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Friday, July 1, 2022

Jim Cramer says these 4 stocks that recently completed spin-offs are buys

CNBC’s Jim Cramer said Monday he believes two recent company breakups have created four stocks worthy of buying.

The first spin-off involves XPO Logistics and the newly separate entity, GXO Logistics. The deal was completed Aug. 2. XPO Logistics runs a freight transportation and truck brokerage business, while GXO Logistics is a warehousing and logistics firm focused on last-mile delivery.

“Honestly, I like them both,” the “Mad Money” host said, calling XPO a “fabulous play on e-commerce.” While the company’s stock is not as cheap as it used to be, Cramer said it’s largely treaded water since May. “I think it’s got more upside,” he said.

Shares of XPO closed Monday’s session up about 2% at $86.62, putting its year-to-date losses now at 27.3%.

GXO, on the other hand, “was always the jewel in the XPO crown,” Cramer said. “GXO has real scarcity value given that there are really very few pure play contract logistics companies in the United States. Even after the incredible move over the past few weeks … I’d be a buyer,” he added.

The other breakup highlighted by Cramer involved entity formerly called L Brands. It’s now become two separate companies: lingerie brand Victoria’s Secret and Bath & Body Works, which makes lotions and hand sanitizers.

While Cramer said he’s “hesitant” to give Victoria’s Secret the benefit of the doubt, he noted the company is taking earnest strides to refresh its image and top retail analyst, Matt Boss of JPMorgan, is bullish on its prospects. Boss has a $100 price target on shares of Victoria Secret, which closed at roughly $66 apiece Monday.

“I think the stock reflects all of the problems but none of the potential positives, which is what makes it so enticing,” Cramer said, adding that he’s “willing to bless the new Victoria’s Secret for turnaround speculation.”

Bath & Body Works, meanwhile, represents a solid long-term investment, according to Cramer. However, he warned that the stock could face near-term challenges because the company is in a period of tough year-over-year comparisons after excelling during the Covid pandemic.

“This business was able to thrive even when it was joined at the hip to the ailing Victoria’s Secret, so I bet they can do much better on their own. At 15 times next year’s earnings estimates, I’m calling it a steal,” Cramer said.


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