Jim Cramer, the host of Mad Money, addressed how investors should approach short-term market gains and cautioned against mischaracterizing these upswings as “bear market rallies.”
“The most important lesson for dealing with a major short-term move higher is that you always have to work hard to prepare yourself for the future. Otherwise, you’ll end up letting some great opportunities to sell pass you by. That’s right. Just as we can’t give in to despair when the market’s down, you… don’t want to give in to euphoria and buy, buy, buy when the market’s roaring. That’s not when you should buy. It is when you should be taking some chips off the table.”
READ ALSO 11 Stocks on Jim Cramer’s Radar and Jim Cramer Shed Light on These 14 Stocks
Cramer also pointed out that managing emotions works both ways. He said that just as it is important to remember the positive days when the market is falling to stay grounded, it is equally necessary to keep the bad days in mind during a rally. He warned against ignoring the opportunity to trim positions simply because of a long-term commitment to a stock or the market as a whole.
“Here’s the bottom line: When the stock market’s had a big short-term run, short-term, don’t get carried away by the optimism. Instead, keep your head on straight, check your emotions, focus on the long term, and think about ringing the register, especially in stocks that might be getting too high.”
Our Methodology
For this article, we compiled a list of over 80 stocks that Jim Cramer commented on during episodes of Mad Money aired between August 7 and August 14. We selected the 10 stocks from our list that analysts have recently covered. We listed the stocks in ascending order of their average analyst price target upside as of August 25. We also mentioned the hedge fund sentiment around each stock, which was taken from Insider Monkey’s Q2 database of over 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Stocks on Jim Cramer’s and Analysts’ Radar
10. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 159
Average Upside Potential: 0.84%
UnitedHealth Group Incorporated (NYSE:UNH) is one of the stocks on Jim Cramer’s and analysts’ radar. On August 20, Morgan Stanley reduced its price target on UNH shares to $325 from $342 and maintained an Overweight rating. The firm revised its estimates to reflect a longer turnaround timeline. It noted that its illustrative path to 2027 EPS suggests potential upside to current Street expectations, while highlighting uncertainties related to Medicare Star ratings and possible changes in regulation and reimbursement.
UnitedHealth Group Incorporated (NYSE:UNH) provides health benefits, care services, pharmacy programs, and data solutions to a wide range of customers, including individuals, employers, healthcare providers, and government entities. The company offers health coverage, care delivery, consulting, software, and pharmacy management services. It should be noted that Cramer, on August 13, mentioned that the company can make a comeback. He stated:
“I think UnitedHealth’s going to work here… I think it’s going to work. I really do. Look, I’m not a believer. I don’t like the fact that they had shenanigans, but I will say this: I think that the company is run by a very good CEO. It could come back.”
9. Lamb Weston Holdings, Inc. (NYSE:LW)
Number of Hedge Fund Holders: 45
Average Upside Potential: 8.85%
Lamb Weston Holdings, Inc. (NYSE:LW) is one of the stocks on Jim Cramer’s and analysts’ radar. On August 20, JPMorgan assumed coverage of Lamb Weston stock with a Neutral rating and set a price target of $57, lowered from $66. The firm initiated coverage on 24 stocks across food producers, food retail, and agricultural products. The analyst noted that food producers are under pressure from slower center store growth and market share declines. Food retailers are expected to benefit from ongoing inflation. The firm also stated that agricultural product companies may be through the worst of their earnings pressures, though a recovery depends on pending U.S. biofuels regulations.
Lamb Weston Holdings, Inc. (NYSE:LW) produces and markets frozen potato products under its own, licensed, and customer brands. Lastly, replying to a caller’s question about the stock on August 7, Cramer remarked:
“Lamb Weston, man… I gotta tell you, I think it’s interesting because there’s a lot of people circling it, but I hate to buy a stock just because I’m hoping for a takeover. So I’m going to steer you away from that stock and from that group, which is really a nightmare.”