In this article, we discuss the 10 stocks that Jim Cramer is talking about.
Recession fears in the United States have reached fever pitch as even veteran stock market experts like Jim Cramer of Mad Money on CNBC, tell investors not to “hold their breath” that a recession can be avoided altogether. During a recent episode of his show, Cramer broke down three possible recession scenarios that the market should prepare for, labeling them as mild, moderate, and severe. He also claimed that each kind of scenario, should it play out, would require a unique set of investments to weather the storm.
Per the journalist investor, a mild recession is “possible” since banks had reported a strong quarter, pointing to the likelihood that people still had money saved over from the pandemic and the job market remained strong. Cramer said even though firms might have a downturn in earnings, the recession fears had already led to a steep drop in the prices of stocks, which now seemed to be holding up well. In case of a moderate recession, Cramer advised investors to “pull in their horns” and be selective about their investment choices.
Some of the stocks that Cramer is monitoring as the market bottoms include Uber Technologies, Inc. (NYSE:UBER), Adobe Inc. (NASDAQ:ADBE), and Citigroup Inc. (NYSE:C). The former hedge fund manager believes that as interest rates will start to trend down, reducing the bond market competition, investors should only buy high yielding stocks that can still make their numbers. However, in case of a severe recession, Cramer advised viewers to “buy the ultimate defensive plays since anything related to advertising, tech and the industrials” will be crushing.
Our Methodology
These were picked keeping in mind the latest calls that Cramer made on these equities on his Mad Money show aired by news platform CNBC. An extensive database of around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the popularity of each stock among hedge funds.
Jim Cramer Is Talking About These Stocks
10. Lemonade, Inc. (NYSE:LMND)
Number of Hedge Fund Holders: 17
Lemonade, Inc. (NYSE:LMND) provides insurance products. During the Lightning Round of his show on July 14, Jim Cramer discussed his bearish stance on the stock in response to a viewer’s question, ringing the bearish call to signal his overall outlook and sarcastically remarking that it was “a lemon” to analyze the shares. Lemonade is one of the most shorted stocks on the market, with a short interest of over 30%, as net losses for the firm persist. In the past year, the share price has fallen nearly 77%.
On May 11, Oppenheimer analyst Jason Helfstein maintained an Outperform rating on Lemonade, Inc. stock and lowered the price target to $30 from $45, identifying decline in comp valuations and weaker outlook for near-term loss ratio as some of the reasons behind the target decrease.
At the end of the first quarter of 2022, 17 hedge funds in the database of Insider Monkey held stakes worth $41 million in Lemonade, Inc., compared to 19 in the preceding quarter worth $62 million.
Just like Uber Technologies, Inc., Adobe Inc., and Citigroup Inc., Lemonade, Inc. is one of the stocks that elite investors are monitoring.
9. Nucor Corporation (NYSE:NUE)
Number of Hedge Fund Holders: 22
Nucor Corporation (NYSE:NUE) makes and sells steel products. Cramer discussed the stock during the Lightning Round of his show on July 6. He highlighted that the company was one of the few steel stocks that could be bought, that there was too much “negativity around steel” and he would wait for prices to drop lower before buying. The company recently posted earnings for the second quarter of 2022, beating analyst estimates on earnings per share and revenue by $1.07 and $200 million respectively.
On July 6, Morgan Stanley analyst Carlos De Alba maintained an Equal Weight rating on Nucor Corporation stock and lowered the price target to $121 from $144, noting that steel prices had fallen from their highs faster than expected.
At the end of the first quarter of 2022, 22 hedge funds in the database of Insider Monkey held stakes worth $260 million in Nucor Corporation, compared to 26 in the preceding quarter worth $186 million.
In its Q3 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Nucor Corporation was one of them. Here is what the fund said:
“Our active approach also applies to being disciplined in managing positions in companies in more cyclical industries and taking profits during stronger periods of each cycle. We closed a position in steelmaker Nucor Corporation during the quarter after the shares had more than doubled over the last year as a direct participant in the recovery of the U.S. economy and rebound in industrial activity. At this point in the cycle, we no longer view the risk/reward as compelling and feel more confident in deploying the proceeds in more attractive areas discussed in this and previous letters.”
8. Barrick Gold Corporation (NYSE:GOLD)
Number of Hedge Fund Holders: 45
Barrick Gold Corporation (NYSE:GOLD) is a mining firm with prime interests in gold and copper. Cramer has been bullish on the company in the past few weeks, identifying it as a “best-of-breed” stock in the gold sector as the precious metal staged a comeback in light of soaring inflation. Cramer noted that the firm had a clear strategy, a geographically diverse portfolio of gold mines, and was also a “terrific” dividend option at a cheap price considering the overall macro environment.
On July 19, Barclays analyst Matthew Murphy maintained an Overweight rating on Barrick Gold Corporation stock and lowered the price target to $25 from $28, noting that copper stocks faced headwinds on macro and fundamental levels.
At the end of the first quarter of 2022, 45 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in Barrick Gold Corporation, compared to 46 the preceding quarter worth $958 million.
In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Barrick Gold Corporation was one of them. Here is what the fund said:
“Also within the structural bucket, we have selectively added to our commodity exposure with the purchase of Barrick Gold Corporation. Canadian mining company Barrick Gold is a play on operating improvements. The company has aggressively delevered its balance sheet and reduced capex spending to a lower level more permanently, directing its healthy free cash flow to dividends and buybacks.”
7. Flex Ltd. (NASDAQ:FLEX)
Number of Hedge Fund Holders: 48
Flex Ltd. (NASDAQ:FLEX) provides supply chain services and solutions. The former hedge fund manager discussed the stock during the Lightning Round of his show on July 13. In response to a viewer question about the firm, Cramer noted that the shares were very inexpensive and he wanted to buy the stock. He added that he did not get why the stock was so inexpensive despite having a good quarter. The firm beat market expectations on earnings per share and revenue for the fourth fiscal quarter by $0.07 and $450 million in early May.
On May 18, Argus analyst James Kelleher upgraded Flex Ltd. stock to Buy from Hold with a price target of $22, backing the top-line growth of the firm to drive margin improvement in the coming months as bookings remained strong.
At the end of the first quarter of 2022, 48 hedge funds in the database of Insider Monkey held stakes worth $1.4 billion in Flex Ltd., compared to 43 the preceding quarter worth $1.3 billion.
6. Pioneer Natural Resources Company (NYSE:PXD)
Number of Hedge Fund Holders: 54
Pioneer Natural Resources Company (NYSE:PXD) is an independent oil and gas firm. Cramer recently made an appearance on CNBC to outline his bullish stance on oil, saying that his thesis was that oil was the “best hedge” against inflation. He noted that there was still opportunity to buy stakes in oil firms. He said that high-yielding oil firms were the best bet in this scenario, noting that the yield of Pioneer was at 14% and that maybe it was prudent to wait until it was at 16% before buying the stock.
On July 20, MKM Partners analyst Leo Mariani assumed coverage of Pioneer Natural Resources Company stock with a Buy rating and a price target of $264, backing oil prices to stay above $100 per barrel as long as the Ukraine war was ongoing.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Adage Capital Management is a leading shareholder in Pioneer Natural Resources Company, with 559,680 shares worth more than $139 million.
Along with Uber Technologies, Inc., Adobe Inc., and Citigroup Inc., Pioneer Natural Resources Company is one of the stocks that hedge funds have their eye on.
5. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 66
Devon Energy Corporation (NYSE:DVN) is an independent oil and gas firm. Cramer has been consistently advising investors to take some defensive positions and then use these as a base to identify buying opportunities in a horrific market. He has identified Devon Energy, a stock that he has said he prefers over other oil firms like EOG Resources, as one of these defensive buys. He recently named the firm among a group of stocks that offer “healthy growth and dividend protection” in a volatile marketplace.
On July 19, Truist analyst Neal Dingmann maintained a Buy rating on Devon Energy Corporation stock and raised the price target to $115 from $103, noting that the tailwind “breeze remains brisk” for oil firms.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Devon Energy Corporation, with 15 million shares worth more than $888 million.
4. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 69
Verizon Communications Inc. (NYSE:VZ) provides technology and communications services. Cramer has been bullish on the stock in the past few weeks, twice advising his viewers to buy the stock. On July 13, he underlined that he preferred Verzion over AT&T in response to a viewer’s question about the telecom sector during the Lightning Round of his show. In mid-June, he had placed the firm among a basket of equities that offered dividend protection in an uncertain macro environment.
On June 28, Scotiabank analyst Maher Yaghi assumed coverage of Verizon Communications Inc. stock with an Outperform rating and a price target of $59, noting that firms with high wireless exposure would do better in Canada in the coming months.
At the end of the first quarter of 2022, 69 hedge funds in the database of Insider Monkey held stakes worth $4.1 billion in Verizon Communications Inc., compared to 63 in the previous quarter worth $10.8 billion.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Verizon Communications Inc. was one of them. Here is what the fund said:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like telecom (Verizon Communications Inc.). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
3. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 80
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) provides cloud-based cybersecurity services. During the Lightning Round of his show on July 14, Cramer outlined his thoughts on the company in response to a viewer’s question about the winners in the cybersecurity space, stating that he thought that the firm was the “number two” in the cybersecurity business. He added that he believed that Palo Alto Networks, the California-based competitor of CrowdStrike, was the “number one” company in the sector.
On June 6, Morgan Stanley analyst Hamza Fodderwala upgraded CrowdStrike Holdings, Inc. stock to Overweight from Equal Weight and raised the price target to $215 from $195, noting the stock offered a defensive position in an uncertain macro environment.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in CrowdStrike Holdings, Inc., with 8.8 million shares worth more than $2 billion.
In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and CrowdStrike Holdings, Inc. was one of them. Here is what the fund said:
“CrowdStrike Holdings, Inc. provides cloud-delivered, next generation security solutions via its Falcon platform consisting of endpoint protection, advanced persistent threat, security information, event management, and cloud workload protection. Shares rose 11% in the first quarter, on the back of impressive quarterly results with net new annual recurring revenue (ARR) accelerating for the second straight quarter to 52% year-over-year and the company’s favorable unit economics driving 30% free cash flow margins. Moreover, key new disclosures highlight how non-end-point products are seeing momentum with cloud product-generated ARR surpassing $100 million, representing 8% of net new ARR in the quarter. With more workloads migrating to or starting in the cloud, we believe CrowdStrike Holdings, Inc. is well positioned to compound at high growth rates for years given its unique product platform and attractive go-to-market business model.”
2. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 90
ServiceNow, Inc. (NYSE:NOW) provides enterprise cloud computing solutions. The journalist investor discussed the stock during an appearance on CNBC on July 13, stating that a lot of people thought that the May bottom for the shares was going to hold. He noted that the stock was at a “crucial level” and indicative of a lot of cloud companies. However, he clarified that the firm was not meant to be representative of the entire market and dismissed as a “grave mistake” that Bill McDermott, the CEO of the firm, had talked down his firm in a recent interview.
On July 19, Bernstein analyst Peter Weed initiated coverage of ServiceNow, Inc. stock with an Outperform rating and a price target of $646, noting the firm had delivered one of the most durable growth stories in the cloud sector.
At the end of the first quarter of 2022, 90 hedge funds in the database of Insider Monkey held stakes worth $7.4 billion in ServiceNow, Inc., the same as in the preceding quarter worth $8.4 billion.
In its Q3 2021 investor letter, Palm Capital, an asset management firm, highlighted a few stocks and ServiceNow, Inc. was one of them. Here is what the fund said:
“ServiceNow, Inc. shares were our final top contributor for 3Q on a strong beat and raise quarter. The company reported 31% subscription revenue growth, 30% subscription billings growth, and a 19% non-GAAP FCF margin for the quarter, while raising full year subscription revenue and billings guidance to 29% and 31%, respectively, as well as raising non-GAAP FCF margin by 100 basis points to 31%.
ServiceNow, Inc. is a best-of-breed provider of both IT Service Management (ITSM) and IT Operations Management (ITOM) solutions to enterprise customers. The company’s products serve mainly its clients’ internal employee base with a current focus on automating the process of IT deployment, configuration and service and management of IT assets across an organization. Both its ITSM and ITOM solutions are delivered as a software-as-a-service (SaaS), and are each leading solutions in growing markets, driven by the secular trend of enterprises transitioning all aspects of their business and operations to the cloud. As the company maintains and adds customers, upsells them, and expands into adjacent markets, we believe ServiceNow, Inc. should sustain a strong long-term revenue and FCF growth trajectory.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is a diversified technology firm with core interests in ecommerce. Jim Cramer discussed his views on the company during an appearance on CNBC in mid-July, stating that the stock was “bottoming” and that it was a “bullish sign” that the firm had come clean and started talking about layoffs. He added that he liked the stock “very much”. Cramer noted that the stock still presented “terrific value” even though the share price had fallen compared to the prices at which he had bought it.
On July 21, Deutsche Bank analyst Lee Horowitz maintained a Buy rating on Amazon.com, Inc. stock and lowered the price target to $155 from $174, noting the firm was “not immune” to recessionary concerns despite ecommerce demand holding up.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc., with 4 million shares worth more than $13 billion.
In its Q2 2021 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Amazon.com, Inc. was one of them. Here is what the fund said:
“Amazon.com, Inc. is the leading e-commerce and cloud-computing provider in the world. Two-thirds of U.S. households are Amazon Prime subscribers, and over half of all online product searches now start on Amazon.com, Inc.. We believe the company’s strong customer loyalty and massive infrastructure are significant barriers to entry in a growing e-commerce market. Separately, Amazon Web Services (“AWS”) controls nearly half of the market in cloud computing. We believe AWS has become utility-like in nature and scale and we expect healthy growth moving forward as IT workloads continue moving to the cloud. More recently, concerns about rising investment spending have weighed on the stock-as they have in times past-providing us another opportunity to purchase shares at a very attractive price. At our purchase price and valuing AWS like its peers, an investor isn’t paying much of anything for the immensely valuable e-commerce franchise.”
You can also take a peek at 10 Best Healthcare Dividend Stocks to Buy Now and 10 Dividend Stocks with Over 20 Years of Dividend Increases.
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This article is originally published at Insider Monkey.
