Renowned investor Jim Cramer has identified two stocks that he believes are undervalued following their recent earnings reports. Cramer is bullish on Advanced Micro Devices Inc (NASDAQ: AMD) and Eaton Corporation PLC (NYSE: ETN), urging investors to consider these stocks amidst their current weakness.
Jim Cramer, host of CNBC’s “Mad Money,” has increased his holdings in both companies. On Tuesday, he added 75 shares of AMD and 25 shares of Eaton to his portfolio.
His Charitable Trust now holds a total of 425 shares of AMD and 300 shares of Eaton. Both companies reported strong quarterly results and positive future guidance last week, yet their stocks have each declined by approximately 7% in recent days.
Why Cramer is bullish on AMD
Advanced Micro Devices exceeded Wall Street expectations for its second quarter, largely due to a significant increase in data center revenue, which more than doubled year-over-year. Based in Santa Clara, California, AMD is the second-largest manufacturer of data center chips, trailing only Nvidia.
Cramer’s optimism for AMD is fueled by the company’s recent upward revision of its MI300X AI chip sales forecast by $500 million.
Additionally, he anticipates that Intel’s struggles to establish a strong presence in the AI market will benefit AMD by allowing it to capture more market share.
Wall Street analysts share Cramer’s positive outlook on AMD, rating the stock as “overweight” with an average price target of $188.
This suggests a potential upside of 40% from its current price.
Why Jim Cramer bought Eaton stock
Eaton Corporation also posted better-than-expected earnings for its second quarter and increased its full-year guidance for organic sales, margin, and adjusted per-share earnings.
Despite this, the stock has taken a 20% hit over the past three months, which Cramer believes presents a buying opportunity.
Cramer commended Eaton’s strong third-quarter guidance, which stands in contrast to broader economic concerns about a potential slowdown.
He noted that the stock is currently as affordable as some of its peers, making it an attractive investment.
Analysts also share Cramer’s positive sentiment towards Eaton, rating the stock as “overweight.”
The average price target for Eaton shares is $344, indicating a potential upside of more than 20%. Additionally, Eaton offers a dividend yield of 1.34%, providing an added incentive for investors to include it in their portfolios.
Both AMD and Eaton have demonstrated resilience and potential for growth, even in the face of recent market volatility.
AMD’s strong position in the data center chip market and its advancements in AI technology position it well for future gains.
Meanwhile, Eaton’s robust earnings and positive guidance suggest it can weather economic challenges better than some of its competitors.
Cramer’s endorsement of these stocks is a reflection of their solid fundamentals and growth prospects. Investors looking for opportunities amidst market fluctuations might find AMD and Eaton to be compelling choices.
Jim Cramer’s recent stock picks, Advanced Micro Devices and Eaton Corporation, present compelling investment opportunities despite their recent dips following strong earnings reports. With solid fundamentals, positive future guidance, and strong endorsements from Wall Street analysts, these stocks are well-positioned for potential gains. Investors may want to consider adding AMD and Eaton to their portfolios to capitalize on these opportunities.
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