We recently compiled a list of the Jim Cramer is Talking About These 12 Stocks. In this article, we are going to take a look at where Kimberly-Clark Corporation (NYSE:KMB) stands against the other stocks Jim Cramer is currently talking about.
On Tuesday, Jim Cramer, the host of Mad Money, analyzed the day’s market activity, shedding light on why some Big Tech stocks gained traction while others struggled. He pointed out that investors are increasingly concerned about the broader economic effects of rising bond yields. Cramer began by questioning how a day could unfold where recent market leaders lose their momentum, prompting money managers to shift back to established favorites like Big Tech.
Cramer acknowledged his growing worry about the bond market, noting that since the Federal Reserve cut rates last month, bond prices have plummeted.
“… Ever since the Fed cut rates last month, right, bond prices have plunged. Bond yields, meaning longer-term interest rates, have soared. Not supposed to happen. But when it does happen, money managers reach for the companies that simply aren’t impacted by the change in the 10-year, the 20-year, or the 30-year US Treasurys.”
Cramer likened Wall Street to Chinatown, suggesting that sometimes, it defies easy understanding. He remarked that people seem to abandon the market’s recent winners in a snap as if discarding hot fries. He then explained that the day’s disappointing earnings reports created confusion, as they didn’t align with the prevailing narrative of strong employment alongside rate cuts.
“See, this morning we got a series of earnings reports that just didn’t add up. They didn’t fit the thesis. They were disappointing. They don’t jive with a rather benign moment when we have the Fed cutting rates, yet employment remains strong. When we get these problematic quarters, several in one day, I might add, money managers default back to the tried and true growth stories that we all know and love. Yes, Titans of Tech. You know what? These managers can’t help themselves. They feel they have to rotate out of what was hot at one point and into something else that’s not that impacted by the big rate-cut cycle.”
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He addressed the “alleged earnings disappointment,” clarifying that he chose the term “alleged” because he holds these companies in high regard and does not want to undermine their reputations. Cramer stated that when the 10-year Treasury yields rise, money flows back to these tech giants. He noted that on days like Tuesday, large investors often become apprehensive about cyclical stocks, with concerns about various sectors like aerospace, home building, and even auto parts.
He reassured viewers that this phenomenon is familiar; it has been a recurring theme for over a decade. Cramer suggested that money could just as easily rotate back to previous favorites, but it might take a day or two for that to happen, which shows the volatility of the current market environment.
Concluding, Cramer noted that Big Tech experienced a significant resurgence. He remarked:
“But the bottom line, Big Tech made a big comeback today because of the bond market, not anything to do with the stocks themselves. So, keep in mind that the pause in the rally is temporary, even as you should still own some of the Magnificent Seven for diversification.”
Our Methodology
For this article, we compiled a list of 12 stocks that were discussed by Jim Cramer during his episode of Mad Money on October 22. 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 stack of disposable diapers in the foreground with a mother and her baby in the background.
Kimberly-Clark Corporation (NYSE:KMB)
Number of Hedge Fund Holders: 43
Talking about Kimberly-Clark Corporation’s (NYSE:KMB) recent quarterly earnings results, Cramer said that the problems were one-off. He remarked:
“How about safety? Can’t we huddle in safety right? Is that what you’re supposed to do when things are uncertain? The action in Kimberly-Clark says, apparently not. The maker of Kleenex as well as all sorts of diapers had some one-off problems that hurt the quarter. So the seller’s body slammed the darn thing. If you own it, you wish you were wearing Depends, which by the way are the quintessential Amazon products… I think Kimberly-Clark’s problems really are one-off. The buyers will come back, but not today. Not today, Satan, that’s why the stock closes down 4.5%.”
Kimberly-Clark (NYSE:KMB) is a prominent manufacturer and marketer of personal care and consumer tissue products and has well-known brands like Huggies and Kleenex under its belt. The company’s extensive portfolio includes a variety of items such as disposable hygiene products, facial tissues, paper towels, and professional hygiene solutions.
On October 22, it released its third-quarter results, reporting sales of $5.0 billion, a decrease of 4% from the same period last year. The decline was influenced by negative effects from foreign currency translation and approximately 1% was attributed to the divestiture of the K-C Professional Personal Protective Equipment (PPE) business. Despite these challenges, organic sales saw a slight increase of 1%.
Kimberly-Clark (NYSE:KMB) recorded an operating profit of $1.2 billion for the quarter, benefiting from $565 million in gains related to the PPE business divestiture. Diluted earnings per share were reported at $2.69. For the year-to-date period, cash generated from operations totaled $2.4 billion, an improvement over the $2.3 billion reported the previous year, largely due to stronger operating performance. Additionally, total debt as of September 30, stood at $7.5 billion, a decrease from $8.0 billion as of December 31, 2023.
Overall KMB ranks 9th on our list of the stocks Jim Cramer is currently talking about. While we acknowledge the potential of KMB 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 KMB 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.