L.P. (NYSE:ET).
As of March 28, Enterprise Products Partners L.P. (NYSE:EPD) is trading at a TTM PE ratio of 10.20 and is offering a forward dividend yield of 7.73%. Enterprise Products Partners L.P. (NYSE:EPD) is one of the best cheap stocks to buy now according to Jim Cramer.
As of December 31, Fairholme (FAIRX) is the most prominent investor in Enterprise Products Partners L.P. (NYSE:EPD) and has a stake worth $99.9 million.
Legacy Ridge Capital made the following comment about Enterprise Products Partners L.P. (NYSE:EPD) in its Q4 2022 investor letter:
“Enterprise Products Partners L.P. (NYSE:EPD) is still owned in the fund and remains one of our largest positions, as it has been since the partnership was founded. This has not been a great investment. Shares are down about 6% since I first wrote about it. However, we have received $8.93 per share in dividends, which is about 34% of the 2018 share price. So, with dividends included we’ve made 28% cumulatively over 5-years. Still not good, but not an impairment of capital either.
Since 2018, EPD’s dividend yield has gone from 6.5% to 8% with the annual per share payout growing from $1.72 to $1.96, +14%. The pace of dividend growth has recently increased from about 2% to 5%+. Additionally, Distributable Cash Flow per share (what could be paid to us if management wanted to) has increased 22%, from $2.73 to $3.33, while leverage has come down a little over ½ a turn. So, the balance sheet and cash flow metrics are in better shape than they were 5-years ago, and they were pretty good 5-years ago.
The competitive dominance of the asset base, industry leading low leverage, and a founding family with multiple billions of dollars invested alongside us keep it a core holding in the portfolio. We’ll continue to own this company unless the shares become meaningfully overvalued, and if it gets cheaper, we would be very comfortable owning more.”
8. Huntington Bancshares Incorporated (NASDAQ:HBAN)
Number of Hedge Fund Holders: 32
PE Ratio (TTM) as of March 28: 7.56
Jim Cramer recently recommended buying Huntington Bancshares Incorporated (NASDAQ:HBAN) to one of his callers, noting that he likes the company’s management and M&T Bank Corporation (NYSE:MTB) “is a well-run bank”. As of March 28, the stock is trading at a PE multiple of 7x and is offering a forward dividend yield of 5.58%.
This March, RBC Capital updated its price target on Huntington Bancshares Incorporated (NASDAQ:HBAN) to $16 from $18 and maintained an Outperform rating on the shares.
At the end of Q4 2022, 32 hedge funds were long Huntington Bancshares Incorporated (NASDAQ:HBAN) and disclosed stakes worth $224.6 million in the company. Of those, Citadel Investment Group was the leading investor in the company and disclosed a position worth $107.8 million.
Here is what Aristotle Capital Boston, LLC had to say about Huntington Bancshares Incorporated (NASDAQ:HBAN) in its Q3 2022 investor letter:
“Huntington Bancshares Incorporated (NASDAQ:HBAN), an Ohio-based bank holding company, was removed from the portfolio based on our belief that shares were fully valued and there were better opportunities to deploy capital elsewhere within the portfolio.”
Some of the best cheap stocks to buy now according to former hedge fund manager and Mad Money host, Jim Cramer, include Huntington Bancshares Incorporated (NASDAQ:HBAN), Devon Energy Corporation (NYSE:DVN), Nucor Corporation (NYSE:NUE), and Stellantis N.V. (NYSE:STLA).
7. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 75
PE Ratio (TTM) as of March 28: 7.31
On March 17, Wells Fargo analyst Mohit Bansal updated its price target on Pfizer Inc. (NYSE:PFE) to $44 from $50 and maintained an Equal Weight rating on the shares.
In one of his recent lightning rounds, Cramer chose between Pfizer Inc. (NYSE:PFE) and Seagen Inc. (NASDAQ:SGEN). Cramer recommended buying Pfizer Inc. (NYSE:PFE) over Seagen Inc. (NASDAQ:SGEN), saying that “you’re not gonna go wrong (with this stock)”. However, he said he also likes Seagen Inc. (NASDAQ:SGEN).
As of March 28, Pfizer Inc. (NYSE:PFE) has a trailing twelve-month PE ratio of 7.31 and is offering a forward dividend yield of 4.08%. The stock is placed seventh on our list of the best cheap Jim Cramer stocks to buy now.
Pfizer Inc. (NYSE:PFE) was held by 75 hedge funds at the end of Q4 2022. These funds held positions worth $2.50 billion in the company, up from $2.44 billion in the previous quarter when 77 hedge funds held stakes in the company.
As of December 31, AQR Capital Management is the top shareholder in Pfizer Inc. (NYSE:PFE) and has disclosed a stake worth $502.7 million.
6. Pioneer Natural Resources Company (NYSE:PXD)
Number of Hedge Fund Holders: 55
PE Ratio (TTM) as of March 28: 6.33
Cramer chose buying Pioneer Natural Resources Company (NYSE:PXD) over Occidental Petroleum Corporation (NYSE:OXY) in one of his lightning rounds. Cramer said that Pioneer Natural Resources Company (NYSE:PXD) offers a better dividend than Occidental Petroleum Corporation (NYSE:OXY) and that is why it’s his favorite. However, Occidental Petroleum Corporation (NYSE:OXY) is Warren Buffett’s favorite stock and “that’s why that stock is so darn hot”, said the Mad Money host.
Pioneer Natural Resources Company (NYSE:PXD) is trading at a PE multiple of 6x and is offering a forward dividend yield of 14%, as of March 28. The stock is one of Jim Cramer’s best cheap stocks to buy now. This March, Citi analyst Scott Gruber upgraded Pioneer Natural Resources Company (NYSE:PXD) to Buy from Neutral and raised his price target on the shares to $210 from $193.
At the close of the fourth quarter of 2022, 55 hedge funds were long Pioneer Natural Resources Company (NYSE:PXD) and disclosed stakes worth $841.9 million in the company. Of those, Yacktman Asset Management is the top shareholder in the company and has disclosed a position worth $165.5 million.
Other cheap stocks that Jim Cramer likes include Devon Energy Corporation (NYSE:DVN), Nucor Corporation (NYSE:NUE), and Stellantis N.V. (NYSE:STLA).
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Disclosure: None. 10 Cheap Jim Cramer Stocks to Buy Now is originally published on Insider Monkey.
