In this article, we will take a look at the Jim Cramer recommends selling these 10 stocks.
The US stock market remained highly resilient throughout the year 2023. Most of the gains posted by stocks were due to the AI-led rally that infused a strange optimism in the broader markets. Almost every other financial commentary and analysis points to the concentration of value and stock gains pattern in the US stock market where just a handful of stocks were responsible for most of the gains in the stock market this year. Analysts at the Lombard Odier Group said in their 2024 market outlook report that the concentration of stock markets gains is causing many analysts to draw parallels between the state of the market today and market crashes of the past where just a handful of stocks were causing a distortion of reality as everyone was thinking the market is going up but in reality most of the stocks were going down. The Swiss banking firm however said that it does not believe the concentration of stock market gains is a sign that the market has peaked. The firm then makes three cases for 2024. Its base case assumes that inflation will continue to cool down in 2024 while real GDP growth will also moderate. In this case the firm does not expect a recession. It said:
“While any decline in economic growth inevitably puts pressure on corporate profits, such an environment should also offer some relief in the form of interest rate cuts by the Federal Reserve towards the end of 2024, and as such we expect the price-to-earnings ratios to stay around their current levels.
We see this as a typical late-economic-cycle environment for equities, and US valuations as elevated but no longer outright expensive. While not a metric that we believe offers much guidance over the short term, after the market declines of recent weeks, price-to-earnings ratios are close to their ten-year averages. From a sector perspective, we believe that the energy and consumer staples stand to benefit. We also increasingly like the technology sector, which if growth holds up, remains relatively attractive thanks to the influence of AI, Cloud storage, the Internet of Things and the deeply-ingrained digitalisation of our working and private lives.”
Lombard Odier’s second case for 2024 assumes that the economy would enter a recession. In that case the firm expects earnings to fall by 20%. It says that while recession in 2023 did not materialize and recession risks have reduced, we are not out of the woods yet. The firm said that should the economy enter a recession in 2024, the Fed would begin to ease its monetary policy, causing the S&P 500 to gain near the end of the year.
The third case painted by Lombard Odier assumes the economy will keep growing, driven by manufacturing activity. The firm cited the ISM purchasing manufacturers index (PMI) contraction in September which was at its slowest pace in ten months for this possibility. However, the firm said that if the economy continues to grow and the Fed does not keep raising interest rates, inflation might remain sticky and the Fed could keep doors open to further rate hikes. In that case the firm advises against investing in sectors that are negatively impacted due to higher costs of borrowing, such as telecommunications, utilities, or real estate.
Our Methodology
For this article we saw several programs of Jim Cramer aired on CNBC this year and picked stocks Cramer either categorically recommended investors to sell or those which he’s strongly bearish on and advises his followers to stay away from. Some famous names Jim Cramer is bearish on include AT&T Inc., Verizon Communications Inc. (NYSE:VZ) and Plug Power Inc. (NASDAQ:PLUG).
Jim Cramer Recommends Selling These 11 Stocks
10. Icahn Enterprises L.P. (NASDAQ:IEP)
Number of Hedge Fund Holders: 2
Answering a question about Icahn Enterprises L.P. (NASDAQ:IEP) during a program in August, Cramer called the company a “mess” and said he has no idea how this company makes its money. Cramer thinks Icahn Enterprises L.P. is “opaque” and recommended investors to “stay away” from the stock.
In June Cramer had said the following about the Carl Icahn-led company:
“Too dangerous, too dangerous for me. It doesn’t matter, it’s too dangerous for me. I want to see more information, I’m not really sure what’s in it. I don’t like that.”
Like IEP, Jim Cramer is bearish on AT&T Inc., Verizon Communications Inc. and Plug Power Inc..
9. VinFast Auto Ltd (NASDAQ:VFS)
Vietnam-based automotive company VinFast Auto Ltd (NASDAQ:VFS) ranks 10th in our list of the stocks Jim Cramer recommends selling. The stock has lost a massive 80% over the past six months.
A couple of months ago Jim Cramer said during his program that VinFast Auto Ltd was not a “company you want to be involved with.” Cramer said that he does not like anything about VinFast Auto Ltd and they don’t have a “lot of cars.” He recommended investors to stay away from the stock.
Cantor Fitzgerald’s Andres Sheppard disagrees with Cramer. The analyst and his team recently started covering VinFast Auto Ltd with an Overweight rating and a price target of $7.
“With the stock down ~46% year-to-date, we believe this to be a good entry-point for investors who are comfortable taking on volatility,” Cantor Fitzgerald’s analyst said.
8. Fisker Inc. (NYSE:FSR)
Number of Hedge Fund Holders: 11
Earlier this year a caller during a CNBC program asked Cramer about his thoughts on Fisker Inc. (NYSE:FSR). “No” was Cramer’s instant reply. Cramer said Fisker Inc. is “more of a charity.”
In another program Cramer said the following about Fisker Inc.:
“Like the car, sell the stock.”
7. Plug Power Inc. (NASDAQ:PLUG)
Number of Hedge Fund Holders: 20
Jim Cramer has been advising investors to stay away from Plug Power Inc.. Earlier this year he said the following about Plug Power Inc. on CNBC:
“I think the only way you’d be able to plug in is if you think someone’s going to engineer a short squeeze here, and I’ve got to tell you, that is not a good reason to own a stock. Those numbers were terrible, I say stay away.”
6. National Fuel Gas Company (NYSE:NFG)
Number of Hedge Fund Holders: 26
Earlier in November Jim Cramer said during his program on CNBC that he does not “like” National Fuel Gas Company (NYSE:NFG).
“I don’t like National Fuel Gas, it doesn’t pay enough, doesn’t have the growth that I want…”
National Fuel Gas Company has lost about 16% year to date through November 11.
As of the end of the second quarter of 2023, 26 hedge funds out of the 910 funds tracked by Insider Monkey reported owning stakes in National Fuel Gas Company. The biggest stakeholder of National Fuel Gas Company was Mario Gabelli’s GAMCO Investors which owns a $60.6 million stake in the company.
Heartland Value Fund made the following comment about National Fuel Gas Company in its Q3 2023 investor letter:
“Utilities. National Fuel Gas is another existing holding we added to in the quarter. NFG is an energy company, with regulated utility assets, involved in the production, transportation, and distribution of natural gas. The stock’s correlation with natural gas prices has been high, so it wasn’t too surprising when the stock fell as natural gas prices declined following last year’s benign winter.
But prices are expected to rebound in the coming months now that the supply issue has been addressed with the steep drop in oil gas rig counts. Demand is also set to improve starting in 2025 with the onset of more U.S. liquefied natural gas (LNG) exports. Meanwhile, this is a well-run business with a track record of financial soundness. NFG, for instance, has raised dividends for 53 consecutive years because of the consistent cash flow generation from its midstream and utility segments.
Yet, when looking at valuations, we see a disconnect. NFG is trading at a 20% discount to its historical valuations compared with traditional oil and gas exploration and production stocks. The relative premium it typically garners is a function of the company’s ability to leverage its pipeline infrastructure to capitalize on higher natural gas prices and the stability of non-energy cash flows. We are positioning the portfolio to take advantage of this opportunity.”
Like AT&T Inc., Verizon Communications Inc. and Plug Power Inc., National Fuel Gas Company is one of the stocks Jim Cramer is bearish on.
5. Iridium Communications Inc.(NASDAQ:IRDM)
Number of Hedge Fund Holders: 34
Last month, Jim Cramer said in his program on CNBC that previously Iridium Communications Inc. (NASDAQ:IRDM) was making money but the stock is now turning out to be a money loser. Cramer has repeatedly said in his program that he is not recommending stocks that are not making money. He repeated the same mantra about Iridium Communications Inc.. Iridium Communications Inc. stock recently fell after Qualcomm and Iridium ended their satellite feature deal. Iridium Communications Inc. also posted weak Q3 results in October, missing estimates on both revenue and earnings.
GAAP EPS in the quarter came in at -$0.01, missing estimates by $0.04. Revenue in the quarter jumped 7.4% year over year to $197.6 million, missing estimates by $2.64 million. Operational EBITDA for the third quarter came in at $121.3 million, as compared to $107.8 million for the prior-year period.
Iridium Communications Inc. talked about its future expectations in Q3 earnings call and said:
“While down from 2022, we expect 2023 equipment sales to remain above normalized historical levels and now expect this year to be the second highest on record. Going forward, we expect equipment sales to moderate to be more in line with historical averages. This is consistent with our comments at our recent Investor Day. Engineering and support revenue was $25.2 million in the third quarter as compared to $17.1 million in the prior year period. The increase reflects ongoing work for the U.S. government related to the Space Development Agency contract that we won last year. We continue to expect engineering revenue will be up significantly this year, but will fluctuate from quarter to quarter based upon execution and milestone achievements. Based upon our results through the third quarter and trends we’re seeing into October, we’re updating our full year guidance for service revenue growth to approximately 10% in 2023 and operational EBIDTA to between $460 million and $465 million.”
Read the full earnings call transcript here.
Here is what Baron Focused Growth Fund has to say about Iridium Communications Inc. in its Q1 2023 investor letter:
“Iridium, a leading mobile voice and data communications services vendor offering global coverage via satellite, increased 20.8% and added 99 bps to performance in the quarter. The stock outperformed as the company’s revenue growth accelerated, leading to strong profitability and cash flow, which the company used to buy back its stock. The company continues to benefit from its $3 billion investment in its satellite constellation, which is a technologically and capital-intensive effort and a strong barrier to entry. Iridium continues to generate consistent and growing revenue and cash flow, which should lead to a return of capital to shareholders for at least the next 10 years. That is since its satellites last longer than its competitors’ satellites, and they offer stronger broadband given their low-Earth orbit positioning.”
2. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
Number of Hedge Fund Holders: 33
Jim Cramer in October made bearish comments about Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR). Cramer said that Petróleo Brasileiro S.A. – Petrobras has “run too much for me, even though it sells at six times earnings.”
Earlier this month Petróleo Brasileiro S.A. – Petrobras posted Q3 results. Net income in the quarter came in at $5.46 billion. Revenue in the period fell 21.2% year over year to $25.55 billion, missing estimates by $410 million.
3. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 53
In September 2023, while answering a call during his Lighting Round segment on CNBC, Jim Cramer said that Verizon Communications Inc. is “dead money.” In August Cramer had said that Verizon Communications Inc. stock was going “nowhere.”
“Verizon to me has lost its way, I don’t think its management is very crisp anymore, and I don’t care where you bought it, I care where it’s going, and I think it’s going nowhere.”
As of the end of the second quarter of 2023, 53 hedge funds tracked by Insider Monkey had stakes in Verizon. The biggest stakeholder of the company was Ric Dillon’s Diamond Hill Capital which owns a $250 million stake in the company.
Ariel Global Fund made the following comment about Verizon Communications Inc. in its Q2 2023 investor letter:
“Global communications and technology leader, Verizon Communications Inc. (NYSE:VZ), also weighed on performance in the period on mixed earnings results. Consolidated revenues came in slightly below expectations, EBITDA was in-line and management reiterated full year 2023 guidance. Although share price action has been weak, we find the company valuation to be compelling and the approximately 7% dividend yield to be both stable and secure. We view Verizon as one of the best positioned telecoms in the world. Looking forward, we expect the free cash flow to grow significantly in the years ahead as Verizon moves past the secular peak in 5G capital spending.”
2. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 56
In August, during his program on CNBC, Jim Cramer said that he believes AT&T Inc. is a “horrendous” stock. He reiterated these extremely bearish views on AT&T Inc. in a latest program when he said:
“I don’t like AT&T…The answer is no thank you.”
AT&T Inc. shares have lost about 16% year to date through November 11.
As of the end of the second quarter of 2023, 56 hedge funds tracked by Insider Monkey had stakes in AT&T Inc.. The most significant stakeholder of AT&T Inc. during this period was D. E. Shaw which had a $256 million stake in the company.
Miller Value Income Strategy made the following comment about AT&T Inc. in its Q3 2023 investor letter:
“Our third-largest holding at quarter end was AT&T Inc. (NYSE:T), a leading provider of communications and connectivity services in the US. At $15/share, the stock trades at the same price it did almost thirty years ago. The share price is much less interesting to us in relation to where it has traded in the past than in relation to how much cash the company generates and what management is doing with it. At just over 6x earnings, the stock trades near its lowest price-to-earnings (P/E) multiple ever, also representing close to its largest-ever P/E discount to the stock market. The business converts most of its earnings to free cash flow, implying a forward free cash flow yield north of 15%. Just under half of free cash flow is going toward the dividend (7.5% yield), while much of the balance is going to debt paydown. In other words, if the stock does not fall below its lowest-ever valuation, investors clip a rock-solid 7.5% in cash, while owning a growing portion of a very steady business as management reduces debt outstanding. A discounted cash flow model will suggest that intrinsic value for shares begins with a “2,” suggesting the stock is undervalued on an absolute basis. The lack of volatility in the underlying fundamentals also makes it unique when compared to many other things we own, which reduces the probability of permanent capital impairment and argues for a significant weight in the portfolio.
AT&T looks particularly attractive when compared to some of the larger names dominating the S&P 500. Compare the stock to Apple, for instance, whose revenues and profits are likely to shrink this year, even as it trades at 29x this year’s earnings estimate. The ongoing return to rationality and capital accountability, along with extreme valuations in the megacap tech stocks, have us more excited about our portfolio’s prospects than we can remember for quite some time. As always, we remain the largest investors and welcome any questions or comments.”
1. Seagen Inc. (NASDAQ:SGEN)
Number of Hedge Fund Holders: 66
Jim Cramer on November 3 categorically recommended his viewers to sell biotech company Seagen Inc. (NASDAQ:SGEN)’s stock. Here’s is what Cramer had said:
“I want you to sell the stock on Monday. I don’t trust the FTC, and you’ve made all the big money already.”
Cramer was referring to Pfizer’s $43 billion planned acquisition of Seagen Inc. which is still under scrutiny by the FTC.
Earlier this month Seagen Inc. posted Q3 results. GAAP EPS in the quarter came in at -$1.15, missing estimates by $0.37. Revenue in the period jumped 11.9% year over year to $571 million, missing estimates by $64.1 million.
Carillon Eagle Mid Cap Growth Fund made the following comment about Seagen Inc. in its Q1 2023 investor letter:
“Seagen Inc. (NASDAQ:SGEN) is a biotechnology company that develops and commercializes monoclonal antibody-based therapies to treat cancer. During the quarter, a major pharmaceutical company announced plans to buy Seagen for a sizeable premium. The transaction is expected to close late this year or early next year.”
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This article is originally published at Insider Monkey.
