We know parts of the market are hot, says Jim Cramer
Speakers
Jim Cramer
— Host, Mad Money
Summary
Jim Cramer discusses the market decline in software stocks due to AI disruption fears and advocates for beaten-down healthcare stocks as value plays with specific picks. He also highlights Home Depot as a rate-cut beneficiary, Intel as a buy after strong earnings, and Tesla as a long-term bet. He warns against Servicenow and enterprise software.
- Software stocks fell sharply due to AI disruption concerns and Servicenow's decline.
- Cramer recommends CVS, Cardinal Health, J&J, and UnitedHealth as cheap healthcare buys.
- He sees Home Depot as a classic rate-cut beneficiary stock.
- Intel's strong quarter under new CEO makes it a buy despite sector weakness.
- Tesla is a long-term buy based on future tech like robots and self-driving.
- Servicenow should be avoided despite being a good company due to AI risk and high valuation.
- Cramer prefers value-oriented healthcare over expensive software stocks.
Trade Ideas
Servicenow expensive amid AI threat.
Servicenow's stock has declined 44% but still trades at 37 times earnings; AI disruption threatens its pricing power and multiple, making it unattractive despite being a good company.
Tesla buy for future tech.
Tesla is a buyer of the future with revolutionary robots and full self-driving cars; selling the stock means selling the future, and he is a buyer.
CVS cheap with competitive advantage.
CVS is a solid company trading at only 11 times earnings, owns Aetna (a strong insurance business), and benefits from disappearing competition as Rite Aid and Walgreens retreat, making it a value play in healthcare.
Cardinal Health high growth at discount.
Cardinal Health has been unjustly sold off, repeatedly beating estimates, shifting from a pure middleman to a service provider for specialty chains, offering high growth at less than 20 times earnings.
J&J triple-A balance cheap pipeline.
Johnson & Johnson has a triple-A balance sheet, the best pharmaceutical pipeline, and sells at less than 20 times earnings, making it a bargain.
UNH cheap with returning CEO.
UnitedHealth reported a solid beat-and-raise quarter, returning CEO Stephen Hemsley is back to replicate past success, yet the stock sells at 19 times earnings, much lower than its $600 peak; it deserves to be higher.
Home Depot rate-cut beneficiary.
Home Depot is the classic stock to buy when you get rate cuts; it has a long history of performing well in rate-cut environments.
Intel buy after miracle quarter.
Intel reported a miraculous top and bottom line beat under new CEO, and despite rate cuts not being the traditional catalyst, it is worth buying.
