On December 14, an enthusiastic Jim Cramer announced on his program on CNBC that the much-dreaded recession in not coming and pricing stability has been achieved by the Federal Reserve.
“Powell does not want to declare victory… I will declare victory for him, Cramer said.”
Cramer said with the latest Fed decision, it is clear that “interest rates have peaked” and that we “now have the wind at our backs for some, not all, stocks."
Jim Cramer said that now the market bears are “trapped.” Cramer said these bears could never embrace the possibility that Jerome Powell could “engineer” a “terrific” soft landing.
Jim Cramer, who kept recommending quality stocks like Apple Inc (NASDAQ:AAPL), Meta Platforms Inc (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT) throughout 2023 and advised investors to stay away from companies that are losing money, said we are now “ready” for rate cuts. Cramer expects three rate cuts in 2024 and said three rate cuts would mean “smooth sailing for stocks.”
Which Stocks Jim Cramer Recommends to Play Interest Rate Cuts?
Jim Cramer is highly bullish on bank stocks after the Fed’s indication of rate cuts. Cramer said bank stocks were among the most shunned stocks but in an environment where rates could decline and defaults will slow, these stocks are positioned for strong gains. Cramer said financial stocks could surpass the Magnificent Seven group in terms of percentage gains in 2024. He also said regional banking stocks never came back from their lows seen during the banking crisis of 2023 and now could be the time to pile into these companies. The analyst also said companies like Stanley Black & Decker and Caterpillar, in which Cramer’s charitable trust has positions, were “made for this moment” and are well-positioned to benefit from the rate cut environment.
Fed No Longer Our "Enemy"
Cramer said that the Fed sounded more worried about a slowdown than inflation, which is good news for investors. Cramer also said that Fed is now on the side of those who own stocks. Cramer said the Fed is “no longer our enemy” and it is “much more likely to become our pal.”
Glass Half Empty?
Cramer said that there’s another side of the story which he calls the “glass half empty version.” Cramer said skeptics can say that the Fed would cut rates in 2024 because it increased rates too aggressively and a few rate cuts would still leave us with possibilities of recession and an elevated interest rate environment. These skeptics, according to Cramer, also say because of aggressive rate hikes sooner or later there would be a recession and the economy could “stall.” Cramer, however, rejected this notion and said he is not sure how people come up with such “ill-advised arguments” when we have strong employment data. He also said that with more people coming back to workforce, he does not believe wages will keep soaring.
Jim Cramer Says Recession Is Not Coming and Recommends These Stocks
Methodology
For this article, we saw several latest programs of Jim Cramer aired after the Fed's latest policy statement on December 13. Cramer recommended these stocks to callers and questioners on his program and gave reasons for his bullish stance, which we have mentioned in our article. We ranked these stocks in ascending order of the number of hedge fund investors. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Jim Cramer believes investing in Whirlpool Corporation (NYSE:WHR) is one of the “best ways to play the change” in the Fed’s stance. Cramer regretted he didn’t buy the stock earlier.
In November, Whirlpool Corporation (NYSE:WHR) revealed in an SEC filing that the company plans to sell about 24% of its ownership interest in Whirlpool Whirlpool Corporation (NYSE:WHR) of India Limited in 2024.
Jim Cramer in a recent program praised IoT-based monitoring solutions company Samsara Inc (NYSE:IOT) and said can Samsara Inc (NYSE:IOT) could “be acquired” if it does not keep going “higher?”
A total of 24 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Samsara Inc (NYSE:IOT).
In November, Samsara Inc (NYSE:IOT) posted Q3 results. Adjusted EPS in the period came in at $0.04, beating estimates by $0.03. Revenue jumped about $237.5 million, beating estimates by $11.77 million.
Jim Cramer recommended investors to “hang on” to Prudential Financial Inc (NYSE:PRU). Cramer likes the stock’s dividend yield and was surprised the stock is up just about 3% for the year despite a strong price target and ratings upgrade.
“I think you’ve got a keeper,” Cramer said of Prudential Financial Inc (NYSE:PRU).
A total of 28 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Prudential Financial Inc (NYSE:PRU). The most significant stake in Prudential Financial Inc (NYSE:PRU) is owned by Dmitry Balyasny’s Balyasny Asset Management which owns an $106 million stake in Prudential Financial Inc (NYSE:PRU).
Recently, in a program on CNBC, a caller asked Jim Cramer about his thoughts on American EV company Rivian Automotive Inc (NASDAQ:RIVN) and whether he should take profits on the stock. Cramer said that Rivian Automotive Inc (NASDAQ:RIVN) “is up a lot” but recommended the caller to sell half of the stake he owns to take profits and hold the rest of the stake for further gains. Cramer said that Rivian Automotive Inc (NASDAQ:RIVN) is a “survivor.” Rivian Automotive Inc (NASDAQ:RIVN) stock is up by about 40% year to date.
As of the end of the third quarter of 2023, 35 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Rivian Automotive Inc (NASDAQ:RIVN). The biggest stakeholder of Rivian Automotive Inc (NASDAQ:RIVN) was Daniel Sundheim’s D1 Capital Partners which owns a $327 million stake in Rivian Automotive Inc (NASDAQ:RIVN).
In addition to RIVN, Jim Cramer also loves Apple Inc (NASDAQ:AAPL), Meta Platforms Inc (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT).
Here is what Baron Global Advantage Fund has to say about Rivian Automotive, Inc. (NASDAQ:RIVN) in its Q3 2023 investor letter:
“Shares of Rivian Automotive, Inc., a U.S.-based electric vehicle manufacturer, continued their volatile trading, and after declining during the first half of 2023, rose 45.7% during the third quarter. Rivian’s unit economics are improving as a result of several factors: i) the company’s production rate is increasing, which enables it to better absorb fixed costs; ii) Rivian is ramping-up the usage of more price effective technologies, such as LFP batteries and its in-house developed motor, Enduro; and iii) the company is benefiting from renegotiated supplier agreements, as its scale and purchasing power have significantly increased over the last few years. Management expects continued progress in profitability ahead as Rivian further scales production. We remain shareholders and believe that the release of Rivian’s new smaller SUV dubbed R2, which is planned for early 2024, would enable the company to compete in the higher volume SUV segment, and significantly expand its addressable market. On the liquidity front, we expect the company to raise additional funds to support its longer-term business plans.”
Jim Cramer was recently asked whether Teradyne Inc (NASDAQ:TER) was a good stock for the long run. Cramer’s reply was an instant yes as he believes it’s a well-run company. Cramer recommended the questioner to buy Teradyne Inc (NASDAQ:TER). The automatic test equipment designer’s stock has gained about 23% year to date.
As of the end of the third quarter of 2023, 38 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Teradyne Inc (NASDAQ:TER). The biggest stake in Teradyne Inc (NASDAQ:TER) belongs to Catherine D. Wood’s ARK Investment Management which owns a $143 million stake in Teradyne Inc (NASDAQ:TER).
Talking about cruise stocks in one of his latest programs, Jim Cramer said that Royal Caribbean Cruises Ltd (NYSE:RCL) is his first choice in the sector while Carnival Cruise Line is his least favorite.
As of the end of the third quarter of 2023, 41 hedge funds out of the 910 hedge funds tracked by Royal Caribbean Cruises Ltd (NYSE:RCL).
Like Apple Inc (NASDAQ:AAPL), Meta Platforms Inc (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT), Jim Cramer and hedge funds are bullish on Royal Caribbean.
Ariel Fund made the following comment about Royal Caribbean Cruises Ltd. (NYSE:RCL) in its Q2 2023 investor letter:
“Several stocks in the portfolio had strong returns over the period. Global cruise vacation company, Royal Caribbean Cruises Ltd. (NYSE:RCL), was one of the top 3 performers in the S&P 500 during the quarter. Shares surged following a significant top- and bottom-line earnings beat, as stronger than anticipated consumer demand is driving a record WAVE season. Forward booking trends are also ahead of historical ranges at record pricing. These factors combined with further improvement in onboard spend and solid cost containment led management to increase RCL’s full-year 2023 guidance. We believe the revised revenue and earnings outlook lays the foundation for RCL to exceed its’ three-year strategic imperative, the Trifecta Program.”
