We recently compiled a list of the Jim Cramer Talked About These 16 Stocks. In this article, we are going to take a look at where Morgan Stanley (NYSE:MS) stands against the other stocks Jim Cramer was talking about.
Jim Cramer, host of Mad Money, shared his thoughts on the market’s reaction to the election results. He noted that the trading session on November 6 was largely influenced by a collective sigh of relief from traders who were glad the election was over. With President-elect Donald Trump set to take office, many were preparing for the shifts his administration could bring. Cramer pointed out that the market responded positively to Trump’s victory, stating:
“The market likes Donald J. Trump and it loves a peaceful transition to the next president. We got both and we had a monster-buying celebration. It was a bull jailbreak and the bears never knew what trampled them.”
Cramer reflected on the uncertainty leading up to the election, with many investors fearing a prolonged and contentious process. But with the winner now clear, Cramer argued that the market is better off knowing what lies ahead. He remarked:
“Let’s understand that many people thought we’d have a contested election, which would cause tremendous uncertainty. The fact that we already know the winner is a huge win for the stock market in itself, which makes it a magnet for new money. This election, with its vicious maelstrom of hate and fear, is finally over.”
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One of Cramer’s main focuses was Trump’s proposed tax cuts, which he believes will have a substantial impact on corporate profits. Cramer emphasized that the tax cuts are expected to boost earnings, particularly by lowering corporate tax rates, which would directly increase profit estimates and earnings per share. Cramer also highlighted the importance of maintaining low interest rates for these benefits to materialize.
He cautioned that while the current environment might feel like a party, there could be risks down the line, especially as debt continues to grow. Despite these concerns, Cramer seemed optimistic, suggesting that the market could continue to rally as long as interest rates stay low and corporate tax cuts come to fruition.
However, Cramer also pointed out a potential complication and commented:
“We also have to accept that we will have another earning season right at the time of the inauguration. So we’ll have to worry about those earnings too, but not yet.”
Additionally, Cramer suggested that there could be more significant market moves in the near future, especially if President-elect Trump makes comments about the Federal Reserve that investors find unsettling. He said that such remarks could trigger a negative reaction from the market, potentially leading to a downturn before things settle again.
Our Methodology
For this article, we compiled a list of 16 stocks that were discussed by Jim Cramer during the episode of Mad Money on November 6 and listed the stocks in the order that Cramer mentioned them.
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 panoramic view of a financial institution, representing the number of corporations who trust the company’s services.
Morgan Stanley (NYSE:MS)
During the episode of Mad Money, Cramer talked about how bank stocks like Morgan Stanley (NYSE:MS) stock performed post-election. He commented:
“The banks, especially investment banks, these stocks had gigantic moves. Moves that would normally take weeks or even months to occur and instead they happened in a handful of hours. The banks have been pushed down for ages because the Democrats have tough, relentless regulators who love to go after the industry… The regulators have crushed their earnings power and their dividend giving and their buyback ability. That, in turn, really obliterated the price-earnings multiple of the cheapest stocks in the entire market. Now though, the banks could be unfettered, they might be able to merge again, reward investors with much higher dividends, and buyback even more stock.”
Cramer also noted that the bank stocks rose significantly after the election results came in, but he gave his approval to purchase them. He mentioned that, overall, the sector remains undervalued. He also pointed out that for the stocks to surge further, they may dip first, providing an opportunity to buy.
“More importantly, the investment banks can advise on many more mergers and there will be many more mergers because the regulators will look the other way and we’ll get more IPOs too. It’s hard to convey how much antipathy there was between bankers and the Biden administration, they were oil and water.”
Morgan Stanley (NYSE:MS) is a global financial services firm offering a broad spectrum of products and services, including capital raising, financial advisory, brokerage, and investment management. According to its third-quarter earnings call, it continues to focus on delivering value to shareholders, as evidenced by its decision to raise its quarterly dividend to $0.925. In addition, the firm repurchased $750 million of its common stock during the same period.
During the earnings call, CEO Ted Pick highlighted several key trends in the financial markets, particularly in the realm of IPOs and M&A. He noted that sponsors in the IPO market currently have approximately $1.3 trillion in “dry powder,” a term used to describe available capital waiting to be deployed. Furthermore, Pick mentioned that portfolio companies in the market, by some estimates, total between $3 trillion to $4 trillion across roughly 10,000 companies.
Morgan Stanley’s (NYSE:MS) Pick also pointed out a significant change in market behavior, emphasizing that for the first time in nearly 15 years, the rate of capital deployment in private equity is outpacing fundraising. While acknowledging that these markets have faced challenges, he expressed optimism that IPOs, particularly from larger companies, will gradually return, with the market for initial public offerings steadily regaining momentum.
Overall MS ranks 4th on our list of the stocks Jim Cramer was talking about. While we acknowledge the potential of MS 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 MS 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.