We recently compiled a list of the Jim Cramer Discussed These 11 Stocks Recently. In this article, we are going to take a look at where The Procter & Gamble Company (NYSE:PG) stands against the other stocks.
Jim Cramer, the host of Mad Money, cautioned viewers on Wednesday about the risks of blindly following the crowd in the stock market. He emphasized that it is essential to avoid expecting the same outcome as everyone else, as there is a significant chance things will not play out as expected. This, he explained, is because many expectations are often already “priced in” to the market.
“… And that’s why you need to be extra wary of the IPO cycle. Let’s go over this. We’ve seen the pattern over and over again. We get this deluge of new deals, at first, many of them explode higher, but at the same time they’re flooding the market with new stock supply and that supply ultimately drags us down. I’ve said it a million times, the stock market is like any other market. It’s all about supply and demand.”
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When supply increases too rapidly, prices are likely to fall. He stressed that the enthusiasm surrounding IPOs, particularly when they make early investors substantial profits, creates an environment of palpable excitement. Cramer noted that when interest in these IPOs wanes, that initial exuberance quickly turns to frustration, which can cause broader market declines, not just in IPOs but across the board.
Such a cycle, Cramer noted, is nothing new. He pointed to 2020 and 2021 as prime examples of how a flood of IPOs and SPAC mergers, fueled by stimulus checks, led many people to invest in trendy stocks. He added:
“2020, we also had a ton of electric vehicle and charging station-related IPOs and SPAC mergers. At first, these stocks were unstoppable, although most of that was because this was a period of high-risk speculation where people were willing to give anything with the right buzzwords.”
Our Methodology
For this article, we compiled a list of 11 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on February 12. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A happy couple viewing the products of this household and personal product company in a mass merchandiser store.
The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 68
Cramer explained that The Procter & Gamble Company (NYSE:PG) stock often rises irrespective of its fundamentals and noted that it is a recession stock. Cramer pointed out that there are several well-managed consumer packaged goods (CPG) companies, and Procter & Gamble is a long-time favorite among them.
He mentioned that there are many logical reasons to like the company, such as its strong management, attractive dividend, and the potential for lower plastic and fuel costs to improve its gross margin, a significant part of its expenses. However, Cramer emphasized that while these reasons make sense, logic does not always drive the stock market on a daily basis. He added:
“So you buy the stock and then it explodes higher. What’s next? Well, you have to ask yourself why is it rallying… Let’s say you rack up a nice win in Procter, you should ask yourself if you were right or if you simply happened to be in the right place at the right time. What do I mean by right place or time? Rotation, rotation, rotation.
There are times when the consumer packaged goods stocks roar higher for reasons that have nothing to do with the underlying companies. Procter, like all consumer packaged goods plays, is a recession stock because its earnings tend to hold up during a slowing economy, its stock roars when we get lousy economic data.”
Procter & Gamble (NYSE:PG) provides a diverse range of consumer goods, including products for beauty, grooming, healthcare, fabric, and home care, as well as baby, feminine, and family care, all under several well-established brands.
Overall PG ranks 4th on our list of the stocks Jim Cramer discussed recently. While we acknowledge the potential of PG as an investment, 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 PG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
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