In his appearance on CNBC’s Squawk on the Street on Monday, Jim Cramer discussed the reasons behind the recent market turmoil. Cramer emphasized that markets haven’t yet priced in the full brunt of the policies that are coming out of the White House. With Peter Navarro’s anti-China agenda now setting the tone, Cramer warned that corporate earnings and valuations are being fundamentally redefined, and made a bold prediction at where the S&P 500 index could potentially find its bottom:
“I think that the way you want to look at it is what multiple do you put on the new earnings estimates for the S&P. And I think that the S&P people thought it would be 270 to 280; now it’s going to be 230. I think you have to put a worst case, 14 times, because markets have tended to bottom at 14 times earnings and that gives you a 36% downside from here. […] We’re still at 20, that’s the problem. You take it down to 14, where it’s historically bottom, you multiply it by 230, and you get S&P 3220, and that should be your bottom.”
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Cramer then painted a picture of the economic path ahead, noting that the current President’s stance is no longer about deal-making but about generating revenue. He warned viewers that without a change in course, the economy could be heading straight toward a recession:
“You’ve got this dichotomy. I mean, this is a man who’s not talking about negotiating. He’s talking about raising a lot of revenue. In the interim, we’ve got inflation because there’s bargaining, but everybody has to pay higher prices and ultimately a recession if there is not some sort of accommodation made.”
While discussing if the current environment is reminiscent of 2007, Cramer rejected the comparison, but acknowledged that capital is fleeing the US markets which might indicate a loss of confidence in American economic leadership:
“Look, there are signs that the U.S. has lost its supremacy. I want to take that off the table if we decide to change our view. See, let’s say I tell people, I think it’s time to really bail. It’s really dangerous. And then the market drops 50 percent. And then the president switches. Can I tell people, oh, now it’s fine, all clear? No, that does not work. It’s not 2007. And by the way, 2007, it took six years to get back. Eighteen months is the average of the last other five bear markets. Eighteen months. “
Our Methodology
To make our list of the stocks that Jim Cramer talked about, we listed down the stocks he mentioned during CNBC’s Squawk on the Street aired on April 7th.
For these stocks, we also mentioned the number of hedge fund investors, as of Q4 2024. 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).
9.Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund holders: 166
Apple Inc. (NASDAQ:AAPL), the giant iPhone maker, is facing some big risks in recent months due to much of its production being tied to a complex global supply chain. The company was mentioned as a prime example of how firms have historically tried to bypass tariffs, such as routing production from China through countries like Vietnam, but are now in the direct line of fire from White House policy. Here’s Cramer’s input regarding the stock:
“[talking about bringing production back to the U.S.] And I think for the point of view of our viewers, they have to understand that Apple is the paradigm of what Navarro is trying to fix. They bring it back here, they are fine. If they don’t; look out. They are not going to be able to make their numbers.”
8. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund holders: 339
Amazon.com Inc. (NASDAQ:AMZN) was brought up frequently during the show as a prime example of how the tariffs, especially on China, are affecting large retailers. Cramer highlighted the risk Amazon faces due to these tariff disruptions, suggesting that inventory tied to Chinese suppliers may be frozen as the company is forced into difficult negotiations:
“But I do believe right now there’s negotiations, let’s say with Amazon. Amazon has a lot of stuff that is made, that’s branded, and I don’t think that stuff’s coming here. I think that stuff’s frozen until they come up with negotiations. […] You’re Amazon, you want to screw the Chinese, the Chinese want to screw you. The only thing you can do is have some sort of meeting of the minds and someone has to pay. […] I’m looking to see whether Amazon’s going to go out of stock on some key things because they were made in China and they cancelled the purchase order. I think that they will.”
7. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund holders: 62
Caterpillar Inc. (NYSE:CAT) is a leading manufacturer of construction and mining equipment, with its fortunes closely tied to global trade and infrastructure development. Cramer discussed the stock following a downgrade from UBS, explaining that the company is vulnerable to slowing world trade but may be worth considering if infrastructure spending returns. Here’s his remarks:
“UBS, good firm, they downgraded Caterpillar from hold to sell. So people are saying, well, there’s going to be a halt in world trade, a halt in construction. So you sell companies that are related to infrastructure. And I think what you’re struggling with here is, is Caterpillar buy at a certain point? Because maybe infrastructure comes back. But my problem is, I think you have to wait. And I know wait is just not what you want to hear. No one really wants to hear somebody come on air and say, I think you have to wait and see. But I think that’s the right thing, the right strategy to advocate. Well, I’m not going to tell people to sell Caterpillar too soon. Look, let’s say Caterpillar goes to 240. Can I tell people, hey, 240, you got to get back in? Are we using a 2007 paradigm, or are we using the other 5-20% declines? Because if it’s the other 5-20% declines, then you can’t sell. You might not have to buy. You can’t sell. “
6. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund holders: 64
Palantir Technologies Inc. (NYSE:PLTR) builds software platforms for big data analytics, primarily serving government and large commercial clients. Cramer made a quick remark about the stock, indicating that despite the current volatility and his own bearish predictions, he’s not recommending his viewers to sell the stock:
“But then I don’t want anybody to think that I think it’s time to sell Palantir. Palantir can go to 40, I don’t know.”
Jim Cramer has always been a fan of Palantir Technologies Inc. (NYSE:PLTR). When asked by a caller if the stock was worth buying now, he replied with:
“Yes, it is. Palantir’s a winner and I’m telling you, we’re going to see what they do with the defense department. I’m telling you they’re going to help… the procurement process. And I’m a believer in Palantir, even if they don’t believe in me. I don’t care.”
5. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund holders: 108
The Walt Disney Company (NYSE:DIS) operates theme parks, media networks, and entertainment studios. Cramer expressed his concerns about consumer spending on high-cost vacations like Disney during a time of broader economic anxiety, but warned investors against selling in a panic. Here’s his view:
“I mean, look, my charitable trust owns Disney. I was looking great. And now I feel like, well, wait a second, if it’s a big family and they have to pay $20,000 for five days, well, they are going to cancel. And the airlines are demonstrable about that. But I don’t I still think when you’re talking to people at home, do they sell Disney at $81? You know what? Right now, Disney could go to $70. I don’t know. But what happens if it goes to $90 two years from now and you sold it at $80 and you never got back in? There is a cost to not being able to get back in.”
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund holders: 223
NVIDIA Corporation (NASDAQ:NVDA) designs graphics processors and is a leader in artificial intelligence hardware. Cramer pointed out the company’s temporary exemption from tariffs due to its defense ties, but warned that tariff-driven costs could still weigh on demand, saying:
“But we have to get Jensen involved. How about the fact that he went 232 on the tariffs? That they decided that NVIDIA should be exempt from the tariffs because of defense. […] Well, NVIDIA at $87 reflects that. It reflects that there’s going to be a decline in orders because they’re selling it.”
3. Dollar Tree Inc. (NASDAQ:DLTR)
Number of Hedge Fund holders: 64
Dollar Tree Inc. (NASDAQ:DLTR) operates discount variety stores across North America. Despite a Citi upgrade, Cramer dismissed the bullish argument that the company could raise prices due to tariffs, noting it lacks the supply chain muscle of larger retailers, such as Walmart. Here’s his analysis:
“One of the critical things that’s happening today, that Citi upgrades Dollar Tree. I want to point this out that one of the reasons why people feel Dollar Tree is interesting is the tariffs have given them the right to be able to go to $1.25, $1.75. I think this is fatuous reasoning. The reason I say that is because you have an outfit like Walmart, and they have the ability to be able to go to China and negotiate. Dollar Tree does not have that ability. Would you still go to Dollar Tree if Walmart’s appreciation would be cheaper? No. So I’m not buying that wrap.”
2. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund holders: 116
Walmart Inc. (NYSE:WMT) is the largest retail chain in the U.S., with significant pricing power and global sourcing capabilities. Cramer compared it favorably to Dollar Tree, saying Walmart’s scale gives it leverage in navigating the tariff uncertainties, even if it might miss earnings. He said the following:
“Would you still go to Dollar Tree if Walmart’s appreciation would be cheaper? No. Even though I think Walmart’s going to miss the quarter, I’d rather own Walmart longer term than own Dollar Tree.”
1. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund holders: 113
Bank of America Corporation (NYSE:BAC) is one of the largest U.S. financial institutions. Cramer noted the bank’s recent share price increase but cautioned against reactionary trading, reinforcing his stance that current market turmoil isn’t a replay of 2007. Here are his thoughts:
“I mean, like, Bank of America’s up. I mean, what am I supposed to tell people? To sell Bank of America two points ago when we started? What do you think people would say right now? They’d say, you know what? That guy is the big clown. It’s not 2007. That’s the only time you should have sold. It’s not.”
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