Jim Cramer says Accenture, Lennar beneficial properties are why it is laborious to be bearish
CNBC’s Jim Cramer, who looked through Accenture Consulting and Lennar Home Construction’s quarterly reports Thursday, said it was difficult to be a bearish investor in the current market environment.
Both companies’ stocks rose about 7% during the session after solidly beating sales and profit lines. However, according to Cramer, the proof lies in the winning call.
“Your neighborhood and your conference calls turned out to be excellent prerequisites for what is happening, prerequisites for what makes it so difficult to be bearish and negative at the moment,” said the Mad Money host.
Accenture found much business in helping companies adapt to the digital revolution, had sales of $ 11.76 billion and earnings of $ 2.32 per share. The company’s sales rose for the first time in two straight quarters of slight declines amid the pandemic.
What Cramer saw was Accenture’s 25% increase in bookings, share buybacks, and dividend hikes. Despite limited travel options, the company offers advisory services to help companies find tools to digitize their finances, supply chain, and other work.
On the conference call, CEO Julie Sweet said, “Every business is a technology company now, and technology will continue to move exponentially.”
Accenture also raised its forecast. The stock, which represents a company with nearly $ 175 billion in revenue, is up 25% this year, and Cramer predicts more profits.
“At first glance, these are the kinds of numbers you should be paying for. You can’t tell Accenture is a night-flight operation. If anything, it’s a hidden gem,” Cramer said. “I got off the Accenture conference call and said … if anything, the stock is undervalued.”
For Lennar, the developer reported earnings of $ 2.82 per share on sales of $ 6.83 billion. The company is benefiting from an unlikely real estate boom amid a recession sparked by the coronavirus pandemic.
Cramer took inspiration from Lennar’s chairman, Stewart Miller, who said, “The real estate market is just very strong and the demand for new and existing homes is greater than the limited supply.”
When high demand meets low supply, it’s a sweet spot for businesses, and Cramer suggested that a real estate market peak doesn’t seem to be near. Interest rates are now cheap for homebuyers.
“Remember, we spent a decade building too few houses after the financial crisis. If anything, we have a housing shortage,” he said. “Miller says this is not just a short-term response to COVID but, and I quote, a hardwired way of life.” In other words, he thinks it’s a secular trend, not a cyclical one, and he’s gaining ground. I am with him. “
Cramer’s assessment came after major stock averages closed at record highs on optimism over stimulus spending.
The S&P 500 rose 0.6% to 3,722.48 at close of trade, the Nasdaq Composite rose 0.8% to 12,764.75, while the Dow Jones Industrial Average rose 0.5% to close at 30,303.37 . Both the S&P 500 and the Nasdaq hit intraday and closing records.
“As much as I wanted to get out of here and contain the euphoria,” I said in light of the worsening coronavirus pandemic, “when I look at the stocks that are roaring here, I want to buy them with my hand over my fist,” Cramer said.