In this article, we discuss 10 Jim Cramer stocks to watch in August.
Mad Money’s Jim Cramer told investors on July 28 to use their heads rather than emotional rationale when picking stocks in this market. To drive his point home, Cramer pointed towards Mark Zuckerberg’s Meta Platforms, Inc. (NASDAQ:META). He said that Meta Platforms, Inc. (NASDAQ:META) used to be a solid investment when Facebook was the dominant social media platform, and it still made sense to invest in the company when it made several acquisitions including Instagram and WhatsApp. However, investors believed in Mark Zuckerberg and did not see the underlying company fundamentals clearly, which he referred to as the ‘great man theory of investing’.
He observed that Meta Platforms, Inc. (NASDAQ:META) stock has lost about half its value year to date, and the company’s disappointing quarter paired with the macroeconomic backdrop is not doing it any favors. He warned investors to avoid the ‘great man theory of investing’, as it never pans out over the long-term, and in this especially market, due diligence before investment is quite important.
Cramer also noted on July 28 that the Federal Reserve seems to be at the end of its tightening cycle, and investors should utilize this opportunity to strengthen their portfolios or add new positions. He said that with a recession threatening to batter the stock market, the Fed has to stop raising rates, “and that pause means you’ve got to buy stocks”. He stressed that this recession is likely to impact inventory, not employment, which means if the Fed does not issue any more unwelcome guidelines, investors can start pouring into the stock market.
Some of the stocks that Jim Cramer was backing heading into August include Costco Wholesale Corporation (NASDAQ:COST), Occidental Petroleum Corporation (NYSE:OXY), and Johnson & Johnson (NYSE:JNJ).
Our Methodology
We selected these stocks from the Lightning Rounds of Jim Cramer’s Mad Money, dated July 25 and later. We have ranked the list according to the Q1 2022 hedge fund sentiment around each stock, which was gauged from Insider Monkey’s database of over 900 elite hedge funds.
Jim Cramer Stocks to Watch in August
10. ICON Public Limited Company (NASDAQ:ICLR)
Number of Hedge Fund Holders: 30
ICON Public Limited Company (NASDAQ:ICLR) was incorporated in 1990 and is headquartered in Dublin, Ireland. It is a clinical research organization that specializes in outsourced development and commercialization services in Ireland, the rest of Europe, the United States, and internationally. On July 28, Jim Cramer said in the Lightning Round of his show that he loves ICON Public Limited Company (NASDAQ:ICLR) as it makes a lot of money. “I think it’s terrific”, Cramer added. In Q2 2022, the company reported earnings per share of $1.41, missing market consensus by $0.23. The revenue of $1.93 billion increased 121.5% on a year over year basis, in-line with Street forecasts.
On July 29, Deutsche Bank analyst Justin Bowers raised the price target on ICON Public Limited Company (NASDAQ:ICLR) to $295 from $285 and kept a Buy rating on the shares, citing the company’s “rock-solid cost management” for the revised price estimate.
According to Insider Monkey’s data, 30 hedge funds were bullish on ICON Public Limited Company (NASDAQ:ICLR) at the end of the first quarter of 2022, up from 29 funds in the earlier quarter. The collective stakes in Q1 2022 were $1.11 billion, compared to $1.37 billion in the last quarter.
Lately, Jim Cramer is bullish on ICON Public Limited Company (NASDAQ:ICLR), just like Costco Wholesale Corporation (NASDAQ:COST), Occidental Petroleum Corporation (NYSE:OXY), and Johnson & Johnson (NYSE:JNJ).
Here is what Polen International Growth Fund has to say about ICON Public Limited Company (NASDAQ:ICLR) in its Q1 2022 investor letter:
“One of our largest Portfolio positions, and one of the top performers in 2021, ICON is an Ireland-based contract research organization that provides outsourced drug trial services to the pharmaceutical and biotech industries. ICON delivered positive results during the quarter and continues to build on its track record of above-market growth and exemplary profit margins. The company reported that new orders were exceeding current revenues, implying future organic growth at above market rates. During the quarter, the company addressed concerns regarding a potential slowdown in biotech funding, which it has seen no indication of. Short-term stock price volatility aside, we believe ICON will continue to compound earnings growth at a mid- to high-teens rate for the foreseeable future.”
9. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 42
Archer-Daniels-Midland Company (NYSE:ADM) is a Chicago-based company that supplies agricultural commodities in the United States, Switzerland, Cayman Islands, Brazil, Mexico, and the United Kingdom. The company operates through three segments – Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. Jim Cramer on July 27 answered a viewer’s question about Archer-Daniels-Midland Company (NYSE:ADM), saying he likes the stock and would buy it.
On July 26, Archer-Daniels-Midland Company (NYSE:ADM) reported its Q2 2022 results, posting earnings per share of $2.15 and a revenue of $27.28 billion, outperforming market consensus estimates by $0.43 and $2.41 billion, respectively. The company expects ‘very strong’ earnings in the second half of the year, which will lead to approximately $1 billion in share repurchases in 2022.
Baird analyst Ben Kallo on July 27 raised the firm’s price target on Archer-Daniels-Midland Company (NYSE:ADM) to $94 from $87 and maintained an Outperform rating on the shares. The analyst observed that fundamental demand has elevated for the long term on the back of multiple factors such as higher demand for renewable diesel inputs and a soaring demand for feeding the Asian swine population. He also noted that Archer-Daniels-Midland Company (NYSE:ADM)’s management is returning capital to shareholders, in addition to investing in organic growth opportunities.
According to Insider Monkey’s database, 42 hedge funds were long Archer-Daniels-Midland Company (NYSE:ADM) at the end of Q1 2022, with combined stakes worth $625.68 million. Ric Dillon’s Diamond Hill Capital is the biggest stakeholder of the company, with 4.75 million shares worth $429.15 million.
Here is what Diamond Hill Long-Short Fund has to say about Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 2022 investor letter:
“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”
8. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 44
Albemarle Corporation (NYSE:ALB) is a North Carolina-based manufacturer of engineered specialty chemicals. The company operates through three segments – Lithium, Bromine, and Catalysts. Jim Cramer said in a Lightning Round on July 27 that Albemarle Corporation (NYSE:ALB) is one of the best lithium plays, reiterating that it is “a real company”, compared to others in the sector.
On July 18, Albemarle Corporation (NYSE:ALB) declared a quarterly dividend of $0.395 per share, in line with previous. The dividend is distributable on October 3, to shareholders of record on September 16. At the end of June, Albemarle Corporation (NYSE:ALB) announced that it plans to build a lithium processing plant in the United States, which would have a capacity of 100,000 metric tons per year. This is as much as the company produces collectively from all its locations presently.
KeyBanc analyst Aleksey Yefremov upgraded Albemarle Corporation (NYSE:ALB) on July 20 to Sector Weight from Underweight without a price target. The analyst forecasts U.S. chemicals companies to announce “strong” Q2 results, but he warned that the second half of 2022 may prove “tougher”. The analyst upgraded Albemarle Corporation (NYSE:ALB) to factor in ongoing robustness in lithium prices.
Among the hedge funds tracked by Insider Monkey, Paul Marshall and Ian Wace’s Marshall Wace LLP is the leading stakeholder of Albemarle Corporation (NYSE:ALB) as of Q1 2022, with 482,729 shares worth $106.75 million. Overall, 44 hedge funds were bullish on Albemarle Corporation (NYSE:ALB) at the end of the first quarter of 2022, compared to 48 funds in the prior quarter.
Here is what Carillon Tower Advisers has to say about Albemarle Corporation (NYSE:ALB) in its Q3 2021 investor letter:
“Albemarle is a global specialty chemicals company with leading positions in lithium, bromine, and refining catalysts. The firm’s shares outperformed in the quarter, driven largely by the current robust demand environment for lithium used in the manufacturing of electric vehicle batteries. As the global push towards the reduction of carbon emissions continues to gain steam, Albemarle is well positioned to benefit from the accelerating adoption of electric vehicles.”
7. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 46
Texas Instruments Incorporated (NASDAQ:TXN) manufactures and distributes semiconductors to electronics designers and manufacturers worldwide. It operates in two segments – Analog and Embedded Processing. On July 28, Mad Money’s Jim Cramer reiterated in a Lightning Round that Texas Instruments Incorporated (NASDAQ:TXN) is an absolute buy after the quarter it recently reported. The company’s third quarter outlook for revenue was in the range of $4.90 billion to $5.30 billion, compared to a $4.65 billion consensus and earnings per share guidance fell between $2.23 and $2.51, versus a $2.15 consensus.
Mizuho analyst Vijay Rakesh on July 27 maintained a Neutral rating on Texas Instruments Incorporated (NASDAQ:TXN) and lowered the price target on the stock to $168 from $175 after the “solid” Q2 results. The analyst still believes Texas Instruments Incorporated (NASDAQ:TXN) faces possible peak margins and higher pricing pressure as industry supply improves ahead of an economic slowdown.
According to Insider Monkey’s data, 46 hedge funds were bullish on Texas Instruments Incorporated (NASDAQ:TXN) at the end of Q1 2022, compared to 53 funds in the preceding quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the leading stakeholder of the company, with 3.3 million shares worth about $622 million.
Here is what Davis Opportunity Fund has to say about Texas Instruments Incorporated (NASDAQ:TXN) in its Q4 2021 investor letter:
“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel, Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”
6. Hertz Global Holdings, Inc. (NASDAQ:HTZ)
Number of Hedge Fund Holders: 57
Hertz Global Holdings, Inc. (NASDAQ:HTZ) is a Florida-based vehicle rental company. The company offers its services under the Hertz, Dollar, and Thrifty brands. On July 26, in his show’s Lightning Round, Jim Cramer advised a viewer to “stay on Hertz” and that he would bet on Hertz Global Holdings, Inc. (NASDAQ:HTZ) CEO Stephen Scherr, not against him. In Q2 2022, greater capital flexibility enabled the company to complete a $2 billion share repurchase program and authorize a new $2 billion program moving forward. Shares rose more than 15% on July 28 after the report went live.
Deutsche Bank analyst Chris Woronka raised the price target on Hertz Global Holdings, Inc. (NASDAQ:HTZ) to $38 from $29 and reaffirmed a Buy rating on the shares on July 29. The management’s decision to slash the fiscal 2022 budget for fleet inventory is bolstering investor confidence that things really are different this time, the analyst told investors in a research note.
According to Insider Monkey’s database, 57 hedge funds reported owning stakes in Hertz Global Holdings, Inc. (NASDAQ:HTZ) at the end of March 2022, up from 55 funds in the prior quarter. Tom Wagner and Ara Cohen’s Knighthead Capital is the biggest stakeholder of the company, with 181.45 million shares worth over $4 billion.
In addition to Costco Wholesale Corporation (NASDAQ:COST), Occidental Petroleum Corporation (NYSE:OXY), and Johnson & Johnson (NYSE:JNJ), Hertz Global Holdings, Inc. (NASDAQ:HTZ) is one of the stocks on the radar of Mad Money’s Jim Cramer.
5. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 61
Mad Money’s Jim Cramer said in a Lightning Round on August 1 that Costco Wholesale Corporation (NASDAQ:COST) is the only retail stock he is bullish on. Cramer reiterated, “Don’t need anything [retail] but Costco”.
On July 27, Costco Wholesale Corporation (NASDAQ:COST) declared a $0.90 per share quarterly dividend, in line with previous. The dividend is payable on August 12, to shareholders of record as of July 29. 2022 marks the 19th consecutive annual dividend increase by Costco Wholesale Corporation (NASDAQ:COST).
On July 14, Deutsche Bank analyst Krisztina Katai upgraded Costco Wholesale Corporation (NASDAQ:COST) to Buy from Hold with a price target of $579, up from $525. Costco Wholesale Corporation (NASDAQ:COST) is one of the most consistent players in the retail sector, and its incremental traffic gains and increasing membership renewal rates “serve as key differentiators in an increasingly uncertain backdrop,” the analyst told investors in a research note. The analyst sees “meaningful share gains ahead” for Costco Wholesale Corporation (NASDAQ:COST) as consumers largely gravitate towards warehouse clubs to cut down on grocery trips and buy in bulk for better prices.
Among the hedge funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management featured as the leading stakeholder of Costco Wholesale Corporation (NASDAQ:COST), with 4.2 million shares worth $2.4 billion. Overall, 61 hedge funds were bullish on the stock at the end of March 2022, up from 57 funds in the earlier quarter.
Here is what ClearBridge Investments Sustainability Leaders Strategy has to say about Costco Wholesale Corporation (NASDAQ:COST) in its Q4 2021 investor letter:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco, which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
4. Blackstone Inc. (NYSE:BX)
Number of Hedge Fund Holders: 61
Blackstone Inc. (NYSE:BX) is a New York-based alternative asset management firm engaged in real estate, private equity, hedge funds, credit, public debt, and multi-asset class strategies. When a viewer asked Jim Cramer in a Lightning Round on July 26 about Apollo Global Management, Inc. (NYSE:APO), he said he prefers Blackstone Inc. (NYSE:BX) instead.
Piper Sandler analyst Sumeet Mody reiterated an Overweight rating on Blackstone Inc. (NYSE:BX) and lowered the price target on the stock to $120 from $154. The analyst slashed earnings expectations following the Q2 results and in the second half of 2022, he forecasts pressured realization activity.
Among the hedge funds tracked by Insider Monkey, D E Shaw held the largest stake in Blackstone Inc. (NYSE:BX) at the end of the first quarter of 2022, comprising roughly 3 million shares worth $371.15 million. Overall, 61 hedge funds were bullish on the stock at the end of Q1 2022, compared to 62 funds in the prior quarter.
Here is what Aristotle Capital Management Value Equity has to say about Blackstone Inc. (NYSE:BX) in its Q1 2022 investor letter:
“Founded by its current CEO Stephen Schwarzman and Pete Peterson in 1985, Blackstone is one of the largest alternative asset managers in the world, with more than $880 billion of assets under management (AUM). The firm creates and manages investment vehicles that span asset classes globally and serve both institutional clients as well as high-net-worth individuals. Its core business segments include Real Estate (34% of fee-earning AUM), Credit and Insurance (31%), Private Equity (24%), and Hedge Fund Solutions (11%).
Blackstone has leveraged its broad product portfolio and enviable investment performance to not only raise substantial amounts of capital but also maintain its reputation as a one-stop shop for investors looking to gain exposure to alternative assets. In contrast to traditional asset managers that rely on investor inaction to keep redemption rates low, the products offered by alternative asset managers typically have lockup periods that prevent redemptions for a substantial amount of time (often 10+ years).
High-Quality Business
Some of the quality characteristics we have identified for Blackstone include:
-Reputable management team that has produced an admirable track record of investment performance and demonstrated its ability to raise capital (the firm is now 9x larger since its 2007 IPO);
-Stable client base and sticky asset base with 73% of its capital locked up for over 10 years; and
-Significant scale and strong brand that provides a myriad of advantages, including for distribution and new product launches.
Attractive Valuation
Based on our estimates of normalized earnings, we believe shares of Blackstone are offered at a discount relative to our estimate of intrinsic value. It is our view that current valuation does not appropriately reflect our estimated future levels of fee-based revenue.
Compelling Catalysts
Catalysts we have identified for Blackstone, which we believe will cause its stock price to appreciate over our three- to five- year investment horizon, include:
-Increased fee-based revenue as dry powder committed capital that has yet to be invested is deployed. As of the fourth quarter of 2021, there was a total of $136 billion in dry powder across the firm;
-Given its scale and sustained investment prowess, Blackstone is uniquely positioned to benefit from the secular shift in investor allocation away from traditional managers and toward less liquid and higher expected return strategies in the alternative asset management sector; and
-Further penetration in the retail and private wealth channel, a segment of investors that has historically been excluded from participating in alternative assets. Blackstone has a first-mover advantage in providing institutional-quality products across its expanding distribution teams that focus on financial advisors.”
3. Cheniere Energy, Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 62
Cheniere Energy, Inc. (NYSE:LNG) is a Texas-based energy infrastructure company that specializes in liquefied natural gas businesses in the United States. Jim Cramer was extremely bullish on Cheniere Energy, Inc. (NYSE:LNG) recently. On July 26, in response to a viewer’s question about the stock on the Mad Money Lightning Round, he said “Buy, buy, buy it”.
On July 26, Cheniere Energy, Inc. (NYSE:LNG) declared a quarterly dividend of $0.33 per share, in line with previous. The dividend is payable on August 16, to shareholders of record on August 9. The company also announced a long-term deal to supply liquefied natural gas from the Corpus Christi Liquefaction project to the Thailand-based energy company PTT, where the latter plans to buy 1 million metric tons per year of LNG for 20 years from Cheniere Energy, Inc. (NYSE:LNG) beginning in 2026 through a combination of free-on-board and delivered ex-ship deliveries.
According to Insider Monkey’s data, Cheniere Energy, Inc. (NYSE:LNG) was part of 62 hedge fund portfolios at the end of March 2022, up from 52 funds in the last quarter. Carl Icahn’s Icahn Capital LP is the biggest shareholder of the company, with a position worth $1.3 billion.
Here is what ClearBridge Global Infrastructure Value Strategy has to say about Cheniere Energy, Inc. (NYSE:LNG) in its Q3 2021 investor letter:
“Cheniere Energy is an energy infrastructure company that owns and operates U.S. liquefied natural gas (LNG) export facilities. Strong quarterly results and the disclosure of capital allocation policies were positively received by the markets. In addition, continued supply and demand tightness in the LNG market created a favorable commodity price environment.”
2. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 67
Occidental Petroleum Corporation (NYSE:OXY) is a Texas-based company with oil and gas properties in the United States, the Middle East, Africa, and Latin America. It operates through three segments – Oil and Gas, Chemical, and Midstream and Marketing. Jim Cramer said on Mad Money’s Lightning Round on July 28 that Occidental Petroleum Corporation (NYSE:OXY) is only going higher as Warren Buffett’s Berkshire Hathaway is buying it in droves.
On July 26, Barclays analyst Jeanine Wai reiterated an Overweight rating on Occidental Petroleum Corporation (NYSE:OXY) and lowered the firm’s price target on the shares to $79 from $84 ahead of the Q2 results.
According to Insider Monkey’s data, 67 hedge funds were bullish on Occidental Petroleum Corporation (NYSE:OXY) at the end of Q1 2022, up from 58 funds in the preceding quarter. Rajiv Jain’s GQG Partners is a significant position holder in the company, with 26.6 million shares worth $1.5 billion.
Here is what Smead Capital Management has to say about Occidental Petroleum Corporation (NYSE:OXY) in its Q3 2021 investor letter:
“Oil stocks dominated our winners for the quarter. We showed that we have unlimited ability to tempt fate by buying into Occidental Petroleum (OXY) this year after it was our biggest loser of 2020. It gained 16.64% during the third quarter.”
1. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ) is an American multinational healthcare firm. When a viewer on a Lightning Round on July 26 enquired about GSK plc (NYSE:GSK), Cramer said he prefers Johnson & Johnson (NYSE:JNJ), noting “What’s not to like?” about the healthcare firm. Johnson & Johnson (NYSE:JNJ) is a reliable dividend king, with 60 consecutive years of annual dividend increases under its belt.
On July 21, UBS analyst Kevin Caliendo reaffirmed a Neutral rating on Johnson & Johnson (NYSE:JNJ) and lowered the firm’s price target on the shares to $180 from $185. The company’s Q2 results reiterated the macro headwinds, which include sizable forex movements, continuing inflation, and lagging elective procedure recovery, the analyst told investors in a research note. He added that China will possibly be a drag on MedTech, but at 5% of Johnson & Johnson (NYSE:JNJ)’s sales, the risk appears “largely contained”.
Among the hedge funds tracked by Insider Monkey, Arrowstreet Capital held the leading stake in Johnson & Johnson (NYSE:JNJ) as of Q1 2022, with 6.65 million shares worth $1.17 billion. Overall, 83 hedge funds were bullish on Johnson & Johnson (NYSE:JNJ) at the end of Q1 2022, with collective stakes worth $7.40 billion.
You can also take a look at This Analyst Is Bearish on These 15 Retail Stocks Amid “Soft Landing” Expectations and The 10 Stocks That Jim Cramer Is Talking About.
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Disclosure: None. 10 Jim Cramer Stocks to Watch in August is originally published on Insider Monkey.
