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 Nucor Corporation (NYSE:NUE) 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 close-up of a worker inspecting a galvanised sheet steel product in a well-lit warehouse.
Mentioning traditional investment strategies, Cramer said it could be “interesting” to buy Nucor Corporation (NYSE:NUE) shares post rate cutting.
“Nucor’s tough, though. See, while steel pricing’s weak, the old hedge fund playbook says you should buy steelmakers like Nucor after the first rate cut because that's when their stocks typically start to turn ahead of pricing of steel. Could be an interesting level to get long here.”
Nucor (NYSE:NUE) is engaged in the manufacture and sale of a range of steel and steel products. In addition to its core activities, the company is involved in the production, processing, and trading of raw materials, alongside offering services related to metal and industrial gases.
In its earnings report for the third quarter announced on October 21, the company reported consolidated net earnings of $249.9 million or $1.05 per diluted share. In comparison to the same quarter in 2023, when net earnings reached $1.14 billion, or $4.57 per diluted share, the latest figures show a decrease in profitability. Despite these fluctuations, the company maintained a solid financial position, ending the quarter with $4.86 billion in cash and cash equivalents, along with short-term investments.
Throughout the third quarter, Nucor (NYSE:NUE) repurchased around 2.5 million shares of its common stock at an average price of $156.07 per share. Year-to-date, the total share repurchases reached approximately 11.0 million shares at an average price of $172.36. Over the first nine months of 2024, the company returned about $2.29 billion to its stockholders through both share buybacks and dividend payments. As of late September, the company still had approximately $1.42 billion authorized and available for additional repurchases under its existing share repurchase program.
Overall NUE ranks 21st on Jim Cramer's list of stocks to watch. While we acknowledge the potential of NUE 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 NUE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
