We recently compiled a list of the 10 Stocks That Have Jim Cramer’s Attention. In this article, we are going to take a look at where Crane Company (NYSE:CR) stands against the other stocks with Jim Cramer’s attention.
On a recent episode of Mad Money, Jim Cramer notes that after a significant rally in the past two weeks, the market took a hit ahead of the Federal Reserve’s upcoming meeting in Jackson Hole. The Dow fell 170 points, the S&P dropped 43 points, and the NASDAQ tumbled 1.67%. This downturn marks a return to reality, which can be harsh.
“After the monster move we’ve had in the last two weeks, that’s why, on the eve of the big Federal Reserve powwow in Jackson Hole, the averages got slammed. It’s back to reality, and reality can sting.”
Previously, after a dramatic unwind of the Yen carry trade, the market quickly collapsed but then rebounded strongly over eight days. According to Cramer, during that period, anything that was doing well surged, and there was optimism that anything struggling would improve once the Fed started cutting rates. However, that optimism has faded.
“If you remember, after the sudden unwind of the Yen carry trade, the market experienced a sharp decline followed by a remarkable 8-day rebound. During that time, stocks that were performing well surged, and there was hope that struggling stocks would improve once the Fed began cutting rates. However, that was then, and this is now.”
Now, we’re experiencing what Cramer refers to as the “buyer’s remorse” phase. Stocks that had risen on hope alone are now falling sharply. Even the prospect of the Fed stepping in hasn’t been enough to prevent the decline.
“Since the winning streak ended, we’re entering what I call the “buyer’s remorse” phase. Stocks that had been climbing based on hope alone are now falling hard. Even the prospect of Fed intervention isn’t enough to prevent this decline. The selling might be exaggerated because the Fed is set to speak in Jackson Hole, and Wall Street has already factored in the possibility of a September rate cut—beyond that, it’s unlikely the Fed will announce multiple rate cuts, as some bulls hope.”
Cramer dismisses the first two explanations for the current market weakness: the idea that the Fed’s actions are too late or that the Fed can’t fix the economy. He believes the Fed’s interventions still have a significant impact, although companies with poor balance sheets might struggle.
“There are also concerns that the Fed might be too late to make a difference, or that traders fear a potential Democratic sweep in November could lead to higher corporate tax rates—bad for earnings—and increased scrutiny on price gouging in supermarkets and drugstores.
I don’t fully buy into the first two explanations. Not everything can be saved by the Fed, as some companies aren’t very sensitive to economic changes. Also, it’s never too late for a rate cut; delays might occur, but the turn is not canceled, except for companies with poor balance sheets. Those companies, burdened with debt, deserve to struggle if they can’t manage their obligations effectively.”
The third explanation, political concerns, seems more plausible to Cramer. He points out that investors initially saw President Biden as less favorable to the stock market due to his pro-labor stance. However, recent discussions suggest that a potential Harris presidency might be even more challenging for businesses. Harris is seen as critical of companies raising prices and could push for measures against price gouging, which might be difficult to achieve.
“The third, politics-is-trickier. Before this week, many investors saw President Biden as unfavorable to the stock market due to his pro-labor stance. However, Vice President Harris, coming from California with ties to the tech industry and connections like her brother-in-law Tony West, General Counsel at Uber, was thought to be more business-friendly.
Recent discussions suggest that a Harris presidency might be even tougher on businesses than Biden’s administration. There is a strong focus on criticizing food and drug companies for raising prices, even though the Biden administration attempted to control the prices of some heavily used drugs. Harris’s potential efforts to curb price gouging might face challenges, as large retailers like Walmart and Costco have already done a great job of pushing suppliers to reduce prices to pre-COVID levels.”
Cramer is also concerned about a recent prediction from market expert Larry Williams, which adds to his apprehension about the market’s future.
“On the campaign trail, Harris might not recognize the distinction between good and bad actors, opting instead to broadly criticize big businesses for taking advantage of the pandemic. These factors might explain some of today’s market weakness, but what concerns me most is a recent prediction from market expert Larry Williams. I respect Larry’s insights and prefer not to contradict him.
Jim Cramer said Larry Williams predicted that the rally was “kaput.” This term, implying that the rally might be over, is especially worrying considering it was used after the eighth day of gains. Despite this winning streak, the market didn’t surpass its previous highs. Larry’s charts also indicated that the S&P 500 might face difficulties in the coming week, particularly due to Nvidia, which he considers a crucial stock in the market.
“Larry sent us his thoughts on Monday, and he used a term that made me concerned. He said that the rally was “kaput.” Mind you, this was on the eighth day. The word “kaput” has some ominous connotations, right? Especially because we didn’t take out the highs of the averages despite the 8-day win streak. Worse, Larry’s charts showed tough sledding for the S&P 500 next week, led by the most important stock in the entire market—maybe the most important stock I’ve ever seen.”
Jim Cramer notes that with the market currently overbought—reflected in the S&P short-range oscillator reading of plus five—Larry’s view that the rally could be over seems plausible. Wall Street’s favorite GPU maker experienced a sharp drop recently, despite its strong performance leading up to the quarter. The stock’s sudden reversal was difficult to watch.
“Given that the market’s overbought—plus five on the S&P short-range oscillator that I follow—the idea that the rally is kaput has some resonance. It doesn’t help that Nvidia ran up rapidly into the quarter and expectations have gotten out of hand. The stock did a horrible reversal today—just painful to watch.”
Our Methodology
In this article, we analyze a recent episode of Jim Cramer’s Mad Money, where he highlighted ten stocks. We also review hedge fund opinions on these stocks and rank them based on hedge fund ownership, from the least to the most.
At Insider Monkey we are obsessed with 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 crane carrying heavy building materials, representing the robust civil engineering products of the company.
Crane Company (NYSE:CR)
Number of Hedge Fund Investors: 31
Jim Cramer responded to a viewer’s inquiry about Crane Company (NYSE:CR) by praising its transformation. He noted that Crane Company (NYSE:CR) has shifted from its traditional metalworking focus to embrace more high-tech solutions.
“Crane is a well-run company that has pivoted significantly and focuses less on traditional metal bending, now being more high-tech. We’re considering including Crane in our new industrial series managed by our Chief Scientist and Chief Research Director, Ben Stod. The company is strong, and we’re excited about its prospects in the HVAC sector.”
Crane Company (NYSE:CR) is well-positioned to benefit from trends like automation, electrification, and the recovery in aerospace demand due to its diverse range of engineered industrial products. In its Q2 2024 earnings report, Crane Company (NYSE:CR) delivered impressive results with earnings per share (EPS) of $1.94, surpassing expectations. Revenue totaled $865 million, reflecting a 7% increase from the previous year, driven by strong demand in aerospace and electronics, as well as growth in industrial products from investments in infrastructure and automation.
A recent major contract with an aerospace manufacturer underscores Crane Company (NYSE:CR)’s potential for future revenue growth. Crane Company (NYSE:CR)’s investments in technology and innovation, including advanced materials for aerospace and industrial uses, strengthen its competitive position. Moreover, Crane Company (NYSE:CR)’s emphasis on improving operational efficiency and expanding margins, along with a strong balance sheet and good cash flow, supports its ability to pursue strategic acquisitions, share repurchases, and dividend increases.
Here’s what Crane Company’s CEO, Max Mitchell, has to say in their latest earnings call:
“Welcome and thank you again for joining Crane and we look forward to much improved performance versus the last person in the role. I’m joking, Jason. Good morning, everyone. Thanks for joining the call today. Yet another excellent quarter with results outperforming expectations. Adjusted EPS was $1.30, driven by an impressive 9% core sales growth, reflecting strength across both aerospace electronics and process flow technologies. That growth was paired with strong leading indicators with core orders up 7% and core backlog up 10% compared to last year, and confidence in our outlook for 2024 remains high. Based on the strength in the first half, we are raising the midpoint of our full year guidance by $0.15 and narrowing our outlook to a range of $4.95 to $5.15, which reflects 18% EPS growth at the midpoint.
We have fairly strong direct line of sight to delivering that 18% earnings growth. Our revised guidance continues to assume somewhat muted industrial activity with aerospace electronics, commercial OE sales growth solid, but at a slightly lower levels given the changes with OE build rates. We also assume that the aerospace electronics supply chain continues with similar issues with only very gradual further improvement as the year progresses. But this is also becoming more of the normal state of play honestly, at this point in time. If those assumptions prove conservative, we are structured to be able to satisfy any unexpected upside demand. We’ve had a strong first half. Our strategy is working. The team is executing, driving improved earnings through its growth and commercial excellence initiatives.”
Overall CR ranks 9th on our list of the stocks with Jim Cramer’s attention. While we acknowledge the potential of CR as an investment, our conviction lies in the belief that under the radar 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 CR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.