Jim Cramer reviews 10 stocks that perform well just after the start of a cutting cycle

by · CNBC

Key Points

  • CNBC's Jim Cramer on Thursday reviewed stocks that have historically performed well just after the Federal Reserve embarks on a cutting cycle and chose his favorites.
  • Using data compiled by CNBC Pro, Cramer discussed the top 10 stocks with the median best performance during three months after an initial cut over the past 40 years.
  • He pinpointed Apple, Target and Textron.

CNBC's Jim Cramer on Thursday reviewed stocks that have historically performed well just after the Federal Reserve embarks on a cutting cycle and chose his favorites. Using data compiled by CNBC Pro, Cramer discussed the top 10 stocks with the median best performance during three months after an initial cut over the past 40 years.

"Now that the Fed's started cutting rates with a bang, you need to think about what kind of stocks will work best in what I consider to be a new regime. Our friends as CNBC Pro got you started with the ten stocks that've done best during the first three months after a rate cuts, going back to '84," he said. "But when you go through their current circumstances, the only ones I can fully endorse are Apple, Target and Textron, in that order."                

  1. Western Digital: Cramer said this hard drive maker has historically been a "giant value trap." While there is high demand for storage as data centers take the enterprise by storm, he recommended peer company Micron, which has pulled back from its highs.
  2. Lam Research: According to Cramer, Lam Research is a key supplier of semiconductor equipment. He said it would be a great buy, but slowing demand from certain customers maybe a hinderance, so investors should wait for shares to come down.
  3. UnitedHealth: This healthcare company is a "terrific operator," Cramer said, but said he wouldn't recommend investors buy the stock here unless they feel the Fed cut rates because the economy is in trouble — which he doesn't think is the case.
  4. Expeditors: To Cramer, FedEx is better than ocean and air freight company Expeditors, and he said the stock is hard to recommend.
  5. Apple: Cramer reiterated his "own it, don't trade it" mantra for the iPhone maker. Although some analysts predict sales of the new smartphone model will disappoint, Cramer pointed to sentiment from the CEO of T-Mobile, who said his company is seeing more sales of the iPhone 16 than last year's new series.
  6. Kroger: Cramer was heartened by the grocery giant's ability to keep up business while fighting with the Federal Trade Commission over a proposed merger with peer Albertsons. But the languishing deal "puts a lid on the stock," he said.
  7. Textron: Textron could work during the cycle, Cramer said, noting that the industrial deals in a variety of arenas including defense, autos and business jets. But the stock will suffer if the economy is actually in bad shape, he added.
  8. Franklin Templeton: Cramer told investors not to touch this investment firm because the Securities and Exchange Commission and the Justice Department are investigating one of its subsidiaries, and "the vibe is off."
  9. Amgen: Amgen could be good, but Cramer said he hesitates to recommend a drug stock right before a presidential election — and neither candidate is particularly partial to the industry.
  10. Target: Cramer praised Target's business and successful turnaround, adding that its strong performance during the start of rate cuts "makes a ton of sense" to him.

– CNBC's Sarah Min contributed to this story.

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