Cramer’s list of cheap stocks to buy in a market trading at record highs

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CNBC’s Jim Cramer said Thursday he sees many cheap stocks worth buying, even with the S&P 500 at record highs and signs of overvaluation in the market’s pockets.

“Forget the madness” around the actions of memes like AMC Entertainment, GameStop – and most recently Robinhood, the host of “Mad Money” said. “Focus on the cheap stocks that have done nothing and sell for peanuts. They are much more plentiful than you might think.”

Walmart

Among the stocks Cramer considers undervalued is Walmart.

“Until it improves today, this Dow component was actually down for the year, even though it has great financial data and is selling for just 24 times earnings. is a multiple of the market, which means it has the same valuation as the S&P 500 average stock, but I would say it’s anything but average, ”Cramer said.

This upgrade of Walmart’s Wells Fargo came with an increase in the price target to $ 165 per share. That’s more than 13% higher than where the stock closed Thursday at $ 145.49.

Cramer said the “real deal,” as Wells Fargo points out, is Walmart’s underperformance against rivals since Covid began.

So far this year, Walmart has “trailed the S&P 500 by 18 percentage points; compared to big Target winners, Kroger, this underperformance is even more glaring, ”Cramer said, adding that the Wells Fargo upgrade made a lot of sense. now because Walmart’s customer base is overflowing with cash from pandemic stimulus programs and higher wages due to the tight labor market.

Ford

Ford, which is trading at around 8.5 times earnings, is relatively cheap given that the cars are flying off lots from dealerships across the country, Cramer said. “It tells me that the earnings estimates could be too low, not too high.”

He acknowledged that the stocks of automakers would be hammered in another recession, but he believes the economy will no longer return to it.

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“Look at it this way, seven years ago Ford was trading at $ 18.… Now Ford is at $ 13.71,” Cramer said, adding that it’s hard to fathom that Ford isn’t. has created no value over that time, especially now that “it has a full line of electric vehicles on its way, a rapidly improving track record and a commitment to stop building cars in countries where it is losing money. money for a long time. “

“When I think of the new Ford, I don’t think of the losses, I think of exhaustion because everything they make seems to be exhausted,” he said.

Nucor

Cramer also considers the valuations of steel stocks such as Nucor to be “absurdly low”.

“Nucor is the best managed steelmaker in the world, the one making a fortune right now with a formidable balance sheet and a healthy dividend,” Cramer said.

Nucor selling at five times future earnings, Cramer said the stock “would still be ridiculously cheap,” even if its profits were halved in a downturn in the economy due to a delta variant.

House builders

“It’s the same deal with the home builders,” Cramer said, pointing to Toll Brothers, Lennar, DR Horton and KB Home, all of which sell between six and nine times their profits.

“These stocks are all set for the future with much higher mortgage rates and no customers, but they do not reflect the relentless demand for new homes created by both Covid and regular population growth,” Cramer said.

Cramer thinks these stocks could really explode if Federal Reserve Chairman Jerome Powell “sticks to his word and lets the economy seep in rather than raise interest rates.”

Disclosure: Cramer’s charitable trust owns shares of Walmart, Ford and Nucor.


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