We recently published a list of Jim Cramer October Calls: Top 10 Stocks. Since J. M. Smucker Company (NYSE:SJM) ranks 7th on the list, it deserves a deeper look.
Jim Cramer in a latest program on CNBC talked about the ills of “complacency” in investing and how sticking to a specific narrative costs investors money. He was criticizing negative analyst reports that keep downgrading stocks.
“We always hear how the bulls are being complacent and ignore downside risk. We almost never hear that the bears are being complacent and missing out on terrific opportunities, which I find to be absurd. Nobody does complacency like the bears. Remember, last night I spent a lot of time talking about how we had a slew of downgrades yesterday that I did not like, and stocks reacting to negative news already. Today, they seem like fortuitous notes that would end up costing you money if you listen to them.”
Cramer said that some analysts like to “take aim” at long-term winners and scare people out of some “amazing gains.” This, Cramer believes, is “downright wrong.” He said that even if investors want to sell a stock based on a downgrade, they should wait for it to “bounce” before pulling the trigger.
For this article we talked about 10 stocks Jim Cramer is talking about during his programs on CNBC. 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 customer shopping for lifestyle and beauty products at a physical store.
J M Smucker Co (NYSE:SJM)
Number of Hedge Fund Investors: 34
Talking about J M Smucker Co (NYSE:SJM) results in August, Jim Cramer said that the $5.6 billion acquisition of Hostess Brands last year might not be “panning out” as the company said its sweet-baked snacks segment sales were below expectations.
Cramer then alluded to the possible impact of GLP-1 weight loss drugs on J M Smucker Co (NYSE:SJM) sweet snacks business:
“Is it really macro? Is it really declining convenience center, like Celsius would say that?
Or, David, is it the endless pin—the tail on the GLP-1 that no one’s willing to admit?”
Jim Cramer said the company’s results were “not good” and maybe twinkies (JM Smucker’s snack cake) are losing their “allure.”
What were the highlights of these quarterly results? J M Smucker Co (NYSE:SJM) saw an 18% increase in sales year-over-year, but excluding the impact of the Hostess Brands acquisition, divestitures, and foreign exchange fluctuations, sales rose by 1% for the quarter ending July 31.
Sales in the U.S. Retail Coffee segment remained flat compared to the previous year, with segment profit increasing by 1%. Free cash flow was reported at $49.2 million, compared to $67.6 million in the previous year, driven by the decrease in operating cash flow and a reduction in capital expenditures.
Looking forward, J M Smucker Co (NYSE:SJM) expects comparable sales growth of approximately 0.5% to 1.5% for the full year, down from prior guidance of 9.5% to 10.5%. The company anticipates net sales will increase by about 8.5% to 9.5% compared to the previous year. Full-year adjusted earnings per share are projected to range from $9.60 to $10.00, with a midpoint of $9.80, below the consensus estimate of $10.03. Free cash flow for the year is expected to reach $875 million.
Middle Coast Investing stated the following regarding The J. M. Smucker Company (NYSE:SJM) in its Q2 2024 investor letter:
“The J. M. Smucker Company (NYSE:SJM), like Lululemon, is an S&P 500 component and one of the worst 70 or so stocks in the S&P 500 this year. The maker of Jif, Smuckers jams, Uncrustables, Folgers Coffee, and Dunkin Coffee pods has had a bad 10 months since announcing its purchase of Hostess Brands (Twinkies, Hostess Cupcakes, etc.). Hostess was expensive and exposes J.M. Smucker to the risk that the new weight-loss drugs suppress diehard consumers’ appetite for sweets.
I think J.M. Smucker shares have suffered enough, and are at a point where a buy should work. The company is producing ample free cash flow to cover its likely to grow ~4% dividend while also paying down debt, which will improve both its profitability and its stock value. J.M. Smucker’s products and brands are leaders, including Hostess. I don’t think this will be a huge winner, but I do think there’s relatively safe upside here. I should note that another of my idea sources, Thomas Lott, mentioned SJM on Cash Flow Compounders; I had already been looking at the company for a while, but it’s always good to see a smart investor following it.”
Overall, J. M. Smucker Company (NYSE:SJM) ranks 7th on Insider Monkey’s list titled Jim Cramer October Calls: Top 10 Stocks. While we acknowledge the potential of J. M. Smucker Company (NYSE:SJM), 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 SJM 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.