We recently published a list of Jim Cramer Says Buy These 5 Industrial Stocks Before Rate Cuts — And 5 Other Stocks He’s Talking About. Since Devon Energy Corp (NYSE:DVN) ranks 4th on the list, it deserves a deeper look.
Jim Cramer said in a latest program on CNBC that the NASDAQ has become an “annoying source of funds” for other indexes as mutual funds pull out of tech and growth stocks that would not benefit from rate cuts and funnel these funds into the companies that can “super-charge” their earnings amid the expected rate cuts in September.
Cramer said that the decline of tech stocks could be “painful” for many because while these companies do not benefit from rate cuts, their earnings are still strong. Cramer said there are two kinds of companies that will benefit from rate cuts: the ones with cyclical businesses that thrive during rate cuts and those with high dividend yields.
Cramer said that by the time the Fed would announce its first rate cuts, it would have been “too late” to buy the stocks that benefit from rate cuts.
“You have to let them recharge, let them come down and then you can pull the trigger,” Cramer said.
In a separate program a few days ago Jim Cramer specifically talked about five industrial stocks he’s bullish on before rate cuts. In this article we mentioned these five stocks along with a few other stocks Cramer is talking about during his programs these days. With each company we have mentioned the number of hedge fund investors. 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.
Devon Energy Corp (NYSE:DVN)
Number of Hedge Fund Investors: 52
When asked about Devon Energy Corp (NYSE:DVN), Jim Cramer said that Rick Muncrief (Devon CEO) has “put together a monster company.” Cramer recommended the stock with caution amid volatility in oil and gas prices.
“So, I’d own Devon Energy Corp (NYSE:DVN) but don’t get too excited.”
Upstream energy giant Devon Energy Corp (NYSE:DVN) is a notable dividend stock popular among hedge funds. During the first quarter, the company’s production beat its guidance by 4%, driven by strong activity in the Delaware Basin. Devon’s FCF hit $844 million, representing its 15th consecutive quarter of strong FCF generation. Devon Energy Corp (NYSE:DVN) also increased its 2024 production guidance to about 665 thousand barrels/day. Devon Energy Corp (NYSE:DVN) is allocating a whopping 30% of the FCF for shareholder returns, with a $3 billion share buyback authorization in place. Analysts believe Devon Energy Corp (NYSE:DVN)’s low net debt-to-EBITDAX of 0.7x and high growth estimates make it an undervalued play.
Devon Energy Corp (NYSE:DVN) is currently trading at a P/E multiple of 8.9, lower than Devon Energy Corp’s (NYSE:DVN) five-year average P/E of 10.84 as well as the industry mean of 10.73. Wall Street analysts have an average price target of $58.45 for Devon Energy Corp (NYSE:DVN), about 20% higher than the stock’s current levels. Devon Energy Corp (NYSE:DVN) has a $3 billion share buyback authorization in place, which is about 10% of its outstanding shares. In the first quarter alone Devon Energy Corp (NYSE:DVN) returned $430 million to shareholders through dividends and buybacks.
Overall, Devon Energy Corp (NYSE:DVN) ranks 4th on Insider Monkey’s list titled Jim Cramer Says Buy These 5 Industrial Stocks Before Rate Cuts — And 5 Other Stocks He’s Talking About. While we acknowledge the potential of Devon Energy Corp (NYSE:DVN), 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.
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Disclosure: None. This article is originally published at Insider Monkey.