We recently published a list of Jim Cramer’s Latest Calls: Top 10 Stocks. Since Delta Air Lines, Inc. (NYSE:DAL) ranks 9th on the list, it deserves a deeper look.
Jim Cramer in a latest program said that if companies would “own up” to the changing circumstances, things would be “so much easier” for them as well as investors.
“There is so much information and misinformation flying around at this point in the earnings season that it’s very easy to be led astray,” Cramer said.
Cramer thinks companies are “leaving out” important information which can cause investors to make “faulty decisions.”
As an example, Cramer talked about how food and beverage companies are not talking about the impact of weight loss drugs on their financials
Cramer said that GLP-1 drugs are extremely “powerful” and they cause a decline in cravings for snacks and liquor. This, according to Cramer, directly affects beverage and snack companies. However, Cramer said these companies are intentionally not mentioning the impact of these drugs.
“I wonder how long they can maintain this fiction, it’ll be better if they just own that it’s a problem rather than just ignoring it.”
Cramer was also furious that consumer companies are not admitting that high prices are impacting their financials. He said hotels and entertainment companies raised prices in the past but now they are not willing to bring them down despite facing pricing headwinds.
Cramer also called the claims that huge AI investments are not bringing any solid results for companies “absurd.”
We watched several latest programs of Jim Cramer on CNBC and picked 10 important stocks he’s talking about. With each stock we have mentioned the number of hedge fund investors. 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).
Pixabay/Public Domain
Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Investors: 51
Jim Cramer was asked about Delta Airlines in a latest program. Here is what he said:
“I’m troubled by Delta even though it sells six times earnings… I’m going to take a real pass on Delta and look at other airlines.”
Cramer said he does not like the spat between Delta and Crowdstrike.
All everyone could talk about these days when it comes to Delta Air Lines, Inc. (NYSE:DAL) is the company’s upcoming legal battle and public spat with Crowdstrike following the July tech outage. But what’s the basic story behind this stock?
Delta Air Lines, Inc. (NYSE:DAL) recently reported weak quarterly results. While the management kept talking about strong summer demand during the earnings call, analysts are noticing an oversupply of seats that could weigh on the company’s near-term results. Delta Air Lines, Inc. (NYSE:DAL) anticipates that seat oversupply will stabilize by August, which is perhaps why it reaffirmed its full-year EPS outlook of $6-$7. However, if low-cost air carriers do not slash their supply, Delta could see headwinds.
Despite these challenges, the company’s PEG ratio of 0.83 suggests a conservative earnings growth estimate of 7.8%. With a projected FY25 EPS of $6.47 and a forward P/E multiple of 6.5x, stock stock’s average price target comes out to be around $42, which is not much higher than the current price of $39. That means there is not any juice left in the stock for now.
Oakmark Fund stated the following regarding Delta Air Lines, Inc. (NYSE:DAL) in its first quarter 2024 investor letter:
“Delta Air Lines, Inc. (NYSE:DAL) is a leading global airline. Of the big three U.S.-based airlines (Delta, United and American), we see Delta as the most competitively advantaged. We believe the company’s years of industry-leading operational performance and investments in the customer experience have established Delta as the premium brand in the industry. We also think its geographically optimal hubs, high local market share, robust loyalty program and unique corporate culture all support healthy returns on capital. Delta currently trades at 6x our estimate of normalized earnings per share. We believe this is an attractive valuation for a competitively advantaged and growing business in an out-of-favor industry.”
Overall, Delta Air Lines, Inc. (NYSE:DAL) ranks 9th on Insider Monkey’s list titled Jim Cramer’s Latest Calls: Top 10 Stocks. While we acknowledge the potential of Delta Air Lines, Inc. (NYSE:DAL), 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 DAL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
Hedge Fund Resource Center