Warren Buffett for the Market Environment: Jim Cramer's Exclusive YEV List

Jim Cramer, known for his candid commentary and profound market analyses, recently revealed his exclusive list of nine YEV stocks. This list resulted from a detailed screening of the S&P 500, taking into account yield, earnings growth, and value. Dow, a leading player in chemical solutions, secured the seventh position on this coveted list. Cramer’s innovative valuation model, the YEV test, stipulates that a stock should offer a better yield than the current yield on the 10-year U.S. Treasury bond. Additionally, the projected earnings growth must exceed 14 percent in the following year, and the stock must be valued lower than the current S&P 500. Cramer acknowledges that while these criteria are demanding, they are crucial in the current economic landscape. At present, Dow appears overall stable but remains below the expected level. Cramer particularly emphasizes the economic cycles, as these "textbook cyclical" values are significantly influenced. The macroeconomic backdrop shapes Dow’s situation — with positive impulses from economic recoveries in China and the U.S., as well as monetary easing by the Federal Reserve, which is expected to lower interest rates to 3.5 to 3.75 percent by June next year. Dow’s CEO, Jim Fitterling, explains optimistic future plans despite existing challenges. The latest forecast for the third quarter of 2024 anticipates revenue of around 10.6 billion USD and an operating profit of about 1.3 billion USD. The company experienced slight setbacks due to unforeseen events that particularly affected the Texas region. Nevertheless, Fitterling sees stabilization opportunities through improved pricing power and raw material costs. Analysts, including JPMorgan, anticipate weaker results in the third quarter for the chemical industry, but Cramer remains optimistic. According to him, falling interest rates and economic stimulus programs in China could support Dow in a recovery. In conclusion, Cramer recommends investors consider high-quality stocks according to the YEV paradigm, especially before the start of the official earnings reports.