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 The Coca-Cola Company (NYSE:KO) 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).
A row of factory workers assembling bottles of sparkling soft drinks on a conveyor belt.
The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 68
Cramer said that The Coca-Cola Company (NYSE:KO) is well run and credited the success to its CEO. Here’s what the host of Mad Money had to say:
“… Sometimes companies can practically print money simply because they’re so well run. Take Coca-Cola. Under the steady hand of James Quincey, Coca-Cola has become a low-risk juggernaut with a solid dividend, definitely a stock that is worth owning.”
Coca-Cola (NYSE:KO) is a leading global manufacturer of beverages, offering a diverse range of nonalcoholic drinks, which include soft drinks, water, tea, juice, and plant-based beverages. In addition to its extensive drink portfolio, the company supplies beverage concentrates and syrups to various retailers, such as restaurants and convenience stores. The company is dedicated to returning value to shareholders, evidenced by 62 consecutive years of increasing dividends.
Recently, it paid out its quarterly dividend of 48.5 cents per common share. As of October 21, the stock has a dividend yield of 2.78%. It is worth noting that Berkshire Hathaway owns 400 million shares of stock and the holding makes up over 9% of the firm’s portfolio, as per Insider Monkey’s database. It ranks as Berkshire’s fourth-largest public equity investment. Berkshire has held its stake in the company for more than 30 years.
Coca-Cola (NYSE:KO) revised its outlook for the year, attributing this adjustment to rising global demand for its beverages, particularly observed in the second quarter. For 2024, the company forecasts organic revenue growth between 9% and 10%, an increase from an earlier forecast of 8% to 9%.
Furthermore, the expectations for comparable earnings growth have been adjusted to a range of 5% to 6%, up from the previous estimate of 4% to 5%. CFO John Murphy emphasized that this updated guidance is a result of the positive momentum generated in the first half of the year and reflects confidence in executing plans for the latter part of the year.
Overall KO ranks 7th on Jim Cramer’s list of stocks to watch. While we acknowledge the potential of KO 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 KO 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.