We recently compiled a list of the Jim Cramer’s Game Plan: 23 Stocks to Watch. In this article, we are going to take a look at where Carrier Global Corporation (NYSE:CARR) stands against the other stocks to watch according to Jim Cramer.
As Wall Street dives into the heart of earnings season, Jim Cramer has provided insights into market trends and earnings reports to watch in the upcoming week. Cramer remarked,
“It’s hard to believe, but this market’s now been up for six straight weeks. That’s right, despite interest rates running higher since mid-September, despite being on the verge of an election where both candidates want to pile on trillions of dollars of debt to an already unfathomable amount of borrowing, this market seems like it can’t help itself from going higher.”
Cramer highlighted the influence of the Federal Reserve, noting that ever since the rate cut on September 18, the market has largely trended upward. He emphasized that it is not solely the Fed driving this bullish sentiment, the earnings season has brought some remarkable quarterly results. With strong performance from banks kicking off the earnings cycle, Cramer posed the question of whether the rally could extend into a seventh consecutive week, suggesting following his game plan to assess this possibility.
On a separate note, addressing economic indicators, Cramer warned that if the economy continues to produce solid numbers, the likelihood of substantial rate cuts will diminish. While he believes that rates will eventually decline, he cautioned those shorting Treasurys, suggesting that they may be making a mistake.
Cramer noted a significant caveat, which is the upcoming election, and pointed out that both candidates are advocating potentially inflationary policies.
“Both candidates have pushed potentially inflationary policies. As I said at the top, if Trump can win enough of a majority to pass his huge tariffs, or Harris expands housing tax credits and de facto subsidy, they could push home prices higher. Then inflation might stage a comeback. But I’m not betting on that. I think both parties are terrified of being blamed for inflation, which almost single-handedly sunk Joe Biden’s presidency. No matter what the candidates campaign on, I don’t see their allies in Congress taking any chances with inflation beyond the usual unwillingness to balance the budget.”
He concluded that those betting against Treasurys have overreached, suggesting that their efforts to counter the Fed’s policies are unlikely to end well. Cramer observed that when a large number of investors align on one side of a trade, as seen currently, that group often ends up being incorrect.
Our Methodology
For this article, we compiled a list of 23 stocks that were discussed by Jim Cramer during his episode of Mad Money on October 18. 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).
An engineer wearing a hardhat inspecting a newly-installed air conditioner system.
Carrier Global Corporation (NYSE:CARR)
Number of Hedge Fund Holders: 45
Cramer expects strong earnings from Carrier Global Corporation (NYSE:CARR) which will be announced on October 24.
“There was a time when people seemed to ignore the success of David Gitlin at Carrier. Not anymore, you can’t. The stock’s getting its due. It’s now had such a big run that this climate control player may not pop on the earnings numbers, but I sure think they’re going to be strong.”
Carrier Global (NYSE:CARR) provides technologies related to heating, ventilation, air conditioning (HVAC), refrigeration, fire protection, and security solutions, with a global presence. Recently, the company has embarked on a significant transformation journey aimed at becoming a more focused and agile organization, committed to sustainability and higher growth.
In August, the company entered into a definitive agreement to divest its Commercial and Residential Fire business to an affiliate of Lone Star Funds for an enterprise value of $3 billion. The agreement shows a strategic effort to streamline operations, with Chairman and CEO David Gitlin noting that all recent divestitures were executed swiftly, culminating in a total value exceeding $10 billion. He said that it represents a strong mid-teens EBITDA multiple overall, emphasizing the value generated from these transactions.
On October 2, Carrier Global (NYSE:CARR) announced the completion of the sale of its commercial refrigeration business to Haier, its long-term joint venture partner, for an enterprise value of $775 million, which includes around $200 million in net pension liabilities.
The divestiture, along with the completed sales of the Industrial Fire and Global Access Solutions businesses, marks a significant step in Carrier’s portfolio transformation. Gitlin highlighted that three out of four announced business exits have been finalized, with the sale of the Commercial and Residential Fire business expected to conclude by the end of 2024.
Overall CARR ranks 16th on Jim Cramer’s list of stocks to watch. While we acknowledge the potential of CARR 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 CARR 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.