We recently compiled a list of the Jim Cramer Recently Discussed These 7 Stocks.In this article, we are going to take a look at where Devon Energy Corporation (NYSE:DVN) stands against the other stocks Jim Cramer recently discussed.
Jim Cramer, host of Mad Money, recently shared his thoughts on how geopolitical concerns, particularly the recent nuclear threat, can significantly impact investor behavior. He pointed out that when such threats arise, investors typically become more cautious and often seek safer investments, such as U.S. Treasury bonds.
Cramer referred to this phenomenon as a "flight-to-quality," a pattern that has become particularly noticeable in the context of rising bond yields. He commented:
“We've had a bad bond market of late with rates going up and this Russian new concern changed the direction of bonds as these flight-to-quality buyers drove bonds up and interest rates lower.”
Cramer explained that fast traders are well aware of how to react to rising long-term interest rates. Their instinct is to invest in tech stocks, regardless of whether bond rates are actually decreasing. According to Cramer, it’s a predictable move that, when bond prices rise and yields fall, investors inevitably turn to tech stocks.
This holds true even in cases where investors are seeking out treasuries because of a flight to quality or because inflation is easing. He emphasized that, whenever there is a rally in bonds and a dip in bond yields, it’s almost automatic that tech stocks will see increased investment. He added:
“Next time nukes are threatened and you see a flight-to-quality, remember this, the highest quality is the Magnificent Seven.”
Cramer also discussed how the market might react to potential trade policy changes, particularly the threat of tariffs under President-elect Donald Trump. He referred to an analysis by Jessica Inskip, the director of investor research at StockBrokers.com, which suggested that the market was largely unaffected by Trump’s pre-election threats of tariffs.
“The charts interpreted by Jessica Inskip suggest that tariffs had little impact on the market until they actually materialized during Trump’s first term, all the saber-rattling beforehand didn’t do much damage. Even when the tariffs actually hit and the market sold off, we eventually erased those losses the moment that the Fed stopped raising interest rates. So until the tariffs actually hit, Inskip says, you can take a page from Taylor Swift and Shake It Off… I think she’s got a real good point.”
Our Methodology
For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during the recent episodes of Mad Money. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A group of technicians in hazmat suits inspecting a natural gas storage tank.
Commenting on Devon Energy Corporation (NYSE:DVN), Cramer said, “I like Devon, but I think Coterra is far superior to Devon.”
Devon Energy (NYSE:DVN) is an independent energy company involved in the exploration, development, and production of oil, natural gas, and natural gas liquids across the United States. On November 7, Truist downgraded the company stock to Hold from Buy, setting a price target of $43, down from $49, following the company’s better-than-expected results and in-line guidance.
According to the analyst, the revised EBITDAX trading multiple and free cash flow yield suggest limited upside potential for the stock. While the company continues to indicate a significant inventory of assets, the analyst believes the company needs to expand its inventory to compete among the top large-cap exploration and production companies.
It is noteworthy that Devon Energy (NYSE:DVN) has made a deliberate decision to focus investments on its core assets in the Delaware Basin to boost productivity. This move has proven successful, with the company initially projecting production of 650,000 barrels of oil equivalent per day (BOED) for the year. However, by August, management revised this estimate upwards to a range of 677,000 BOED to 688,000 BOED.
As of November, the target was further increased to between 811,000 BOED and 830,000 BOED, reflecting a significant rise of 110,000 BOED from the acquisition of assets in the Williston Basin. This focus on improving productivity in the Delaware Basin has yielded clear results, with production from this region, reaching 488,000 BOED in the third quarter of 2024, and accounting for 67% of company-wide volumes.
Overall DVN ranks 5th on our list of the stocks Jim Cramer recently discussed. While we acknowledge the potential of DVN as an investment, 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 DVN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
