Jim Cramer is “Scrapping” the Magnificent 7 — Here’s a Stock That Looks Better Right Now

You just knew it was just a matter of time before the Magnificent Seven, a term coined by Mad Money host Jim Cramer, was “scrapped.” With the latest market sell-off and the multi-month bout of underperformance posted by the Magnificent Seven cohort (once cherished for their market-beating runs), it should not come as a surprise to hear Jim Cramer say he’s “scrapping” the Mag Seven moniker, at least for the time being.

Indeed, the market leaders can’t stay at the very top forever.

Though the group has soured in a major way, even before the stock market fell into correction territory, I’m not so sure it’s time to be giving up on all seven. Though, Jim Cramer did have some better, timelier stock picks for investors to take advantage of on the dip.

In this piece, we’ll look at one of the names Cramer recently noted he liked better than the Magnificent Seven group, which he’s now “abandoning.” With Tesla (NASDAQ:TSLA) stock crashing over 50%, while the rest of the six drag their feet, I think Cramer is right to shift gears as the market and AI boom enter their next innings.

Goodbye Magnificent 7, hello Costco?

With many of the Mag Seven names in or close to a bear market, it’s time to start thinking about the types of defensive names that have been “unfairly” beaten down of late. Indeed, Costco (NASDAQ:COST) stands out as a retail juggernaut that’s navigated inflation quite well and could continue to do so as tariff-fuelled inflation strikes next. Jim Cramer gave his praise for the stock on a recent showing of Mad Money, citing the name as a potential pick-up amid the Trump slump.

For years, Costco has been a place where consumers can get more from their dollar. Of course, buying in bulk isn’t for everyone, but I do think those who wish to fight back at the next wave of inflation may have to sign up for a membership and start filling up their shopping carts if they’re fed up with the limited value they may be getting from rival grocery retailers.

Over the past year, COST stock has been red-hot, now up by more than 26% despite the latest 14% correction in the stock sparked by broad market fears over Trump tariffs. Arguably, COST stock should be going up, given its role in giving Americans a better deal in the face of harsh price increases and economic turbulence.

Costco stock still looks somewhat lofty after a 14% plunge

Either way, Costco stock was quite frothy before the correction. And while shares aren’t dirt-cheap today at just north of 51 times forward price-to-earnings (P/E), I do see the name as having a sound defensive growth profile.

The company has “big plans” to expand across the U.S., with around 12 new locations to pop up in the next six months. My guess is that the new locations are going to be a hit, especially if tariffs fuel a rush to lower-cost, higher-value grocers. Indeed, Costco came up short on earnings in its recent quarter. But Jim Cramer isn’t at all unsettled by the recent correction in the name.

Personally, I’d rather wait for a deeper pullback before shopping for Costco stock. Though Costco stands to gain in a more challenging economic environment, the valuation is a tad too hot for me. And given the pace of the sell-off, we may see COST shares enter bear market territory.

Either way, those keen on the name should buy slowly rather than back up the truck in the $900s. Jim Cramer’s blessing, while encouraging, does not signify a bottom is here quite yet. Also, I think there are better deals in the Mag Seven group, notably Alphabet (NASDAQ:GOOG), which trades at a ridiculously low 18.9 times forward P/E.

The bottom line

In short, if you’re in the market for a bargain today, Cramer likes COST more than the sagging Mag Seven (should we refer to it as the Sag Seven or the Lag Seven now?). Of course, time will tell if the still-rich premium is worth paying up for at a time like this.

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