We recently compiled a list of the 10 S&P 500 Stocks on Jim Cramer's Radar.In this article, we are going to take a look at where The Estée Lauder Companies Inc. (NYSE:EL) stands against the other S&P 500 stocks.
Jim Cramer, host of Mad Money, recently discussed the current state of the market and also discussed both the leading and lagging stocks within the S&P 500. He posed an intriguing question: What if Trump's tariffs are more negotiable than expected? Instead of a hard-line approach, Cramer suggested they could end up being more like a "steak knife" than a "meat axe," meaning less harmful to trade and international relations.
While a more reasonable tariff policy might not be ideal for global trade, it would be a positive development for stocks, particularly if it results in lower prices for American consumers or if multinational companies move their manufacturing to more favorable countries. Cramer emphasized that, for stockholders looking for growth, hopes should be placed on negotiable tariffs.
“If you own stocks and you want them higher, you have to hope for negotiable tariffs that could cause countries to lower prices to us or make multinational companies move their manufacturing base here to a more friendly country.”
Cramer also discussed the S&P 500's performance this year, noting that, while it is clear which stocks have thrived in the Nasdaq, the winners and losers in the broader S&P 500 have been more difficult to pinpoint.
Additionally, Cramer mentioned that several of the stocks in his Charitable Trust, which are reliant on a rebound in China, are ones he’s not excited about at the moment, especially considering the disappointing Chinese economic data. He mentioned that his dismay for such stocks will only last until “they annualize the crummy Chinese numbers and then they'll probably bounce back.”
Our Methodology
For this article, we compiled a list of 10 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 2. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock 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).
5 High Quality Foundations for All Skin Types
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During Mad Money’s episode, Cramer discussed a few reasons behind The Estée Lauder Companies Inc. (NYSE:EL) stock price nosediving in 2024.
“Fourth is Estée Lauder. Lost 49% last year because it went all in China and saw every part of its business pretty much fall apart, even as management kept promising otherwise. Yep, louder, over-promised and under-delivered endlessly… It was also eviscerated by competition from e.l.f Beauty or ELF. Of course, management would never admit this. It would never admit that its products were way overpriced compared to e.l.f’s, much cheaper, but only slightly inferior merchandise. They would say it's radically inferior.”
The Estée Lauder Companies Inc. (NYSE:EL) manufactures and sells a wide range of skincare, makeup, fragrance, and hair care products globally, offering popular brands such as Estée Lauder and Clinique. However, despite its widespread success, the company has faced significant challenges recently. Since its peak stock performance in 2022, the stock has experienced a sharp decline. In 2024, it also announced a reduction in its dividend by approximately 47%, signaling struggles in its financial performance.
A significant issue contributing to the company's difficulties has been weak sales in China, which have been hindered by the country's slow recovery from the pandemic-induced shutdowns. As approximately 30% of the company’s sales are tied to China, the volatility in the region’s economy has significantly impacted the company’s performance.
As per DA Davidson’s Linda Bolton Weiser, this has resulted in a suspension of the company’s annual guidance. Weiser believes that the China market’s complications will result in a drop in sales of 15% to 16% year-over-year in the second quarter of fiscal 2025.
The Estée Lauder Companies Inc. (NYSE:EL) began fiscal 2025 expecting slower performance in mainland China and Asia travel retail, with the actual impact being greater than expected due to worsened consumer sentiment. For the remainder of its business, the company expects continued normalization in the prestige beauty sector, particularly in North America, with net sales expected to decrease between 6% and 8%, and diluted net earnings per share projected between $0.02 and $0.19.
Overall EL ranks 9th on our list of the S&P 500 stocks on Jim Cramer's radar. While we acknowledge the potential of EL 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 EL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
