Jim Cramer Holds on CarMax (KMX): "Don't Sell It Down Here - That's a Remarkable Decline"

We recently published a list of 9 Stocks on Jim Cramer’s Radar. In this article, we are going to take a look at where CarMax, Inc. (NYSE:KMX)stands against other stocks on Jim Cramer’s radar.

On Monday, Mad Money host Jim Cramer drew a parallel to 2011 and argued that what we are seeing is another crisis that feels manufactured, one he believes could be resolved just as easily as it was created, “with the stroke of a pen,” as he described it.

“Could this be another earnings season that simply doesn’t matter because there are bigger forces at work that are going to crush the entire market? It’s happened before, back in 2011.”

READ ALSO Jim Cramer’s Thoughts on These 5 Stocks and Jim Cramer’s Game Plan for Next Week: 25 Stocks in Focus

Cramer pointed out that the market has opened lower nearly every day, not because of disappointing earnings, those, he said, have largely held up, except in the case of companies with significant exposure to China, which he described as now being a liability for American businesses. He emphasized that the situation is not being driven by corporate fundamentals but by factors outside of earnings. He added:

“At least this time, the problem’s about America itself. As the president begins to create a constitutional crisis over the potential firing of Jay Powell while Congress once again deals with the interminable debt crisis, I think we can expect another ratings agency to begin the discussion of a debt downgrade.”

According to Cramer, investors should begin to accept the reality of a market that drops every morning, regardless of how strong earnings might be. The dominant forces in the environment, he insisted, are not balance sheets or profit margins. He remarked that the current period will be shaped by discussions around tariffs and the ongoing threats to remove Jerome Powell from his position. He added:

“Unfortunately, this time, the United States is not a safe haven as other countries appear much more stable and our bonds act squirrelly, almost as if they’re anticipating another painful debt downgrade. Ironic. We could get much higher yields because a president wants them to be lower in the worst way. The worst way being to poke fun, to ride, chide, and make life hell for a man who has served our country well, and I think deserves better.”

Our Methodology

For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on April 21. We listed the stocks in ascending order of their hedge fund sentiment as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

CarMax, Inc. (NYSE:KMX)

Number of Hedge Fund Holders: 57

A caller asked if they should hold or sell CarMax, Inc. (NYSE:KMX). Here’s what Cramer had to say:

“Well, you know I am a Carvana guy. I don’t want you to, this stock, whoa man, this stock has come down so much. No, I can’t, no, I don’t want you to sell it down here. That’s a remarkable decline, down 24%, for a very high-quality company, but that’s what’s happening. That’s endemic of what’s happening in this country right now. We are losing a lot of money, and I don’t need to tell you every single time why.”

CarMax (NYSE:KMX) focuses on selling used cars and related products and offers various models that include electric, hybrid, and luxury vehicles. It also offers financing plans and repair services for customers. In early April, Cramer commented:

“Now anyway, we just profiled a company called CarMax the other night that reports Thursday and when new cars get tariffed, used cars become a lot cheaper by comparison, which should spur sales for CarMax. The stock’s no longer cheap, selling at 23 times this year’s earnings, but I think this might be a real investment given the fact that the president seems unwilling to back down. Then again, if we get a recession, it doesn’t really matter. You don’t want to own anything connected to autos in a recession.”

Overall, KMX ranks 4th on our list of stocks on Jim Cramer’s radar. While we acknowledge the potential of KMX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than KMX but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.