We recently compiled a list of the 8 Cheap Jim Cramer Stocks to Invest In. In this article, we are going to take a look at where Citizens Financial Group, Inc. (NYSE:CFG) stands against the other cheap Jim Cramer stocks.
On a recent episode of Mad Money, Jim Cramer criticized the semiconductor sector’s performance on Tuesday, particularly in light of a significant sell-off in semiconductor stocks following disappointing earnings from ASML, which wiped out over $50 billion from its market capitalization. Cramer argued that many on Wall Street fail to grasp the enduring significance of advanced graphics chips in artificial intelligence. He emphasized that as long as innovations and new applications for computing power continue to emerge, the demand for these chips will persist.
“I don’t think the need for speed is going away. In fact, it’s only going to increase, especially when tech companies and utilities are fiercely trying to put up nuclear power plants to meet the energy demands.”
Cramer expressed frustration at how quickly some investors rushed to declare the semiconductor sector in decline.
“There were many money managers and writers falling all over each other just at the close of yesterday, at the closing bell, to write the definitive obituary for this group, even as it’s less of a group than more of like a parliament of owls that’s somehow been combined with a pride of lions, two very different beasts. As I watched and listened, I said to myself, this terrible miss by some abstruse Dutch outfit is going to make people miss out on what could be the next leg of a powerful, semiconductor rally fueled by the wall of worry and skepticism that’s being built right in my face.”
He also pointed out that various industries are only beginning to experience “AI-powered revolutions.” He explained:
“… As Jensen told me, software never dies. As long as there are new inventions and new uses for computer power, there will be more need for these chips. And you can attach them to the software, no matter what the iteration. You just have to keep buying them because you have to keep up. Right now we have revolutions just starting in healthcare, manufacturing, climate change, cybersecurity, autonomous driving, and even robots.”
He further talked about how the current bull market could gain momentum if the tech sector maintains its strength. Cramer highlighted analysis from Jessica Inskip, noting that both the S&P 500 and the Nasdaq-100 are showing promising charts. He pointed out that the market has expanded significantly compared to six months ago, but for this upward trend to persist, Inskip emphasized the need for substantial engagement from tech stocks.
Cramer discussed the weekly performance charts of the Nasdaq 100, which features some of the largest technology companies. Although the index remains in a positive trading cycle, it has not reached new highs like the S&P 500. Inskip mentioned that while the Nasdaq 100 is moving in a favorable direction, it must surpass its July peaks to stimulate a broader market rally. While Cramer acknowledged that tech might not need to lead the market, it still must closely follow the stronger sectors.
Our Methodology
For this article, we compiled a list of nearly 80 stocks that Cramer was bullish on during episodes of Mad Money aired in October. We narrowed the list to 8 stocks that had a forward price-to-earnings ratio of under 15 and were most widely held by institutional investors. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 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).
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Citizens Financial Group, Inc. (NYSE:CFG)
Forward P/E: 13.26
Number of Hedge Fund Holders: 47
Cramer views Citizens Financial Group, Inc. (NYSE:CFG) positively and said that it is among the bank stocks that are nearing pre-Silicon Valley Bank collapse levels. He believes regional banks are moving in a favorable direction. He has highlighted that the shift toward rate cuts by the Federal Reserve will likely benefit these institutions, even if the reductions are gradual.
“It’s a Northeast bank, it’s called Citizens Financial Group. I haven’t focused on it since it was spun off by the Royal Bank of Scotland a decade ago. When you take a closer look at Citizens, it’s got some of the best capital ratios of large regional banks. That matters for a couple of reasons. First, it offers safety. This is how you know Citizens won’t be the next First Republic if we have another banking blow-up. But more importantly, in calmer times, it gives them [the] flexibility to do other shareholder-friendly things, dividends [and] buybacks. In fact, in late July, after hearing all the regional banks report second-quarter earnings, analysts at Deutsche Bank called Citizens Financial their top pick in the sector, citing strong earnings growth potential as net interest margins normalize, growth initiatives pay off like the private bank build-out and their expansion in New York City and mortgage demand bounced back thanks to lower rates. Deutsche Bank analysts also know that Citizen has been held back in recent quarters by some significant one-off items. But management is signaling that there shouldn’t be much more of an impact from that kind of thing going forward. That all sounds real good to me. So count me in as a believer in Citizens Financial.”
Citizens Financial Group (NYSE:CFG) operates as a bank holding company, providing an extensive range of retail and commercial banking services. In its third-quarter report released on October 16, the company reported earnings per share of $0.79, alongside a 5.5% decline in revenue, which totaled $1.9 billion compared to the previous year.
The company’s Private Bank was highlighted in the report as it now holds $5.6 billion in deposits and $4.1 billion in assets under management. The company has also seen significant growth in the New York City Metro region and is preparing to launch a TOP 10 program expected to have a $100 million impact. Bruce Van Saun, Chairman and CEO, emphasized that the balance sheet remains strong, with solid capital, liquidity, funding, and loan loss reserves. Despite the challenges faced in the third quarter, including the effects of forward-starting swaps initiated in July and some fees being deferred to the fourth quarter, management remains optimistic about a strong performance in Q4 and the beginning of 2025.
Additionally, Citizens Financial Group (NYSE:CFG) announced a quarterly dividend of $0.42 per share, which will be payable on November 13 to shareholders on record as of October 30.
Overall CFG ranks 4th on our list of the cheap Jim Cramer stocks to invest in. While we acknowledge the potential of CFG 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 CFG 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.