In this article, we’ll explore the 10 Large Cap Stocks Jim Cramer Can’t Stop Talking About.
In a recent episode of Mad Money, Jim Cramer highlights a critical gap in the American education system, which often overlooks financial literacy despite its importance. While students may graduate with extensive knowledge in subjects like chemistry, history, and languages, they rarely receive practical education on managing personal finances. Cramer emphasizes that financial planning, retirement readiness, and investing are seldom covered, leaving many people uninformed about crucial money management skills.
“There is a gaping hole in the American education system, although I hesitate even to call it a system. When you go to high school, they teach you chemistry, geometry, and physics. You have English classes, history classes, and foreign language classes. You can graduate from college speaking three languages with a deep understanding of quantum physics or ancient philosophy. But you know the one thing they almost never teach you in middle school or high school, let alone college? Financial literacy.
And I’m not talking about economics here—you could be an econ major and still learn nothing about financial planning or retirement readiness, let alone investing. Money is just not talked about. Frankly, it’s become the third rail of American education. You’re a thousand times more likely to read Marx’s “Das Kapital” than to read anything about planning a budget or picking stocks.”
Cramer’s mission is to bridge this gap through the CNBC Investing Club, where he and the Charitable Trust provide practical financial guidance. He stresses the significance of retirement planning, noting that while 401(k) plans and Individual Retirement Accounts (IRAs) are key tools for saving, many people lack comprehensive understanding of their benefits and limitations.
“That’s why I’m on a constant mission to teach you how to manage your money, which is what we do every day in the CNBC Investing Club, with the Charitable Trust providing a constant source of examples. When it comes to managing your money, nothing is more important than retirement. Sooner or later, you’re going to stop working—hopefully sooner rather than later, unless you really love your job. I’m betting most of you, even if you don’t own individual stocks, still have some money in a 401(k) plan.
Decades ago, corporate pensions started going the way of the dodo, and now the 401(k) is the main way that Americans save for retirement. They’re offered by your employer, and they’re among the greatest tax-deferred investment vehicles out there, along with the IRA. And I’m not talking about the Irish Republican Army—I’m not even talking about the Inflation Reduction Act, for that matter. I mean the Individual Retirement Account.”
Cramer points out that while contributing to a 401(k) is widely advised, it’s not always the best strategy for everyone. Despite its tax advantages and the ability to defer taxes on contributions, 401(k) plans can have drawbacks, such as hidden fees that diminish returns.
“Hear me out, darn it—you need to know this stuff. Your future self will thank you for getting your retirement funds in order. While you may think you know everything you need to know about these tax-favored accounts, the truth is there’s a lot the so-called experts don’t tell you or don’t want you to know. For example, conventional wisdom says that you absolutely must invest in your 401(k)—you’d have to be a fool not to contribute.
Many experts will even advise you to max out your 401(k) contributions every year if you can afford to. Right now, the maximum contribution is over 20 grand, with room for an additional 7 grand if you’re over 50. It tends to rise gradually over time, usually a little faster than inflation. In 2004, it was $13,000; by 2023, it was $22,500. Either way, that’s a serious chunk of change, even with these contributions coming from your pre-tax income.”
He argues that understanding both the benefits and the shortcomings of these retirement accounts is essential for making informed financial decisions. Cramer encourages individuals to educate themselves about these investment options to ensure their retirement savings are managed effectively.
“However, sometimes I think it can be the wrong approach. I’m not going to sing the praises of the noble 401(k) plan or tell you it’s the key to your financial salvation because 401(k) plans can be a real mixed bag. Sure, they have a couple of really great features, but they also have a lot of bad ones, and those problematic features will eat away at your returns—sometimes through fees that are almost totally hidden from you. I do not like that. So let me lay out the good, the bad, and the ugly of 401(k) plans. Then I’ll tell you whether it makes sense for you to contribute more money to your own 401(k)—maybe there’s a better way for you to invest for retirement.”
Our Methodology
This article reviews various episodes of Jim Cramer’s Mad Money, where he frequently discussed several stocks. We’ve highlighted ten large-cap companies that were prominently featured in his recommendations, including details on their market capitalizations. Additionally, the article examines how hedge funds view these stocks and ranks them based on the extent of hedge fund ownership, from the least to the most owned.
At Insider Monkey we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Large Cap Stocks Jim Cramer Can’t Stop Talking About
10. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Investors: 70
Market Capitalization: 105.5B
In an episode of Mad Money, Jim Cramer highlighted a dramatic turnaround for Starbucks Corporation (NASDAQ:SBUX), attributing it to the appointment of Brian Niccol as CEO. According to Cramer, Starbucks Corporation (NASDAQ:SBUX) had struggled until Niccol, a skilled food executive known for his successful tenure at Panera Bread, took the helm. Cramer points out that Starbucks Corporation (NASDAQ:SBUX) faced challenges with outdated store models that couldn’t accommodate mobile ordering, similar to issues Niccol addressed at Panera. He suggests that Niccol’s innovative approach, which revolutionized Panera’s store experience, could be exactly what Starbucks Corporation (NASDAQ:SBUX) needs.
“Here’s a stock that had been in freefall, and all it took was bringing in one person, a talented food executive, a CEO, and then it soars. The new guy, Brian Niccol, is a genius at what he does. He turned around AAA, but it’s not like his predecessor, Laxman Narasimhan, was a knucklehead. Laxman was beloved at PepsiCo and beloved where he was the CEO. When he took over Starbucks, all I heard was he worked in snacks and beverages and packaged goods—he really understood the process. He was supposed to be the logical, considered choice.
I think Howard had more pull by the lack of contrition than by the current’s execution, which he didn’t like. But if you’re blaming Schultz for firing Narasimhan, maybe you should thank him because he just created $20 billion in value when we learned that the new CEO was from AAA. I would like to take credit for that. We all take credit for the brick if we are looking for what can be saved. You need a big change of this topic. Starbucks is going to become the model. “
Despite a slight drop in revenue and net earnings in Q3 FY2024, Starbucks Corporation (NASDAQ:SBUX) remains committed to long-term growth through its aggressive expansion efforts. Starbucks Corporation (NASDAQ:SBUX) added 526 new stores during the quarter, bringing its total to nearly 39,500 locations worldwide. This expansion highlights Starbucks Corporation (NASDAQ:SBUX)’s strategy to increase its market share, particularly in international markets. Although comparable store sales declined, especially in China, Starbucks Corporation (NASDAQ:SBUX) mitigated these issues by boosting average ticket sizes in North America.
Strong customer engagement, driven by loyalty programs and digital innovations, positions Starbucks Corporation (NASDAQ:SBUX) well for future growth. Additionally, Starbucks Corporation (NASDAQ:SBUX)’s focus on new products and store formats supports its positive growth outlook. Despite short-term challenges, Starbucks Corporation (NASDAQ:SBUX)’s global expansion and efforts to enhance customer experience indicate it is poised to recover and continue delivering value to shareholders.
Mar Vista Strategic Growth Strategy stated the following regarding Starbucks Corporation (NASDAQ:SBUX) in its Q2 2024 investor letter:
“Our decision to divest from Starbucks Corporation (NASDAQ:SBUX) followed their latest earnings report, which highlighted concerning business trends. The primary issue was sluggish demand, with comparable store sales dropping in their important U.S. and Chinese markets. American consumers, grappling with inflation, are reducing non-essential expenses, including regular coffee shop visits. Meanwhile, China’s economic rebound, vital for Starbucks’ growth, has been underwhelming. These challenges led Starbucks to downgrade its annual financial projections, raising doubts about leadership’s capacity to address immediate headwinds. Faced with lowered financial expectations, persistent demand challenges, and a deteriorating economic landscape, we opted to liquidate our investment.”
9. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Investors: 71
Market Capitalization: 389.5B
Jim Cramer praises Costco Wholesale Corporation (NASDAQ:COST) for its unique position in the retail market, describing it as the second-largest pure-play retailer in the country and a massive buying group for its members. According to Cramer, Costco Wholesale Corporation (NASDAQ:COST)’s membership model allows it to offer exceptional prices, often lower than what even the store pays for items like wine and gold bullion. While Costco Wholesale Corporation (NASDAQ:COST) may not carry every product, it consistently provides lower prices on the items it does stock compared to other retailers.
“Costco is like no other. It’s the second-biggest pure-play retailer in the country, and it functions basically as a gigantic buying group for its members who order pretty much everything. The membership gets you amazing prices, including some that are likely below what the store itself pays, like the bottles of wine I mentioned the other day and the gold bullion everyone is so crazy about.
Costco is a one-of-a-kind retailer where you might not find everything, but what you do find is likely cheaper than anywhere else. This store has done the most to roll back prices in this nation, often through its premium house brand, Kirkland Signature. Costco isn’t afraid to go after any nationally branded product if it won’t lower prices, and under the Kirkland label, they get prices down because the Kirkland brand is better than most of the branded stuff.”
Costco Wholesale Corporation (NASDAQ:COST)’s Q3 2024 earnings report highlights its strong financial performance, with earnings per share (EPS) of $3.78, surpassing the expected $3.70, and revenues reaching $58.52 billion, up 9.1% from the previous year. This reflects Costco Wholesale Corporation (NASDAQ:COST)’s ability to excel even in a challenging retail environment. Costco Wholesale Corporation (NASDAQ:COST)’s effective membership model, which boasts high retention rates and solid comparable sales growth, reinforces its resilience.
Additionally, Costco Wholesale Corporation (NASDAQ:COST)’s investments in expanding its store network and enhancing its e-commerce platform are driving steady revenue growth. Investor confidence is high, as evidenced by Costco Wholesale Corporation (NASDAQ:COST)’s strong stock performance, and there is positive anticipation for its Q4 2024 earnings report. With continued expectations for increased EPS and revenue, alongside Costco Wholesale Corporation (NASDAQ:COST)’s strong brand loyalty and effective cost management, the company stands out as a reliable investment with substantial growth potential.
