In this article, we will be looking at 10 stocks Cramer thinks are climbing in this market. To explore similar stocks, you can take a look at 5 Stocks Jim Cramer Thinks Are Climbing In This Market.
"The Winners Make No Sense"
On May 9, CNBC's Mad Money host, Jim Cramer, dived into the current market dynamics to try and unravel the perplexing trends and developments we've been seeing unfold in the market so far in 2023. While bears have been whispering that a "financial storm" has been brewing and has "snuck up on us," with a debt ceiling crisis and economic recession on the horizon, Cramer notes that the market still has not "cratered." Everyone seems to be confused about how the market has been "hanging in there." To deal with this confusion, Cramer went through several financial chart to try and spot what the "strategists might be missing." The answer he came to was that the stocks and sectors that have been rising seem to "make no sense." In fact, "they aren't supposed to be on top all at once" at all.
Noting this perplexing phenomenon, Cramer then begins to go over various sectors and companies that had been performing well in May. While they included big-tech names such as Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT) alongside major drug companies such as Merck & Co., Inc. (NYSE:MRK), they also included industrials, housing, travel and leisure, and consumer packaged goods companies. With such a wide range of positively-performing sectors, especially those that are generally not up all together at the same time, Cramer began to break down what has been setting each sector apart in 2023, leading to its success.
Cramer's Thoughts on Industrials and Housing Stocks
In answering the question behind the success of industrials stocks even after the Fed has raised "rates by 500 basis points in 14 months," Cramer noted that most leaders in this industry "are involved in aerospace, or decarbonization, or both. He explained that the aerospace industry, being cyclical in nature and hosting "so much pent up demand," is one of the key factors driving the growth being several industrials stocks. These include companies that are suppliers for "Boeing or Air Bus, like General Electric."
Moving on from industrials, Cramer delves deep into the housing industry and notes that historically, housing stocks "should be at their 52-week-lows, not highs" because "when the Fed raises rates aggressively, these stocks are supposed to get hammered." However, considering the "tremendous housing shortage" in the US, this industry has actually been incredibly successful so far in 2023. Homebuilders have also apparently "raised prices by a gigantic amount, roughly 25% on average over the past two years." According to Cramer, this trend has become pronounced in the housing industry because the rising demand for housing in the US has reduced the need for housing companies to offer lower prices to their customers.
"Healthcare Is Running"
Another industry whose success Cramer sees as an anomaly is the healthcare industry. Cramer noted that stocks operating in this sector are usually "classic slow-down stocks that shouldn't be running at the same time as the industrials and the housing stocks," but this doesn't seem to be the case this year. The reason behind this development seems to be the "new product cycles" many drug companies are enjoying in 2023. There's also the "emerging turn in medical devices" as the pandemic has died down. According to Cramer, during the COVID-19 pandemic, many individuals "deferred non-urgent surgeries," so now, with the pandemic out of the way, demand for these surgeries and the devices required for them has "come back with a vengeance."
"Pent-up demand" is also the key factor behind the surprising success of travel and leisure stocks, according to Cramer. He noted that "we're in a weird post-pandemic moment where everybody feels long on money and short on time." This sense of urgency that many people in the US may feel best explains the perplexing case of the travel and leisure industry, which "should be faltering at this stage" but isn't.
In short, Cramer helped explain the confusing market reality on his show by holding up a microscope to the performance of the companies in these industries. Considering these factors, we decided to cover the top stocks out of the ones Cramer mentioned on Mad Money.
To select the stocks for our list, we watched Jim Cramer's Mad Money episode from May 9, when the host gave a rundown on what stocks and sectors have been climbing the market so far in 2023. Cramer went through a range of names, including industrial companies, housing corporations, drug companies, consumer packaged goods stocks, and big tech. Of these names, we selected those that have been the most popular among hedge funds in 2023, using Insider Monkey's hedge fund data for the first quarter. We shortlisted the top ten based on the number of hedge funds holding stakes in them, and ranked them using this metric, from the lowest to the highest number.
Stocks Cramer Thinks Are Climbing In This Market
10. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 72
Broadcom Inc. (NASDAQ:AVGO) was one of the stocks mentioned by Cramer in his "big-cap tech" stocks list. These were the stocks he believes have been confusing the market with their performance so far this year because they've been rising.
As of June 2, Broadcom Inc. (NASDAQ:AVGO) is up 42.72% year-to-date.
Oppenheimer's Rick Schafer raised his price target on Broadcom Inc. (NASDAQ:AVGO) shares from $800 to $900 on June 2. The analyst also has an Outperform rating on the stock.
Broadcom Inc. (NASDAQ:AVGO) was spotted in the portfolios of 72 hedge funds in the first quarter. Their total stake value was $3.5 billion.
The most prominent shareholder in Broadcom Inc. (NASDAQ:AVGO) at the end of the first quarter was Citadel Investment Group, holding 1.1 million shares in the company.
“Broadcom Inc. (NASDAQ:AVGO) contributed to performance in the quarter following the company’s solid fourth quarter 2022 results. This was driven by better-than-expected results in both its semiconductor solutions, networking and storage segments. The company also provided first quarter guidance that was ahead of consensus as well as 2023 commentary that expects earnings momentum to continue due to a strong product cycle.”
9. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 72
There were 72 hedge funds long Eli Lilly and Company (NYSE:LLY) in the first quarter, with a total stake value of $3.7 billion.
According to Cramer, Eli Lilly and Company (NYSE:LLY) is a drug company that is offering "diabetes drugs that could be revolutionary weight loss treatments." Because of such products, the stock "would be going up under a strong or weak economy."
Eli Lilly and Company (NYSE:LLY) is up 19.59% year-to-date as of June 2.
On May 26, Wells Fargo analysts raised their price target on Eli Lilly and Company (NYSE:LLY) from $440 to $500 and reiterated an Overweight rating on the stock.
“Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical company with core franchises in diabetes, obesity, neurology, and oncology. The company offered exposure to therapeutics in obesity and diabetes via the launch of Mounjaro, as well as in Alzheimer’s via Donanemab which was filed in November 2022 for accelerated Phase 3 approval in mid-2023. While the company reported decent fiscal fourth quarter results, shares detracted from performance after a modest miss in their obesity and diabetes drug. Mounjaro. Moreover, investors became skeptical of potential regulatory scrutiny around Donanemab and its efficacy relative to Biogen’s competing offering.”
Like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Merck & Co., Inc. (NYSE:MRK), Eli Lilly and Company (NYSE:LLY) is a stock that has performed well in the current market conditions.
8. Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 73
As of June 2, Analog Devices, Inc. (NASDAQ:ADI) is up by 11.06% year-to-date.
An Outperform rating was held on Analog Devices, Inc. (NASDAQ:ADI) shares on May 25 by Ambrish Srivastava at BMO Capital. The analyst also placed a $200 price target on the stock.
Analog Devices, Inc. (NASDAQ:ADI) was also among Cramer's "big-cap tech" stocks list. He noted that the rise of artificial intelligence was the main factor behind the success of these stocks.
A total of 73 hedge funds held staked in Analog Devices, Inc. (NASDAQ:ADI) in the first quarter. Their total stake value came up to $4.9 billion.
Generation Investment Management was the largest stakeholder in Analog Devices, Inc. (NASDAQ:ADI) at the end of the first quarter, holding 5.1 million shares.
“Analog Devices, Inc. (NASDAQ:ADI) stock price declined in the first half of 2022, along with its semiconductor peers. That sector has since rebounded, lifting ADI with it. We believe ADI is a well-run company and a secular grower, which should augur well for its future. However, given that it operates in a cyclical industry, we will not be surprised when its shares periodically trade down.”
7. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 75
Carter Gould, an analyst at Barclays, holds an Overweight rating on Merck & Co., Inc. (NYSE:MRK) shares as of May 1. The analyst also raised his price target on the stock from $128 to $130.
All major drug names on the market, including Merck & Co., Inc. (NYSE:MRK), are "enjoying new product cycles," according to Cramer. He believes this is driving their growth at the time.
Over the past year, Merck & Co., Inc. (NYSE:MRK) has risen by 23.26% as of June 2.
Merck & Co., Inc. (NYSE:MRK) was found among the 13F holdings of 75 hedge funds in the first quarter, with a total stake value of $3.7 billion.
Like Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT), Merck & Co., Inc. (NYSE:MRK) is a stock that Cramer thinks has high potential.
6. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 75
The Procter & Gamble Company (NYSE:PG) is a consumer packaged goods stock that has been surging because, like many others, its costs decreased "while the prices stayed the same," according to Cramer.
On April 26, Lauren Lieberman reiterated an Overweight rating on The Procter & Gamble Company (NYSE:PG) shares while raising her price target on the stock from $160 to $167.
Bridgewater Associates was the most prominent shareholder in The Procter & Gamble Company (NYSE:PG) at the end of the first quarter, holding 4.9 million shares. The fund was one out of 75 hedge funds long the stock in total, with a total stake value of $4.7 billion.
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Disclosure: None. 10 Stocks Cramer Thinks Are Climbing In This Market is originally published on Insider Monkey.