We recently published a list of Jim Cramer says these 10 stocks deserve your attention. In this article, we take a look at Dell Technologies Inc. (NYSE:DELL) stock compared to other stocks that Jim Cramer thinks deserve attention.
In a recent episode of Mad Money, Jim Cramer advised investors to wait to sell stocks because he expected a rebound after the market downturn ended. This strategy proved effective, as the average investor made gains: The Dow rose 484 points, or 1.16%, and the NASDAQ also gained 1.16%. This development suggests that selling during Friday’s decline was not the best move.
“Last week I advised you not to sell everything and just wait, believing that we would see a recovery once the crisis was over. The average investor was able to make gains: the Dow rose 484 points, or 1.16%, and the NASDAQ also gained 1.16%. While it may not be a complete recovery, it shows that selling into Friday’s downturn was not the best strategy.”
Last week was challenging for economically sensitive stocks and technology stocks, although the August employment report showed modest growth and a downward revision for July. The latest report seemed favorable for those hoping for rate cuts from the Federal Reserve, as it presented a balanced scenario that was neither too strong nor too weak. Still, Wall Street reacted negatively as investors turned away from cyclical stocks and turned to recession-proof sectors such as consumer goods and pharmaceuticals. Industrials and semiconductors were particularly hard hit.
Jim Cramer noted that recession-proof stocks such as pharmaceutical companies, drug wholesalers and medical devices continued to perform strongly on Monday. However, this trend is concerning because these stocks have risen significantly and a correction may be imminent.
“Recession-proof stocks such as pharmaceutical companies, drug wholesalers and medical device companies continued to perform well, which is dangerous because these stocks have seen parabolic price increases and a correction could be imminent.”
According to Cramer, historically, when the Federal Reserve is about to cut interest rates, it is a signal for a change in investment strategy. With the Fed now moving toward easing and a rate cut expected next week, Cramer suggests it is time to reconsider owning recession-proof stocks. Instead, investors should look at more cyclical companies that could benefit from an economic stimulus. Investing in cyclical stocks can be difficult during a recession, but anticipation of a positive effect from the Fed’s rate cuts could make these stocks attractive.
“Historically, we know that when the Fed is close to cutting rates, it’s time to shift focus. With the Fed trending toward easing and a rate cut expected next week, it’s time to shift away from recession-proof stocks and invest in more cyclical companies. While cyclical stocks are difficult to buy during a slowdown, the expectation that the Fed will stimulate the economy can make them good investment opportunities. It’s important to maintain diversification but be prepared to make adjustments when needed.”
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Dell Technologies Inc. (NYSE:DELL)
Number of hedge fund investors: 88
Jim Cramer highlighted that Dell Technologies Inc. (NYSE:DELL) is seeing a rise in its stock price as the company is set to join the S&P 500 later this month. Cramer suggested that investors should not sell their shares of Dell Technologies Inc. (NYSE:DELL) just because of this recent strength. Citi analysts also pointed out that Dell Technologies Inc. (NYSE:DELL) has several upcoming catalysts, including a PC refresh cycle that is expected to last into next year.
“Dell Technologies shares rose Monday on news that the company will join the S&P 500 later this month. I don’t think you need to sell Dell now on strength. Analysts at Citi said Monday that they see several catalysts for Dell, including next year’s PC refresh cycle.”
Dell Technologies Inc. (NYSE:DELL) is positioned for long-term growth, with strong performance in AI-related sectors driving its optimistic forecast. In the second quarter of 2024, Dell Technologies Inc. (NYSE:DELL) reported revenue of $22.9 billion, thanks primarily to 10% growth in its Infrastructure Solutions Group (ISG), which benefited from rising demand for AI-optimized servers. This suggests that Dell Technologies Inc. (NYSE:DELL) is well-positioned to benefit from the broader adoption of AI across industries. Looking ahead, Dell Technologies Inc. (NYSE:DELL) forecasts fiscal year 2025 revenue between $91 billion and $95 billion, with earnings per share expected to be between $7.25 and $7.75, signaling confidence in the company’s future performance.
Dell Technologies Inc.’s (NYSE:DELL) partnerships, particularly with NVIDIA Corporation (NASDAQ:NVDA) for AI-optimized servers, are considered key factors in driving margin expansion. While the Client Solutions Group reported a 12% year-over-year decline in revenue, Dell Technologies Inc. (NYSE:DELL) expects AI-driven investments to drive improvements going forward. Analysts remain optimistic, maintaining strong “buy” ratings and increasing price targets, underscoring Dell Technologies Inc.’s (NYSE:DELL) potential as a solid long-term investment opportunity in the technology sector.
Overall, DELL 5th place on our list by Jim Cramer thinks these 10 stocks deserve your attention. While we recognize DELL’s potential, 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 the ones on our list but trades at less than 5 times 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 at Insider Monkey.
