On Wednesday, Mad Money host Jim Cramer weighed in on how companies are grappling with the challenge of issuing guidance during the earnings season.
“So far this earnings season, the great dilemma is how the heck are you supposed to deal with your guidance? How do you come up with a forecast when you got no idea what the future’s going to look like? I don’t have it. You don’t have it. They don’t have it.”
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Cramer pointed to a series of recent developments that have added to the uncertainty. Among the most disruptive, he said, is the sudden rollout of a sweeping tariff policy, which includes a 10% base tariff on all imported goods. It has triggered retaliatory measures from several trading partners. Cramer mentioned that China has stopped accepting deliveries of Boeing aircraft. On top of that, he noted a noticeable decline in international tourism. “The whole thing’s a bit of a mess,” he said. He added:
“So aside from purely domestic companies with little economic sensitivity, how on earth can executives give you any kind of forecast for 2025 here? Coming into earnings season, I figured most of them would just simply pull their outlooks. I mean, who could blame them?”
As the earnings season is underway, however, Cramer said he is seeing a variety of responses. Some companies, especially the major banks, are opting to reiterate their full-year outlooks. But he noted that these institutions generally do not issue detailed guidance on metrics like revenue or earnings per share in the first place. Meanwhile, several companies have managed to surpass Wall Street’s expectations for the quarter, only to stick with previously issued full-year forecasts.
“But here’s the bottom line: With earnings season in full swing, I’m surprised more companies haven’t pulled their full year forecast like Delta. The most common strategy that’s been seen so far is beat and maintain from a handful of companies like the banks and a couple of healthcare companies holding up so far.”
Our Methodology
For this article, we compiled a list of 6 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on April 16. We listed the stocks in ascending order of their hedge fund sentiment as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 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).
Jim Cramer Put These 6 Stocks Under the Microscope
6. FS KKR Capital Corp. (NYSE:FSK)
Number of Hedge Fund Holders: 9
When a caller inquired about FS KKR Capital Corp. (NYSE:FSK), Cramer said:
“This is a business development company, and those have high yields, and I don’t want to trust them because they take so much leverage, and they do all the things that we don’t do when it comes to Mad Money.”
FS KKR Capital (NYSE:FSK) focuses on providing tailored credit solutions by investing mainly in senior secured debt and some subordinated debt of private middle market companies. In November 2024, when Cramer was asked about the company during a lightning round, he commented:
“Okay, so this is what’s known as a business development company. It has a very big yield, but I do think that over time you’re going to wish that you did start peeling some off. That’s what I want you to do.”
5. American Financial Group, Inc. (NYSE:AFG)
Number of Hedge Fund Holders: 21
When a caller asked Cramer about American Financial Group, Inc. (NYSE:AFG), he said, “Oh, you know what? To the Lindner family, I’ve always liked that stock.”
American Financial Group (NYSE:AFG) offers a range of specialty insurance products, including coverage for transportation, property, casualty, and financial risks. For 2025, the company expects a 5% rise in net written premiums, building on the $7.1 billion reported the previous year.
It is targeting a combined ratio of roughly 92.5% and expects a reinvestment rate near 5.75%. American Financial Group (NYSE:AFG) also expects an annual return of about 8% from its $2.7 billion alternative investment portfolio. Based on these assumptions, the company projects core net operating earnings per share of approximately $10.50 and a core operating return on equity, excluding AOCI, of around 18%.
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