In this article, we discuss the 10 stocks that Jim Cramer recommends buying as commodity prices decline.
The prices of commodities like oil, grains, metals, and paper have all started to come down in recent weeks, lowering the valuations even as leading firms from these sectors post strong second quarter earnings. Jim Cramer of Mad Money on CNBC, one of the biggest finance personalities on television, has urged investors to take advantage of these falling prices before a recession “takes it all away”. Cramer has also taken aim at officials of the central bank who called for endless rate hikes as the ones responsible for the “craziness” at the market.
Cramer identified the present commodities collapse as one of the “most monumental” that he had seen in his forty years of trading experience. However, he highlighted how nobody at the central bank was talking about it because it did not fit their preferred narrative of “runaway pricing”. Cramer bemoaned the “Fed-media-short seller nexus” that was making investors feel like any positive news from the inflation standpoint was “meaningless” and “just to be ignored”, instead focusing on the fact how everybody was doing “too well”.
Some of the stocks that Cramer is monitoring as the earnings season winds down include Meta Platforms, Inc. (NASDAQ:META), Applied Materials, Inc. (NASDAQ:AMAT), and Eli Lilly and Company (NYSE:LLY).
Our Methodology
These were picked keeping in mind the latest calls that Cramer made on these equities during his appearances on news platform CNBC. The list of stocks contains core commodity plays and the stocks which Cramer recently said would benefit from the fall in commodities. 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 Recommends Buying These Stocks as Commodity Prices Decline
10. Nucor Corporation (NYSE:NUE)
Number of Hedge Fund Holders: 22
Nucor Corporation (NYSE:NUE) makes and sells steel products. Cramer recently underlined that Nucor was one of the only steel stocks that he would recommend buying in the present economic environment where steel prices were falling and he would wait for them to fall lower before buying shares in firms other than Nucor. Cramer has also said that in the present marketplace, there is a spree of investors buying whatever little is working before recession takes it all away.
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, underlining that steel prices had fallen from highs in March 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.
Just like Meta Platforms, Inc., Applied Materials, Inc., and Eli Lilly and Company, Nucor Corporation is one of the stocks that Jim Cramer is monitoring.
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 steel maker 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.”
9. Toll Brothers, Inc. (NYSE:TOL)
Number of Hedge Fund Holders: 29
Toll Brothers, Inc. (NYSE:TOL) is a firm that develops and sells homes in luxury residential communities. Cramer recently placed the company among a basket of commodity stocks that he would recommend buying. The journalist investor said that things were going “very well overall” even amid concerns that the central bank would crush the economy. He noted that it was the job of the Federal Reserve to “take away the punch bowl when things get out of hand” but there were many places where things were not out of hand at all.
On July 12, JPMorgan analyst Michael Rehaut maintained a Neutral rating on Toll Brothers, Inc. stock and lowered the price target to $48 from $53.50, noting that sector headwinds would persist for the homebuilding sector in the coming months.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Greenhaven Associates is a leading shareholder in Toll Brothers, Inc., with 5.2 million shares worth more than $245 million.
8. Waste Management, Inc. (NYSE:WM)
Number of Hedge Fund Holders: 40
Waste Management, Inc. (NYSE:WM) provides waste management environmental services. The former hedge fund manager recently placed the company among a group of stocks that he would recommend buying as commodity prices start to come down. Cramer noted that although it was normal to sell industrial stocks amid a crisis situation, investors should consider buying the shares of firms that had reported great quarters recently as prices of commodities like oil, grains, and metals start to come down.
On July 28, BMO Capital analyst Jeffrey Silber maintained a Market Perform rating on Waste Management, Inc. stock and raised the price target to $169 from $164, appreciating the second quarter earnings beat of the firm.
At the end of the first quarter of 2022, 40 hedge funds in the database of Insider Monkey held stakes worth $4.13 billion in Waste Management, Inc., compared to 35 in the preceding quarter worth $4.17 billion.
In its Q1 2022 investor letter, Diamond Hill Capital, an asset management firm, highlighted a few stocks and Waste Management, Inc. was one of them. Here is what the fund said:
“We also initiated a position in Waste Management, Inc., one of the largest providers of waste collection services in the US. We believe it is a high-quality business with ownership of key landfill assets that provide pricing power over the long term. Its stock was trading at a discount to our estimate of intrinsic value due to short-term market concerns over an increase in growth investments—we expect these investments to be value-creating over the long term.”
7. 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 gold industry in the past few months and placed Barrick Gold among the “best-of-breed” stocks in the sector recently. Cramer claims that some industries and companies can withstand the pressure that the central bank puts them under because they are “good companies”. He also noted that the Federal Reserve does not want anyone to “get hammered” by the rate hikes.
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 equities were reflecting better value even as macro headwinds persisted.
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.”
6. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 46
Ford Motor Company (NYSE:F) is a Michigan-based automobile manufacturer. The former Goldman Sachs employee recently placed Ford among a group of commodity stocks that disciplined investors should consider buying even as rate hikes pressured the economy and a recession loomed. Cramer noted that the prices of oil and gasoline were “down big” and investors could consider buying stocks that benefit from cheaper fuel, like travel and leisure plays, identifying Ford as one of these firms.
On August 2, Citi analyst Itay Michaeli maintained a Neutral rating on Ford Motor Company stock and raised the price target to $16 from $15, noting that the near-term catalysts for the firm had been realized.
At the end of the first quarter of 2022, 46 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Ford Motor Company, compared to 53 in the preceding quarter worth $1.7 billion.
In addition to Meta Platforms, Inc., Applied Materials, Inc., and Eli Lilly and Company, Ford Motor Company is one of the stocks that Jim Cramer recommends buying.
In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Ford Motor Company Waste Management, Inc. was one of them. Here is what the fund said:
“Ford Motor Company is another example of typical industrial manufacturing business executive mindsets. The April 18, 2022, Bloomberg Businessweek cover story features Ford Motor Company CEO Jim Farley behind the wheel of an electrified Ford F-150 Lightning. The article is titled, “Hey Elon, THIS is a truck.” I thought the article was terrific. One idea especially stood out to me. Since the F-150 is such a popular vehicle, it “argued for a gradual approach to electrification. Essentially the company retrofitted an existing F-150 with an electric powertrain rather than develop an entirely new truck.” No all-in financial and operation bet by this company on electrification.”
5. Lennar Corporation (NYSE:LEN)
Number of Hedge Fund Holders: 50
Lennar Corporation (NYSE:LEN) is a Florida-based firm in the homebuilding business. Jim Cramer recently placed the firm among a basket of equities that he would recommend buying as the prices of commodities started to come down. Cramer gave the example of the housing market to drive his point home, noting that higher mortgage rates had led to the annihilation of housing stocks but now, as the market was sobering up, investors could get away with buying homebuilding stocks as long as housing prices did not start skyrocketing again.
On June 22, UBS analyst John Lovallo maintained a Buy rating on Lennar Corporation stock and lowered the price target to $106 from $108, backing the firm to continue with solid execution in the coming months.
At the end of the first quarter of 2022, 50 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in Lennar Corporation, compared to 52 the preceding quarter worth $2.1 billion.
4. Honeywell International Inc (NASDAQ:HON)
Number of Hedge Fund Holders: 50
Honeywell International Inc. (NASDAQ:HON) is a diversified technology and manufacturing company. The journalist investor placed the company among a group of commodity stocks that he would recommend buying amid falling prices. Cramer underlined that the earnings beat of companies like Honeywell, which seemed to be doing very well despite recession fears and rate hikes, to argue his position, saying that the terrific quarters these firms were posting was evidence of their health in an uncertain marketplace.
On July 29, JPMorgan analyst Stephen Tusa maintained an Overweight rating on Honeywell International Inc. stock and raised the price target to $190 from $180, noting that a good 2023 setup was coming into view for the firm.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Honeywell International Inc., with 2.1 million shares worth more than $415 million.
3. DoorDash, Inc. (NYSE:DASH)
Number of Hedge Fund Holders: 52
DoorDash, Inc. (NYSE:DASH) is a logistics platform that connects merchants with consumers. The former Goldman Sachs employee recently placed the company among a group of stocks that he would recommend buying. Cramer highlighted that oil and gasoline prices had come down to little or no fanfare, opening up a buying opportunity in sectors like travel and leisure and other firms that benefited from cheaper oil prices. Cramer noted that these stocks were “scorned” just three weeks ago amid higher prices.
On August 5, Needham analyst Bernie McTernan maintained a Buy rating on DoorDash, Inc. stock and raised the price target to $115 from $100, noting the stock presented a value proposition to the consumer amid macro uncertainty.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Coatue Management is a leading shareholder in DoorDash, Inc., with 5.2 million shares worth more than $618 million.
2. Expedia Group, Inc. (NASDAQ:EXPE)
Number of Hedge Fund Holders: 88
Expedia Group, Inc. (NASDAQ:EXPE) operates as an online travel firm. The former hedge manager has urged his viewers to buy up shares in companies that benefit from falling commodity prices. He has identified Expedia, a travel play, as one of these firms, which can benefit from falling oil prices and rising travel demand. Cramer has noted that firms like Expedia have recently reported great quarters. However, Cramer has also urged investors to be disciplined in their buying.
On August 6, Mizuho analyst James Lee maintained a Neutral rating on Expedia Group, Inc. stock and lowered the price target to $132 from $172, noting that the earnings beat of the firm proved the operating leverage of the online travel agency model.
At the end of the first quarter of 2022, 88 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in Expedia Group, Inc., up from 82 in the previous quarter worth $7.4 billion.
In its Q1 2022 investor letter, Aristotle Capital Management, an asset management firm, highlighted a few stocks and Expedia Group, Inc. was one of them. Here is what the fund said:
“Expedia Group, Inc. outperformed in the first quarter following a better-than-expected earnings report for the company’s fourth quarter of 2021. During the pandemic, the company reduced expenses which has improved operating leverage as revenue recovers. Expectations for travel in 2022 have improved as COVID cases have declined.”
1. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 113
The Walt Disney Company (NYSE:DIS) operates as an entertainment company. Cramer recently placed the firm among a group of stocks that he would recommend buying. He underscored that several companies seemed to be doing well as commodity prices fell, even amid market uncertainty. He outlined that the Federal Reserve and Congress were largely responsible for the bearish sentiments at the market, noting that neither the investors nor the companies themselves had much to do with it.
On July 27, Evercore ISI analyst Vijay Jayant maintained an Outperform rating on The Walt Disney Company stock and lowered the price target to $130 from $150, backing the firm to do well in the streaming business in the coming months.
At the end of the first quarter of 2022, 113 hedge funds in the database of Insider Monkey held stakes worth $5.1 billion in The Walt Disney Company, up from 111 the preceding quarter worth $6.9 billion.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and The Walt Disney Company was one of them. Here is what the fund said:
“The communication services sector was a weak spot in both the benchmark and the portfolio in the fourth quarter. The Walt Disney Company announced lower than expected streaming subscriber growth to the company’s Disney+ offering, attributable primarily to the content release schedule. The Walt Disney Company has been ramping up content spending given strong global response to Disney+, although production capability was temporarily impacted by COVID-19. We still believe Disney is on track to reach the subscriber outlook outlined at its December 2020 analyst day, driven by a very robust slate of content releases, particularly in the 2022–2024 time period.”
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This article is originally published at Insider Monkey.
