Jim Cramer Recommends J.M. Smucker as a Buy Amidst Challenges from Hostess Acquisition

Jim Cramer believes The J. M. Smucker Company (SJM) is a "buy down here" despite its 5% year-to-date loss. He criticizes the company's acquisition of Hostess Brands, which he says has hurt the company. However, he notes that SJM has strong brands like Folgers, Dunkin', and Hostess, and that its pet food and coffee businesses are performing well. Cramer suggests that investors consider other AI stocks that offer higher potential returns and limited downside risk.

The J.M. Smucker Company (SJM) experienced a challenging first quarter, with its stock declining 5% in intraday trading on Wednesday, July 2, 2025. The company's U.S. retail coffee division, which includes brands like Folgers, Dunkin', and Café Bustelo, reported a 22% decrease in profit due to higher commodity costs and tariffs [2]. This resulted in a first-quarter GAAP net loss of $0.41 per share, compared to a $1.74 EPS the same period last year [2].

Despite the quarterly setback, the company raised its full-year sales growth guidance to between 3% and 5%, an increase from the previous 2% to 4% range [2]. This optimism is buoyed by the expectation that price increases, particularly in the coffee segment, will help offset the impact of tariffs.

Jim Cramer, a well-known financial analyst, has a mixed view on SJM. While he acknowledges that the company's acquisition of Hostess Brands has been a burden, he believes that SJM's strong brands, such as Folgers, Dunkin', and Hostess, provide a solid foundation. Cramer suggests that investors consider other AI stocks that offer higher potential returns and limited downside risk [1].

J.M. Smucker's stock trades at a valuation of 11.5 times this year's free-cash-flow guidance, with a 4% dividend yield. This valuation, assuming tariffs are a one-time cost, may not be demanding for investors [1].

References:
[1] https://www.nasdaq.com/articles/why-jm-smucker-plunged-today
[2] https://finance.yahoo.com/news/j-m-smucker-stock-drops-163611733.html