We recently compiled a list of the 8 Stocks on Jim Cramer’s Radar. In this article, we are going to take a look at where Agilent Technologies, Inc. (NYSE:A) stands against the other stocks.
Jim Cramer, the host of Mad Money, recently shared some investment guidelines based on his 40 years of experience. As we previously discussed in our article, Jim Cramer Talked About These 8 Stocks, Cramer emphasized that both bulls and bears can profit, but greed leads to losses, advising investors to take profits and avoid being overly greedy. His second rule is that paying taxes is acceptable. Finally, Cramer stressed the importance of not making large, all-at-once buys or sales, recommending gradual adjustments to positions instead.
In addition to these guidelines, Cramer’s next rule was to recognize the importance of distinguishing between damaged stocks and damaged companies. He explained that buying stocks from companies that are fundamentally flawed is a mistake with no chance of recovery, but stocks of companies that are simply experiencing temporary issues may present a buying opportunity. This distinction is critical because, as Cramer pointed out, there’s no “money-back guarantee” when buying into a company with long-term problems.
Investors should focus on finding stocks that are down for reasons that aren’t related to poor company fundamentals. Cramer then moved on to his next rule, which is to always do the relevant homework.
“If you want to build a portfolio of individual stocks, that’s a big if since there’s nothing wrong with getting all of your equity exposure from a cheap index fund that mirrors the S&P 500, well, you gotta be rigorous about it. Which brings me to my next rule: Do the homework.”
READ ALSO Jim Cramer’s Latest Lightning Round: 8 Stocks in Focus and Jim Cramer Discussed These 11 Restaurants and Retail Stocks
Cramer said that doing the homework means more than just picking stocks based on a gut feeling; it involves actively researching companies by listening to earnings calls, reading research reports, and staying on top of the news. Cramer noted that some investors dismiss this kind of work, seeing it as unnecessary or outdated in today’s fast-paced world. However, he was clear in his belief that failing to do proper research before buying stocks is foolish and can lead to poor investment choices.
Cramer further emphasized that doing homework today is easier than ever. With so much information available on the internet, there’s no excuse for not gathering as much data as possible. For those who don’t have the time or inclination to dive deep into individual stocks, Cramer suggested that index funds are a great alternative. Another crucial rule that Cramer continually stresses is the importance of diversification.
“The next rule is another essential that I harp on constantly: Diversify, diversify, and diversify. Always be diversified, that controls risk, and managing risk is really the holy grail of this business. What’s the biggest risk out there? It’s called sector risk.”
Sector risk refers to the potential for a specific sector of the economy to lag, which can result in negative impacts on investments within that sector. Cramer explained that sector risk is one of the most significant dangers to an investment portfolio, and diversification is the only way to protect against it.
He frequently says that “diversification is the only free lunch in this business” because it’s the one investment principle that benefits everyone. As per Cramer, by mixing different sectors in a portfolio, at least five according to him, investors can prevent themselves from suffering catastrophic losses if one particular sector takes a hit.
“Here’s the bottom line: Whether you’re an amateur or professional, you always need to do your homework and keep your portfolio diversified. This is the kind of routine maintenance that protects you from monster losses down the line. Remember, if you can keep your losses to a minimum and let your gains run, you almost always come out ahead. But don’t try to rationalize those losses because stocks don’t always come back to even or anywhere near that.”
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episodes of Mad Money. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 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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Agilent Technologies, Inc. (NYSE:A)
Number of Hedge Fund Holders: 44
Discussing Agilent Technologies, Inc. (NYSE:A), Cramer said:
“Finally, how about Agilent Technologies, letter A, a company that provides instruments, software, and services for customers in the life sciences, diagnostics, and applied industrial end markets? This one’s down more than 14% from its 52-week high in May. Agilent’s in the news because the company hosted an analyst day yesterday and from what I hear, they told a pretty good story.”
At its recent analyst day, the company reaffirmed its long-term revenue growth forecast of 5-7%, exceeding market expectations, and slightly raised its operating margin expansion targets (50-100+ bps/yr), indicating potential growth fueled by revenue leverage and strategic initiatives such as Ignite.
The company’s Ignite plan focuses on driving growth through innovation, simplifying processes with a customer-first approach, and improving operational productivity. Furthermore, Cramer also highlighted the company’s recent reorganization. Acknowledging that the analyst day did not lead to much stock activity, Cramer said:
“Now, the analyst day didn’t have much impact on the stock, but I think it was a good reintroduction for this fine company which might have fallen off investors’ radar during this listless period for the life science space.
Again, there’s a good valuation argument for Agilent here. At its peak in September of 2021, the stock sold at 37 times forward earnings. Now it’s trading just under 22 times next year’s earnings estimates, very reasonable valuation. And I have more confidence in the numbers because we just got them from yesterday’s analyst meeting.”
In November, the company announced the new organizational structure to improve collaboration and better align with customer needs. The three business groups include Life Sciences and Diagnostics Markets Group (LDG), representing 38% of revenue, which focuses on pharma, biopharma, clinical, and diagnostics markets.
The Applied Markets Group (AMG), accounting for 20% of revenue, serves industries such as food, environmental, forensics, and chemicals. The Agilent CrossLab Group (ACG), making up 42% of revenue, supports all end markets by strengthening customer connections and providing services, software, and consumables.
Overall A ranks 3rd on our list of stocks on Jim Cramer’s radar. While we acknowledge the potential of A 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 A 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.