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3 Giants Jim Cramer is Betting on

Despite the recent macroeconomic headwinds and market volatility, renowned TV personality and investor Jim Cramer has placed his bets on some beaten-down shares of some industry giants because they are currently trading at attractive price levels. Wall Street analysts expect Jim Cramer’s top stock picks, Morgan Stanley (MS), The Walt Disney Company (DIS), and Starbucks Corp. (SBUX), to soar in the near term. Read on…

The persistent macroeconomic headwinds, including high inflation, the Fed’s aggressive monetary tightening, continued supply chain disruptions, the ongoing Russia-Ukraine war, and the rising commodity prices, have kept the equity markets under pressure since the beginning of the year. The major market indexes are expected to witness further selling pressure as analysts expect the economy to witness a recession.

Some fundamentally strong stocks have corrected due to the recent market turmoil and are trading at attractive entry points. CNBC’s popular show host Jim Cramer is known for his unconventional stock picking. Cramer is currently betting on Morgan Stanley (MS), The Walt Disney Company (DIS), and Starbucks Corporation (SBUX). These stocks have been beaten down over the past few months and are now trading at attractive valuations.

Thus, investors could consider adding these stocks to their watchlist. Wall Street analysts expect these stocks to soar in the near term.

Morgan Stanley (MS)

MS offers its customers a wide range of services, including investment banking, market research, wealth management, and investment management services. Its segments include Institutional Securities, Wealth Management, and Investment Management.

On June 22, 2022, MS announced the acquisition of American Financial Systems (AFS), a leading nonqualified deferred compensation plan provider. This acquisition is expected to enhance the company’s workplace offering spectrum.

On June 7, 2022, the company’s Board of Directors increased the quarterly common stock dividend by 11% to $0.775 per share. It also authorized a $20 billion multi-year common equity share repurchase program. This reflects its strong cash flows.

MS’ revenue from the asset management segment increased 16.4% year-over-year to $5.11 billion for the first quarter ended March 31, 2022. The company’s net revenue increased 2% sequentially to $14.80 billion. Also, its interest income increased 9% year-over-year to $2.65 billion.

Analysts expect MS’ EPS and revenue for fiscal 2023 (ending December 2023) to increase 10.6% and 4% to $8.11 and $58.99 billion, respectively. It surpassed Street EPS estimates in each of the trailing four quarters.

The stock has lost 21.8% year-to-date to close the last trading session at $76.75. However, Wall Street analysts expect the stock to hit $96.33 in the near term, indicating a potential upside of 25.5%.

The Walt Disney Company (DIS)

DIS is a leading American multinational entertainment and media conglomerate, operating through two segments: Disney Media and Entertainment Distribution; and Disney Parks, Experiences, and Products. The company operates theme parks and resorts and offers direct-to-consumer streaming services.

On March 4, 2022, DIS announced that Disney+ will expand its offerings to a broader audience by introducing ad-supported subscriptions in addition to its option without ads, beginning in the United States in late 2022, with further plans to expand internationally in 2023. This initiative is expected to deliver gains to the company in the upcoming months.

For the fiscal second quarter ended April 2, 2022, DIS’ net revenues increased 23% year-over-year to $19.25 billion. The company’s total segment operating income increased 50% year-over-year to $3.70 billion. Also, its non-GAAP EPS came in at $1.08, representing an increase of 37% year-over-year.

For the third quarter ended June 30, 2022, DIS’ EPS and revenue are expected to increase 26% and 23.5% year-over-year to $1.01 and $21.01 billion.

The stock has lost 37.9% year-to-date to close the last trading session at $96.14. However, Wall Street analysts expect the stock to hit $140.77 in the near term, indicating a potential upside of 46.4%.

Starbucks Corporation (SBUX)

SBUX is a specialty coffee roaster and retailer, operating through three segments: Americas, International, and Channel Development. It offers coffee and tea beverages, roasted whole bean and ground coffees, single-serve and ready-to-drink drinks, iced tea, and various food products.

On May 24, 2022, SBUX partnered with Bolthouse Farms to acquire Evolution Fresh’s brand and business. This should enable the company to expand its core business and enhance its customer experience.

SBUX’s net revenues increased 14.5% year-over-year to $7.63 billion for the second quarter ended April 3, 2022. The company’s net earnings rose 2.3% year-over-year to $674.50 million. Also, its EPS came in at $0.58, representing a 3.6% increase year-over-year.

Analysts expect SBUX’s EPS and revenue for the fiscal 2023 first quarter (ending December 2022) to increase 10.9% and 8.7% year-over-year to $0.80 and $8.75 billion, respectively.

The stock has lost 32.2% year-to-date to close the last trading session at $79.26. However, Wall Street analysts expect the stock to hit $93.62 in the near term, indicating a potential upside of 18.1%.

MS shares were trading at $76.75 per share on Monday afternoon, up $0.69 (+0.91%). Year-to-date, MS has declined -20.59%, versus a -19.14% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.


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