Cramer’s 2 Tariff-Hit Stock Picks: Buy Opportunity

Jim Cramer has built his reputation on identifying opportunities where the market’s short-term pessimism creates long-term value. His current focus on tariff-impacted stocks follows this proven pattern. According to Cramer’s analysis, most investors treat tariff headlines “like weather reports, something to grumble about and then ignore,” but this creates opportunities for those willing to look beyond temporary headwinds. His core investment thesis is straightforward: “if a good business is knocked down for a macro reason that does not touch its fundamentals, it’s worth buying.”

Cramer explicitly acknowledges that both Starbucks and Nike were “mismanaged by their previous CEOs and were rightfully sold by the market.” However, he believes the pendulum has swung too far, creating oversold conditions that set the stage for multi-year recovery stories. The key to his conviction lies in recognizing that “good turnarounds take time” – a reality that often causes impatient investors to abandon positions just as the recovery begins. Cramer identifies this moment as precisely when contrarian investors should be buying, not selling.

The dividend component provides additional appeal during what could be a prolonged recovery period. Both stocks offer 2-3% yields, providing income while investors wait for the turnaround stories to develop. This combination of potential capital appreciation and current income creates what Cramer views as an attractive risk-reward profile for investors with longer time horizons.

Starbucks represents the more established of Cramer’s two turnaround picks, trading at $85 after disappointing investors with a slower-than-expected recovery. Cramer’s confidence in the coffee giant stems largely from his recent meeting with CEO Brian Niccol, who previously engineered Chipotle’s remarkable turnaround. Under Niccol’s leadership, Chipotle stock surged from the $70s to $117, demonstrating his capability to revitalize struggling consumer brands.

Cramer notes that Niccol “emphasized endlessly” that the Starbucks turnaround won’t happen quickly, which Cramer views as realistic rather than concerning. The analyst community’s disappointment with the pace of recovery has created the current buying opportunity. “Some analysts now blame the stock’s latest downturn on the slowness of the turn itself,” Cramer observed. “I blame the decline on the lack of recognition from the analyst community.”

The financial metrics support Cramer’s patient approach. Starbucks faces an estimated 35% EPS decline for fiscal 2025, followed by a 21% recovery in fiscal 2026. Revenue growth projections are modest at 2.2% for FY2025 and 4.73% for FY2026. This gradual acceleration requires investor patience, but Cramer believes Niccol now has “his arms around what’s been going wrong” and concludes that “it is time to buy Starbucks, not to sell it.”

Nike presents what may be an even more compelling opportunity, having fallen further than Starbucks and thus offering greater potential upside. Cramer sees “the same deal” here as with Starbucks – a quality business temporarily derailed by management missteps. He bluntly assessed that “the previous CEO took a good company and turned it into an also-ran,” emphasizing that “the business didn’t need to be turned around!”

The recovery now falls to CEO Elliott Hill, who took leadership in October of last year. Cramer identifies several challenges Hill must address, noting that “he has to fix China, not a quick fix… There’s still inventory within the system, and that holds down earnings.” These operational issues have led analysts to recognize that “a fast turnaround is impossible,” contributing to the stock’s recent weakness.

Despite the near-term challenges, the financial projections suggest substantial recovery potential. Nike faces a projected 23.5% EPS decline in FY2026 before a dramatic 51% recovery in FY2027. Sales growth is expected to be minimal at 1% in FY2026 before stabilizing around 5%. If these projections materialize, Nike could deliver significant returns over a 2-3 year horizon. Cramer’s enthusiasm is unmistakable: “This is precisely the moment when people want to give up on Starbucks and on Nike, which is why I want to be a buyer, not a seller. Buy buy buy!”

Both Starbucks and Nike represent classic Cramer contrarian plays – fundamentally sound businesses facing temporary challenges that have created attractive entry points. The key differentiator for investors will be patience, as Cramer repeatedly emphasizes that meaningful turnarounds “take a lot of time.” The market’s disappointment with the pace of recovery in both names has created the current opportunity.

The combination of dividend income during the recovery period and substantial upside potential if management executes their turnaround plans makes these stocks particularly appealing for investors with longer time horizons. While tariff concerns and management transitions have created near-term uncertainty, Cramer believes both companies have bottomed and represent compelling values at current levels for those willing to ride out what could be a “tedious turnaround” to ultimately “have the last laugh.”