We recently published a list of Jim Cramer wants you to pay attention to these 10 stocks. In this article, we’ll take a look at where Walmart Inc. (NYSE:WMT) stands compared to the other stocks Jim Cramer says you should be wary of.
Jim Cramer noted that Tuesday’s drop was expected as the market had risen for eight days in a row and a ninth day would have put it in rare territory, a streak not seen since 2004. The session was rough, with the Dow losing 62 points and the S&P down 2%, nearly a 33% loss. This raises the question of whether the market still has the momentum to continue rising, especially since bad news eventually led to falling stock prices, something that had not happened often during the recent 8-day rally.
“Today’s modest decline was due – the S&P has been up eight days in a row and nine days in a row would have put us in rare territory. We haven’t seen a winning streak like this since 2004. Today’s session was rough, the Dow lost 62 points and the S&P fell 2%, down 33%. We have to ask ourselves if the market still has the momentum to keep going higher because today we got some bad news and guess what – stocks actually went down. That didn’t happen much during the 8-day run.”
Cramer observed an unusual trend during this winning streak. When a company reported better-than-expected results, stock prices rose. Even when the results were only slightly better than feared, stock prices rose. And when a company reported disappointing results, the market shrugged it off. It assumed it was the last bad quarter because the Fed might cut rates soon, and people kept buying anyway.
“Look, we had a very odd pattern during the winning streak. It was a little bit of Pangloss and a sip of Camelot. If a company reported a better-than-expected quarter, that was great. If a company reported a quarter that was just slightly better than feared, stocks went up anyway. And if a company reported a bad quarter, we decided it was the last bad quarter because the Fed was about to cut rates, so it was no big deal – buy anyway. In other words, companies could do no wrong, but not today. Today we had a sort of reckoning, a dose of reality.”
Jim Cramer noted that the market had been going through a period where good performance boosted stock prices and even poor performance was cushioned by the belief that the Fed would step in to help. However, after seven consecutive days of gains, he pointed out that this bullish pattern may be coming to an end. The market has now reached a level where stocks no longer automatically get the benefit of the doubt. Cramer explained that we are back in a more typical environment where strong stocks rise and weaker ones fall. At these high levels, it is no longer enough to dismiss the pessimistic forecast with a simple “heads I win, tails you lose” attitude.
“We’ve reached a point where the market is sufficiently high, and we’re back to day-to-day business – where the good stocks go up and the bad ones go down. At this high level, we can’t just dismiss the bears by saying, ‘Heads, I win, tails, you lose.’ There’s a return to rationality, and rationality is the enemy of a market where everything goes up indiscriminately.”
Our methodology
In this article, we discussed a recent post by Jim Cramer and his latest insights on what to watch in the stock market on Tuesday. We highlighted ten stocks he mentioned and provided details on hedge fund sentiment for each stock. The stocks are ranked in order from low to high by the number of hedge funds that own them.
At Insider Monkey, we are obsessed with the stocks that hedge funds invest in. The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (Further details can be found here).
A manager stands in a hypermarket and points to items available for wholesale sale.
Walmart Inc. (NYSE:WMT)
Number of hedge fund investors: 95
Jim Cramer noted that Walmart Inc.’s (NYSE:WMT) recent decision to sell its $3.7 billion stake in Chinese e-retailer JD.com Inc. (NASDAQ:JD) was surprising, especially given that Walmart Inc. (NYSE:WMT) continues to maintain its partnership with JD.com Inc. (NASDAQ:JD). Despite this, Walmart Inc. (NYSE:WMT) saw its own stock price rise 1%.
“Walmart has given up its $3.7 billion stake in Chinese online retailer JD.com. However, the American retail giant will continue the partnership. The strangest thing about it: The move sent JD.com shares down 8%. That makes me think that the entire market in China may be completely inflated. Walmart shares rose 1%.”
Walmart Inc. (NYSE:WMT) is an attractive investment due to its strong position as a leading global retailer with extensive reach in both brick-and-mortar and e-commerce. Walmart Inc. (NYSE:WMT) has significantly expanded its online business, with e-commerce sales increasing 37% in the last fiscal year. Walmart Inc. (NYSE:WMT)’s ability to seamlessly integrate online and in-store shopping – through options such as buy online, pick up in store and same-day delivery – improves customer convenience and increases sales.
Walmart Inc. (NYSE:WMT)’s leading position in terms of scale and cost is supported by its efficient supply chain and investments in technology. Walmart Inc.’s (NYSE:WMT) continued expansion, including international moves such as the acquisition of Flipkart in India, strengthens its market presence and growth potential. In addition, Walmart Inc.’s (NYSE:WMT) commitment to returning value to shareholders through dividends and share buybacks underscores its financial stability and shareholder focus.
Total WMT 1st place on our list of stocks to watch according to Jim Cramer. While we recognize WMT’s potential as an investment, we believe AI stocks that fly under the radar promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than WMT but trades at less than 5x earnings, read our report on the cheapest AI stock.
READ MORE: $30 trillion opportunity: The 15 best humanoid robot stocks to buy, according to Morgan Stanley And According to Jim Cramer, NVIDIA has “become a wasteland”.
Disclosure: None. This article was originally published on Insider Monkey.
