In this article, we’ll explore the 10 Stocks That Have Jim Cramer’s Attention.
On a recent episode of Mad Money, Jim Cramer notes that after a significant rally in the past two weeks, the market took a hit ahead of the Federal Reserve’s upcoming meeting in Jackson Hole. The Dow fell 170 points, the S&P dropped 43 points, and the NASDAQ tumbled 1.67%. This downturn marks a return to reality, which can be harsh.
“After the monster move we’ve had in the last two weeks, that’s why, on the eve of the big Federal Reserve powwow in Jackson Hole, the averages got slammed. It’s back to reality, and reality can sting.”
Previously, after a dramatic unwind of the Yen carry trade, the market quickly collapsed but then rebounded strongly over eight days. According to Cramer, during that period, anything that was doing well surged, and there was optimism that anything struggling would improve once the Fed started cutting rates. However, that optimism has faded.
“If you remember, after the sudden unwind of the Yen carry trade, the market experienced a sharp decline followed by a remarkable 8-day rebound. During that time, stocks that were performing well surged, and there was hope that struggling stocks would improve once the Fed began cutting rates. However, that was then, and this is now.”
Now, we’re experiencing what Cramer refers to as the “buyer’s remorse” phase. Stocks that had risen on hope alone are now falling sharply. Even the prospect of the Fed stepping in hasn’t been enough to prevent the decline.
“Since the winning streak ended, we’re entering what I call the “buyer’s remorse” phase. Stocks that had been climbing based on hope alone are now falling hard. Even the prospect of Fed intervention isn’t enough to prevent this decline. The selling might be exaggerated because the Fed is set to speak in Jackson Hole, and Wall Street has already factored in the possibility of a September rate cut—beyond that, it’s unlikely the Fed will announce multiple rate cuts, as some bulls hope.”
Cramer dismisses the first two explanations for the current market weakness: the idea that the Fed’s actions are too late or that the Fed can’t fix the economy. He believes the Fed’s interventions still have a significant impact, although companies with poor balance sheets might struggle.
“There are also concerns that the Fed might be too late to make a difference, or that traders fear a potential Democratic sweep in November could lead to higher corporate tax rates—bad for earnings—and increased scrutiny on price gouging in supermarkets and drugstores.
I don’t fully buy into the first two explanations. Not everything can be saved by the Fed, as some companies aren’t very sensitive to economic changes. Also, it’s never too late for a rate cut; delays might occur, but the turn is not canceled, except for companies with poor balance sheets. Those companies, burdened with debt, deserve to struggle if they can’t manage their obligations effectively.”
The third explanation, political concerns, seems more plausible to Cramer. He points out that investors initially saw President Biden as less favorable to the stock market due to his pro-labor stance. However, recent discussions suggest that a potential Harris presidency might be even more challenging for businesses. Harris is seen as critical of companies raising prices and could push for measures against price gouging, which might be difficult to achieve.
“The third, politics-is-trickier. Before this week, many investors saw President Biden as unfavorable to the stock market due to his pro-labor stance. However, Vice President Harris, coming from California with ties to the tech industry and connections like her brother-in-law Tony West, General Counsel at Uber, was thought to be more business-friendly.
Recent discussions suggest that a Harris presidency might be even tougher on businesses than Biden’s administration. There is a strong focus on criticizing food and drug companies for raising prices, even though the Biden administration attempted to control the prices of some heavily used drugs. Harris’s potential efforts to curb price gouging might face challenges, as large retailers like Walmart and Costco have already done a great job of pushing suppliers to reduce prices to pre-COVID levels.”
Cramer is also concerned about a recent prediction from market expert Larry Williams, which adds to his apprehension about the market’s future.
“On the campaign trail, Harris might not recognize the distinction between good and bad actors, opting instead to broadly criticize big businesses for taking advantage of the pandemic. These factors might explain some of today’s market weakness, but what concerns me most is a recent prediction from market expert Larry Williams. I respect Larry’s insights and prefer not to contradict him.
Jim Cramer said Larry Williams predicted that the rally was “kaput.” This term, implying that the rally might be over, is especially worrying considering it was used after the eighth day of gains. Despite this winning streak, the market didn’t surpass its previous highs. Larry’s charts also indicated that the S&P 500 might face difficulties in the coming week, particularly due to Nvidia, which he considers a crucial stock in the market.
“Larry sent us his thoughts on Monday, and he used a term that made me concerned. He said that the rally was “kaput.” Mind you, this was on the eighth day. The word “kaput” has some ominous connotations, right? Especially because we didn’t take out the highs of the averages despite the 8-day win streak. Worse, Larry’s charts showed tough sledding for the S&P 500 next week, led by the most important stock in the entire market—maybe the most important stock I’ve ever seen.”
Jim Cramer notes that with the market currently overbought—reflected in the S&P short-range oscillator reading of plus five—Larry’s view that the rally could be over seems plausible. Wall Street’s favorite GPU maker experienced a sharp drop recently, despite its strong performance leading up to the quarter. The stock’s sudden reversal was difficult to watch.
“Given that the market’s overbought—plus five on the S&P short-range oscillator that I follow—the idea that the rally is kaput has some resonance. It doesn’t help that Nvidia ran up rapidly into the quarter and expectations have gotten out of hand. The stock did a horrible reversal today—just painful to watch.”
Our Methodology
In this article, we analyze a recent episode of Jim Cramer’s Mad Money, where he highlighted ten stocks. We also review hedge fund opinions on these stocks and rank them based on hedge fund ownership, from the least to the most.
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 Stocks That Have Jim Cramer’s Attention
10. Healthpeak Properties Inc. (NYSE:PEAK)
Number of Hedge Fund Investors: 27
Jim Cramer addressed a viewer’s question about Healthpeak Properties Inc. (NYSE:PEAK), highlighting its appeal to those seeking high yield. Cramer acknowledged that Healthpeak Properties is a high-yielding REIT that has performed well, stating, “I endorse it.”
“Okay, look, people are going to be really interested in getting yield, and that is a very high-yielding REIT that’s done quite well. So, I’m going to have to say I endorse it. That said, look, it’s at its high. It’s like Realty Income. Let’s say you call me about Realty Income—that’s at its high. A lot of the ones that yielded six are now yielding five, and they come to play. I think yours is one of them.”
Healthpeak Properties Inc. (NYSE:PEAK) is well-positioned for continued success, driven by demographic trends such as an aging population and rising healthcare demands. Healthpeak Properties Inc. (NYSE:PEAK)’s Q2 2024 earnings report demonstrated strong performance, with Funds From Operations (FFO) per share reaching $0.44 and revenue increasing by 6% year-over-year to $654.4 million. This growth was fueled by solid leasing activity and rent escalations in its life science and medical office segments, particularly benefiting from heightened demand from biotech and pharmaceutical companies.
Strategic acquisitions, such as the recent purchase of a state-of-the-art life science campus in the San Francisco Bay Area, further strengthen Healthpeak Properties Inc. (NYSE:PEAK)’s position in a key innovation hub, promising substantial growth potential. Additionally, Healthpeak Properties Inc. (NYSE:PEAK)’s disciplined financial management, including effective debt refinancing, has enhanced liquidity and lowered interest expenses.
9. Crane Company (NYSE:CR)
Number of Hedge Fund Investors: 31
Jim Cramer responded to a viewer’s inquiry about Crane Company (NYSE:CR) by praising its transformation. He noted that Crane Company (NYSE:CR) has shifted from its traditional metalworking focus to embrace more high-tech solutions.
“Crane is a well-run company that has pivoted significantly and focuses less on traditional metal bending, now being more high-tech. We’re considering including Crane in our new industrial series managed by our Chief Scientist and Chief Research Director, Ben Stod. The company is strong, and we’re excited about its prospects in the HVAC sector.”
Crane Company (NYSE:CR) is well-positioned to benefit from trends like automation, electrification, and the recovery in aerospace demand due to its diverse range of engineered industrial products. In its Q2 2024 earnings report, Crane Company (NYSE:CR) delivered impressive results with earnings per share (EPS) of $1.94, surpassing expectations. Revenue totaled $865 million, reflecting a 7% increase from the previous year, driven by strong demand in aerospace and electronics, as well as growth in industrial products from investments in infrastructure and automation.
A recent major contract with an aerospace manufacturer underscores Crane Company (NYSE:CR)’s potential for future revenue growth. Crane Company (NYSE:CR)’s investments in technology and innovation, including advanced materials for aerospace and industrial uses, strengthen its competitive position. Moreover, Crane Company (NYSE:CR)’s emphasis on improving operational efficiency and expanding margins, along with a strong balance sheet and good cash flow, supports its ability to pursue strategic acquisitions, share repurchases, and dividend increases.
Here’s what Crane Company’s CEO, Max Mitchell, has to say in their latest earnings call:
“Welcome and thank you again for joining Crane and we look forward to much improved performance versus the last person in the role. I’m joking, Jason. Good morning, everyone. Thanks for joining the call today. Yet another excellent quarter with results outperforming expectations. Adjusted EPS was $1.30, driven by an impressive 9% core sales growth, reflecting strength across both aerospace electronics and process flow technologies. That growth was paired with strong leading indicators with core orders up 7% and core backlog up 10% compared to last year, and confidence in our outlook for 2024 remains high. Based on the strength in the first half, we are raising the midpoint of our full year guidance by $0.15 and narrowing our outlook to a range of $4.95 to $5.15, which reflects 18% EPS growth at the midpoint.
We have fairly strong direct line of sight to delivering that 18% earnings growth. Our revised guidance continues to assume somewhat muted industrial activity with aerospace electronics, commercial OE sales growth solid, but at a slightly lower levels given the changes with OE build rates. We also assume that the aerospace electronics supply chain continues with similar issues with only very gradual further improvement as the year progresses. But this is also becoming more of the normal state of play honestly, at this point in time. If those assumptions prove conservative, we are structured to be able to satisfy any unexpected upside demand. We’ve had a strong first half. Our strategy is working. The team is executing, driving improved earnings through its growth and commercial excellence initiatives.”
(Click here to see more…)
8. BJ’s Wholesale Club Holdings Inc. (NYSE:BJ)
Number of Hedge Fund Investors: 34
Jim Cramer discussed BJ’s Wholesale Club Holdings Inc. (NYSE:BJ)’s efforts to manage customer costs amid rising prices. He highlighted that CEO Robert Eddy emphasized BJ’s Wholesale Club Holdings Inc. (NYSE:BJ)’s commitment to keeping member expenses in check through significant investments.
“In an era of escalating prices, BJ’s worked hard to keep a lid on customers’ costs. CEO Robert Eddy pointed out that the company has:
“invested considerably in order to make our members make their baskets work within the confines of their budgets.”
Hey, pretty good, right? He said that’s part of the company’s DNA. But then he adds,
“These investments might pressure our short-term results.”
Oh no. During those fabulous eight days, we would have ignored that phrase entirely. People would have focused on how terrific it is that BJ’s is fighting inflation. That era is almost over now. Instead, all we think about is cutting numbers, and BJ’s stock gets pulverized, falling nearly 7%.”
In its Q2 2024 earnings report, BJ’s Wholesale Club Holdings Inc. (NYSE:BJ) reported strong results with earnings per share (EPS) of $1.08 and revenue of $5.2 billion, reflecting a 5% increase from the previous year. This growth was driven by higher membership renewals, increased same-store sales, and strong performance in digital channels, bolstered by the company’s focus on value and private-label products.
Looking ahead, BJ’s Wholesale Club Holdings Inc. (NYSE:BJ) aggressive expansion plans, including the opening of new clubs in key markets, are expected to drive additional sales growth and capture a larger share of the warehouse club market. Investments in digital and omnichannel capabilities, such as enhanced online shopping and expanded curbside pickup and delivery options, are likely to attract more customers and boost sales.
Additionally, BJ’s Wholesale Club Holdings Inc. (NYSE:BJ) robust membership model ensures a stable revenue stream with high renewal rates and strong customer satisfaction. BJ’s Wholesale Club Holdings Inc. (NYSE:BJ)’s solid balance sheet and cash flow enable it to invest in growth opportunities while providing value to shareholders through dividends and share repurchases, making BJ’s an attractive investment.
TimesSquare Capital U.S. Small Cap Growth Strategy stated the following regarding BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) in its first quarter 2024 investor letter:
“Our preferences in the Consumer-oriented sectors lean toward value-oriented or specialty retailers, franchise models, or premium brands. BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) operates membership warehouse clubs. Its shares gained 14% after they reported better-than-expected comparable sales growth along with in-line revenues and earnings for their fiscal fourth quarter. Highlights of the quarter were increased membership and customer traffic.”
7. L3Harris Technologies Inc. (NASDAQ:LHX)
Number of Hedge Fund Investors: 40
Jim Cramer recently commented on L3Harris Technologies Inc. (NASDAQ:LHX), noting that the company’s strength lies in its focus on high-tech and defense sectors, which are both strong long-term trends.
“L3 Harris remains strong due to its combination of high-tech and defense, two robust long-term trends. The previous CEO was someone I knew, and while I don’t know the current CEO personally, the company is still solid.”
In its Q2 2024 earnings report, L3Harris Technologies Inc. (NASDAQ:LHX) reported strong financial performance, with earnings per share (EPS) of $3.29 and revenue of $4.8 billion, reflecting a 5% year-over-year increase. This growth was driven by high demand for its space and airborne systems, especially in intelligence, surveillance, and reconnaissance (ISR) solutions, along with continued success in communication systems tied to military modernization.
L3Harris Technologies Inc. (NASDAQ:LHX)’s positive outlook is further supported by recent developments. The acquisition of Aerojet Rocketdyne, a leading propulsion systems provider, is expected to enhance L3Harris Technologies Inc. (NASDAQ:LHX)’s capabilities in space and missile defense, creating new growth opportunities and synergies.
Additionally, L3Harris Technologies Inc. (NASDAQ:LHX) secured a multi-billion-dollar contract with the U.S. Department of Defense for advanced communication and electronic warfare systems, reinforcing its critical role as a defense supplier and bolstering its revenue outlook with a strong backlog.
Here’s what L3Harris Technologies Inc. (NASDAQ:LHX)’s CFO, Kenneth L. Bedingfield, has to say in their latest earnings call:
“I’ll start with consolidated results for the quarter. Demand remains high, and in the second quarter we were awarded over $5 billion in new awards, resulting in a book-to-bill of $1.0, and total backlog of $32 billion. We were awarded a nearly $900 million contract for the delivery of electronic time fuses, which play a crucial role in replenishing our nation’s critical ammunitions inventory. We were also awarded a $1 billion IDIQ contract with an initial task order of $123 million to supply the next lot of multi-functional information distribution systems, jitters terminals to the U.S. Navy, leveraging the unique capabilities of the TDL product line that we acquired last year. Consolidated revenue grew 13% or 1% organically.
Operating margins continued to be strong, expanding to 15.6%, up 80 basis points, reflecting improved operational and program performance across all segments with LHX NeXt cost savings contributing. Chris highlighted our EPS growth of 9% as a result of strong operational performance. I’d like to add that on a pension-adjusted basis, second quarter EPS was up 13% as profitable growth drops to the bottom line. Free cash flow was 714 million for the second quarter driven by increased operating income and improved working capital performance. In the quarter, we repaid a $350 million note which helped reduce our net leverage to 3.2 times down from 3.5 times in the previous quarter. By segment, organic growth within our communication system segment was over 4% from higher production rates and deliveries of resilient communication products.” (Click here to see more…)
6. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Investors: 52
Jim Cramer recently shared his thoughts on Devon Energy Corporation (NYSE:DVN), highlighting his positive view on the company’s strategic acquisitions. However, he cautioned that with natural gas prices low and oil prices struggling to stay above $60, investors should temper their expectations about the stock’s short-term performance.
“I like Devon Energy, especially considering its strategic acquisitions. However, with natural gas prices low and oil prices struggling to stay above $60, don’t get overly excited about the stock’s immediate prospects.”
Devon Energy Corporation (NYSE:DVN), a leading U.S. independent oil and gas producer, is poised for continued growth thanks to its significant operations in major shale basins like the Delaware Basin, Eagle Ford, and Powder River Basin. The company’s Q2 2024 earnings report demonstrated strong performance, with earnings per share (EPS) of $1.56 and revenue of $4.6 billion, an 8% increase from the previous year. This growth was driven by a rise in production volumes to 325,000 barrels per day and favorable commodity prices. Devon Energy Corporation (NYSE:DVN)’s focus on efficient operations and high-margin assets has enabled it to maintain robust cash flow despite fluctuating oil prices.
Recent developments further support a positive outlook for Devon Energy Corporation (NYSE:DVN). Devon Energy Corporation (NYSE:DVN) has increased shareholder returns with a $0.72 per share variable dividend and a substantial share repurchase program, buying back about $500 million in shares during the quarter. These actions highlight Devon Energy Corporation (NYSE:DVN)’s strong financial health and confidence in its future. Additionally, Devon Energy Corporation (NYSE:DVN)’s disciplined approach to capital allocation—focusing on high-return projects and maintaining a conservative spending strategy—has resulted in a solid balance sheet with low net debt-to-EBITDA ratios.
5. Carvana Co. (NYSE:CVNA)
Number of Hedge Fund Investors: 61
Jim Cramer recently discussed Carvana Co. (NYSE:CVNA), highlighting its recent price movement. He noted that Carvana’s stock had experienced a “bad island reversal,” where the stock price surged and then dropped back down. Despite this, Cramer emphasized the potential strength of Carvana Co. (NYSE:CVNA)’s CEO, Ernie Garcia, stating that Garcia is a powerful force in the industry.
“Okay, today it had what’s known as a bad island reversal—went all the way up and then came back down. Now, I’ll tell you this: Ernie Garcia is kind of an unstoppable force, and as rates go lower, he will do even better. Do not buy this stock right here at 153. Let it come in. It’s been hanging here for a couple of weeks. If you can get this stock in the 140s, I would start picking some up.”
Carvana Co. (NYSE:CVNA)’s recent performance indicates a strong bullish outlook for the company. In Q2 2024, Carvana Co. (NYSE:CVNA) achieved a significant turnaround, reporting a net income of $48 million, a marked improvement from earlier profitability challenges. Carvana Co. (NYSE:CVNA) saw a 33% increase in retail units sold, reaching 101,440 units, and a 15% rise in revenue to $3.41 billion. These results highlight Carvana Co. (NYSE:CVNA)’s solid market position and its ability to scale effectively in the competitive used car market.
A standout achievement was Carvana Co. (NYSE:CVNA)’s record Adjusted EBITDA of $355 million with a 10.4% margin, setting a new benchmark for public automotive retailers. This reflects Carvana Co. (NYSE:CVNA)’s strong operational efficiency and successful execution of its strategies, including national vehicle acquisition, a proprietary fulfillment network, and an in-house lending platform.
Looking forward, Carvana Co. (NYSE:CVNA)’s management is optimistic, projecting full-year 2024 Adjusted EBITDA between $1.0 and $1.2 billion, a significant increase from the previous year. Carvana Co. (NYSE:CVNA)’s ongoing efforts to improve customer experience, expand inventory, and enhance logistics position it well for future growth. Carvana Co. (NYSE:CVNA)’s stock has surged over 180% year-to-date, showcasing strong investor confidence in its potential to capture a larger share of the still-developing automotive e-commerce market.
Here’s what Carvana Co. (NYSE:CVNA)’s CFO, Mark Jenkins, has to say in their latest earnings call:
“The second quarter was an exceptional quarter for Carvana and reinforce the significant and sustainable progress we have made and continue to make in our current multiyear phase of driving profitable growth. For the second consecutive quarter, we generated positive net income and we set new company records for adjusted EBITDA, adjusted EBITDA margin and GAAP operating income. For the first time, quarterly adjusted EBITDA margin approached the midpoint of our long-term financial model EBITDA margin range of 8% to 13.5%, and we see meaningful opportunities for fundamental gains to drive towards the higher end of that range over time. Moving to our second quarter results.
Unless otherwise noted, all comparisons will be on a year-over-year basis. Q2 again demonstrated the strength of our differentiated business model. Retail units sold increased 33% despite continued focus on unit economics and profitability initiatives as the strong demand we experienced in Q1 continued into Q2. Revenue increased by 15%. Revenue grew less than retail units, primarily due to industry-wide declines in retail and wholesale vehicle average selling prices. In Q2, our operational teams focused on increasing production capacity to increase selection to more optimal levels for our customers. The teams met their production targets in the quarter, but we still remain below our target available website inventory due to continued strong demand.
In the near term, we will continue to increase production across the country. Our strong profitability results in Q2 were driven by meaningful fundamental improvements in GPU and SG&A expenses. In the second quarter, non-GAAP total GPU was $7,344, an increase of $314 and a new company record. Non-GAAP retail GPU was $3,539, an increase of $677 and a new company record. Our strength in retail GPU continues to be driven by fundamental gains and consistent performance in several areas, including uveal cost of sales, customer sourcing, inventory turn times and revenues from additional sources. Year-over-year changes were also driven by higher spreads between wholesale and retail market prices, partially offset by higher retail depreciation rates and a lower retail inventory allowance adjustment.” (Click here to see more…)
4. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Investors: 69
Jim Cramer addressed concerns about Abbott Laboratories (NYSE:ABT) when asked by a viewer. He acknowledged the ongoing lawsuits, noting that there is one more expected to conclude in September, which will be in the same jurisdiction as a previous case where Abbott Laboratories (NYSE:ABT) faced a large verdict. Cramer anticipated that Abbott Laboratories (NYSE:ABT) might lose this upcoming lawsuit as well, but he still views Abbott positively because it is a strong company.
“Okay, I got the whole lawsuit thing down. We’ve got one more lawsuit that’s done in September. It’s going to be in the same jurisdiction as the bad one where they got the very big verdict. I think that verdict is going to be brought down. I think they’ll lose the next ones too, but we’re holding on to it for the trust. Why? Because Abbott’s a great company.
In the end, these are product liability suits—they are not mass tort actions like J&J. I think we’ll come out ahead of the game. They’ve got four great product lines that are selling fabulously. The market is still too overbought, people. We got too hopeful, so now we might need to take a brief respite. There’s nothing wrong with that—maybe little buyers’ remorse.”
Abbott Laboratories (NYSE:ABT)’s latest earnings report showed a 10.2% revenue increase, thanks to strong performance in diagnostics and medical devices. Abbott Laboratories (NYSE:ABT) also exceeded expectations for earnings per share (EPS), demonstrating effective cost management and operational efficiency. A major highlight is the launch of the AVEIR™ DR dual-chamber leadless pacemaker in Canada, which is set to enhance Abbott Laboratories (NYSE:ABT)’s position in the cardiac care market.
Additionally, the continued strong demand for Abbott Laboratories (NYSE:ABT)’s FreeStyle Libre system supports growth in its diabetes care segment. Abbott Laboratories (NYSE:ABT)’s solid financial health is backed by a promising pipeline of new products and reliable dividend payments, setting it up for sustained growth. Analysts are confident in Abbott Laboratories (NYSE:ABT)’s future, with a recent price target upgrade to $143 from Barclays adding to the positive sentiment.
Aristotle Atlantic Core Equity Strategy stated the following regarding Abbott Laboratories (NYSE:ABT) in its Q2 2024 investor letter:
“We sold Abbott Laboratories (NYSE:ABT) given the full valuation and the complexity of its combined businesses. While we like the company’s continuous glucose monitoring business FreeStyle Libre and its aggregate medical device business, we are less excited about the prospects for its nutritional business and established pharmaceuticals business. Recent news of a large jury award at an infant formula competitor has us concerned that the overhang of this litigation could be an ongoing negative for Abbott for some time.”
3. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Investors: 70
Jim Cramer recently discussed Starbucks Corporation (NASDAQ:SBUX) in response to a viewer’s question. He affirmed that Starbucks Corporation (NASDAQ:SBUX) is a good buy but advised patience. Cramer praised Brian Niccol, the new CEO who previously led Chipotle Mexican Grill, Inc. (NYSE:CMG), highlighting his impressive leadership qualities.
“Yes, Starbucks is a buy. Look, you’ve got to be a little more patient. Brian Niccol, who’s come from Chipotle, is fabulous. Will it go straight back to 100? No. Will it go to 92, 88? Now, it’s never going to be the same because Brian Niccol is that fabulous. CEOs matter. We tend to treat them as if they’re all the same—they’re not. Niccol’s the real deal. I like what he’s going to do.”
Despite facing a challenging Q2 2024, where Starbucks Corporation (NASDAQ:SBUX) experienced a 2% decrease in net revenue to $8.6 billion and a 4% drop in global comparable store sales, the company’s core strengths and strategic initiatives point to a positive outlook. Starbucks Corporation (NASDAQ:SBUX)’ strong brand and commitment to customer loyalty are reflected in a 6% increase in U.S. Starbucks Rewards memberships.
Starbucks Corporation (NASDAQ:SBUX)’s “Reinvention” plan, which includes opening 364 new stores and focusing on sustainability, positions it well for recovery and future growth. In addition to these efforts, Starbucks Corporation (NASDAQ:SBUX) has made several strategic moves to enhance its market position. The new partnership with Nestlé to introduce Starbucks-branded coffee capsules in emerging markets will broaden its global footprint. Starbucks Corporation (NASDAQ:SBUX) is also improving its digital platform to provide more personalized experiences through its mobile app.
Starbucks Corporation (NASDAQ:SBUX)’ investment in sustainability, with a target to reduce its carbon footprint by 50% by 2030, aligns with increasing consumer demand for environmentally friendly practices. These factors, combined with Starbucks Corporation (NASDAQ:SBUX)’ strategic expansion and strong brand loyalty, underscore its potential for future growth and make it an appealing investment opportunity.
Diamond Hill Select Strategy stated the following regarding Starbucks Corporation (NASDAQ:SBUX) in its Q2 2024 investor letter:
“Starbucks Corporation (NASDAQ:SBUX) is the global leader in the coffee industry. Given its significant scale, we believe Starbucks can maintain its average ticket growth and drive decent traffic growth, which should allow for some margin expansion. While macroeconomic and competitive pressures remain intense in China, the country accounts for a minimal percentage of today’s earnings, and we believe the current valuation embeds little to no contribution from China over the long term, which we view as too cynical. As the share price declined recently amid near-term concerns surrounding store sales in North America and China, we capitalized on what we considered an attractive entry point.”
2. Micron Technology Inc. (NASDAQ:MU)
Number of Hedge Fund Investors: 120
Jim Cramer recently addressed a viewer’s question about Micron Technology Inc. (NASDAQ:MU). He noted that Micron Technology Inc. (NASDAQ:MU)’s stock had fallen sharply but stabilized around $92 after the company announced a buyback program. Although Micron Technology Inc. (NASDAQ:MU) has recently declined again, Cramer suggested it might drop to around $98 or $99. He recommended considering buying more shares if the stock reaches that level.
“So, Micron Technology (MU) saw a steep decline, but after the company announced its buyback program, the stock stabilized around $92 before rebounding. It has recently come back down, and I think it could drop to around $98 or $99. At that point, I would consider buying more.”
Micron Technology Inc. (NASDAQ:MU)’s Q2 2024 earnings report shows strong financial health and efficiency. Micron Technology Inc. (NASDAQ:MU) saw a 12% increase in revenue and a notable rise in net income, reflecting its success in meeting the growing demand for memory and storage solutions. Micron Technology Inc. (NASDAQ:MU)’s $10 billion investment in U.S. production facilities highlights its commitment to boosting capacity and advancing technology, which should improve its market position and profitability.
Recent advancements in DRAM and NAND technologies position Micron Technology Inc. (NASDAQ:MU) well to address the increasing needs of sectors like AI and 5G, which are expected to drive significant growth. The positive outlook for the semiconductor industry further supports a favorable trajectory for Micron Technology Inc. (NASDAQ:MU)’s stock.
1. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Investors: 308
In a recent Mad Money episode, Jim Cramer explained that after Amazon.com Inc. (NASDAQ:AMZN)’s recent earnings report, which faced criticism due to weaker consumer sales and concerns about potential declines, the stock dropped to around $160. However, Cramer noted that Amazon.com Inc. (NASDAQ:AMZN) has since rebounded, suggesting that the initial negative forecasts were too pessimistic.
“When Amazon reported three weeks ago, the quarter was criticized, with sellers focusing on weaker consumer sales and management’s comments on potential declines. Critics viewed concerns over spending impacts from the news cycle as an excuse. Despite this, the stock, which fell to around $160, has rebounded, reflecting that the negative forecasts were premature.
Amazon is integral to my daily life, from receiving packages to using services like Instagram, Microsoft Outlook, and YouTube TV. Amazon’s ability to lower costs and improve efficiency is unmatched. The company continues to innovate and is not stationary. If Amazon dominates the essentials market, it could challenge local supermarkets and drugstores, given its scale and convenience. Additionally, Amazon Web Services remains a significant revenue driver and continues to strengthen.
Despite some recent tough shopping days, Amazon’s stock is worth buying into weakness. Tech giants often rebound from downturns, and buying them during these periods can be advantageous. While not as spectacular as Prime Day deals, it remains a strong opportunity.”
Amazon.com Inc. (NASDAQ:AMZN) achieved a 15% increase in revenue and a 33% rise in net income, reflecting successful business strategies and operational improvements. AWS plays a key role in Amazon.com Inc. (NASDAQ:AMZN)’s growth, with its revenue increase underscoring its leading position in cloud computing and potential for further expansion.
Amazon.com Inc. (NASDAQ:AMZN)’s advancements in e-commerce and logistics, such as automation and new delivery solutions, help it capture more of the online retail market and enhance customer experience. Amazon.com Inc. (NASDAQ:AMZN)’s focus on sustainability and climate goals also boosts its reputation and operational efficiency.
While we acknowledge the potential of Amazon.com Inc. (NASDAQ:AMZN), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
