Jim Cramer, host of Mad Money, made a compelling argument on Monday that parents should begin investing for their children as soon as they are born. He emphasized that whether parents choose index funds, individual stocks, or a combination of both, it is important to start early.
Cramer pointed out that there are many factors to consider when making investment decisions, especially age suitability. He advised parents to set up accounts for their kids or, at the very least, provide them with shares of stock as soon as possible. The goal is to begin the saving process from day one. He added:
“I’m talking about index funds, which aren’t perfect, but they’re the best way to go if you want to put your money on autopilot and you can’t spend a lot of time looking at individual stocks… I’m partial to cheap ETFs that mirror the S&P 500 because those 500 stocks represent the bedrock of America’s publicly traded companies.”
READ ALSO 13 Stocks Jim Cramer Recently Talked About and Jim Cramer’s Thoughts On These 8 Stocks and the Packaged Goods Playbook
He explained that, when investing for an infant, there is plenty of time for the money to grow, with compounding offering significant long-term benefits. As Cramer put it:
“You’re buying for an infant who’s got their whole life ahead of them, their whole life. These kinds of things can really compound over time, meaning if you let it run, then money can build up on itself.”
When discussing what stocks to pick for a newborn, Cramer suggested two types of investments: those with dividends, which can be reinvested to take advantage of the compounding effect, and growth stocks which have the potential for higher returns over time. He recommended selecting well-known names that offer both dividends and growth potential, as they can provide a balance of stability and upside.
For parents looking to open an investment account for their children, Cramer recommended setting up a Uniform Gift to Minors Act (UGMA) account. As children grow older, Cramer stressed the importance of involving them in the investing process.
“I think you should do everything in your power to get your kids involved in investing in stocks, teaching that stocks represent pieces of companies that they might like.”
However, he acknowledged that teenagers can be tough to engage when it comes to topics like stocks. “Teenagers are incorrigible,” Cramer quipped, “The last thing they want to hear about is stocks.” As a result, he advocated for letting teenagers take the lead and choose stocks they are passionate about, rather than dictating what they should buy.
Cramer also observed that teenagers tend to avoid phone calls but are drawn to apps. In fact, he noted that delivery apps, which he initially did not understand, have completely transformed the way we shop and interact with technology. Cramer reflected on how products designed for tech-savvy users were not targeting older generations like him, but now, those same apps dominate the market.
“Bottom line: Please buy your kids a few shares in a name brand that they know and you know. Something they can see and hear and touch then put it away.”
Our Methodology
For this article, we compiled a list of 17 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on February 10. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
17. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Cramer discussed that teenagers’ likes and dislikes can be used to guide their investment choices. Talking about his kids discovering and liking tech before he did, Cramer mentioned Amazon.com, Inc. (NASDAQ:AMZN) and said, “No, FAANG wasn’t purely their creation. I figured out Amazon.”
Amazon (NASDAQ:AMZN) provides a wide range of services, including e-commerce, advertising, and subscription-based offerings. Around a week ago, Cramer discussed the company’s recently released earnings report and said:
“Next up, Amazon. Now, they reported a really great number tonight with better than expected sales, up 10% year over year, monster 37 cent beat off a $1.49 basis. Top line beat was driven by the core e-commerce business with the company calling this past holiday season the most successful yet for Amazon. But all three of the company’s segments beat operating income expectations for the quarter.”
16. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 121
Discussing his children’s partiality toward technology, Cramer mentioned Netflix, Inc. (NASDAQ:NFLX) and remarked:
“… That’s all digital now. My kids get their news from their iPhones and they get their entertainment from Netflix.”
Netflix (NASDAQ:NFLX) is a global streaming service offering a diverse selection of movies, TV shows, and original programming to millions of subscribers worldwide. In December 2024, Cramer was bullish toward Netflix as he mentioned professionals’ and viewers’ sentiments toward the company and its streaming service.
“Next up, Netflix. What the heck were we thinking when we didn’t own Netflix? Is there a week that goes by where we don’t talk about a Netflix show? The big linear TV networks like to do expensive shows about fires and hospitals and police… It’s been their formula since the 1970s. They just keep doing the same thing, failing each year. But Netflix, they come up with things like Jake Paul versus Mike Tyson and it did huge viewership numbers… Millions of people watched it… We watch all sorts of… programs from other countries because we’ve been taught by Netflix to like subtitles. It’s insane how good this company is…
And yet Wall Street doubted Netflix the whole way when it came to the new ad-supported subscription tier. They didn’t get it perfect right out of the box and… many of these who followed the company presumed it was a bust. Oh, it was hardly a bust and it’s just gonna get bigger and bigger. It’s easy to say, of course, that… anyone could have had it. But those who spend their lives examining this company thought otherwise.”
Cramer then noted that professionals, who have a more cautious approach to investments, advised staying away from the stock, especially due to the high P/E multiple, with Netflix (NASDAQ:NFLX) previously trading at 50 times earnings, which some consider too steep. However, Cramer pointed out that the professional community’s doubts did not align with the views of regular investors.
Cramer noted that the “home gamers,” who are more enthusiastic about Netflix, have seen the stock rise significantly. Despite the valuation concerns, he said that it seems that the general public’s love for the company has outweighed those worries, driving its strong performance. Over the last year, Netflix (NASDAQ:NFLX) stock rose over 80%.
15. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 202
Alphabet Inc. (NASDAQ:GOOGL) is among Cramer’s kid-friendly stock picks. While recounting technology’s integration into his kids’ lives, Cramer briefly mentioned the company, and said, “What else? Fabulous. Google it, dad. Yeah, that’s how I found out about Google, now Alphabet.”
Alphabet (NASDAQ:GOOGL) offers a range of products and services, including ads, cloud solutions, AI, devices, and various digital platforms like Google Search, YouTube, and Google Maps, along with enterprise tools and healthcare-related services.
Oakmark Equity and Income Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q4 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOGL) was the top contributor during the quarter. Despite ongoing litigation with the Department of Justice in its antitrust case, the U.S.-headquartered interactive media and services company’s stock price rose after posting solid third-quarter earnings. In the Search division, the company generated low-teens year-over-year revenue growth and management highlighted that they’re seeing strong user engagement with their new AI Overviews feature. The biggest upside surprise came from the Cloud division, where revenue growth accelerated to 35% and margins reached a record of 17%. This performance was driven by client demand for AI Infrastructure and Generative AI Solutions as well as core Google Cloud Platform (GCP) products. We continue to believe Alphabet is a collection of great businesses that can unlock further value over the long term through its world-class AI capabilities.”
14. Domino’s Pizza, Inc. (NYSE:DPZ)
Number of Hedge Fund Holders: 32
Cramer mentioned that Domino’s Pizza, Inc. (NYSE:DPZ) targets and attracts young people and is among his kid-friendly stock recommendations because of how the company employs technology.
“Hey, that’s why I got behind Domino’s so passionately for over a decade as the stock roared higher before peaking at the end of the pandemic like this, the other delivery place. Sure, I met with Patrick Doyle the day he became CEO, stock was at 10 bucks. Yes, the stuff did taste like cardboard before he reformulated the pizza in 2010.
I loved that whole line of advertising and told you, I thought it was a good spec, so sure I recommended it. But that’s not what made this stock a Mad Money crown jewel. Nah, it was the technology… I was not like the target audience. That’s why I started calling Domino’s a tech company that sells pizza.”
Domino’s (NYSE:DPZ) is a globally recognized pizza chain offering a variety of menu items, such as pizzas, oven-baked sandwiches, pasta, chicken, wings, breads, desserts, and drinks. The company operates through U.S. stores, international franchises, and a supply chain segment.
13. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Holders: 69
Cramer noted that a major reason that Chipotle Mexican Grill, Inc. (NYSE:CMG) has been on his recommendation list is because his kids like the company’s products.
“Finally, there’s fast food… the incredibly well-run Chipotle if you want something a little more organic… How about Chipotle? The kids love the fresh and organic Chipotle salads… I recommended this stock from the low hundreds all the way to 2000, largely because they liked it so much.”
Chipotle (NYSE:CMG) owns and operates restaurants that serve a variety of food and beverages, including burritos, burrito bowls, quesadillas, tacos, and salads. Early February, when tariff chatter was at its peak, Cramer commented on the company, saying:
“Hey, even Chipotle, which could have a real avocado problem, did quite well today and they’re about to report their quarter tomorrow. Wow, this group made no sense to me at all. Tariffs can make dinners more expensive, but the market was indifferent because they’re domestic operations.”
12. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 60
McDonald’s Corporation (NYSE:MCD) is an internationally recognized brand that owns and franchises restaurants offering a diverse selection of food and beverages. As Cramer talked about individual stocks for children, he said, “Finally, there’s fast food. McDonald’s is obvious.”
At the beginning of February, Cramer mentioned McDonald’s (NYSE:MCD) and noted, “There’s some real crazy stuff that happened today. If you offered a value meal, your stock went up higher. Brinker, Darden, Dutch Bros, McDonald’s, Starbucks, they all moved higher.”
Carillon Tower Advisers stated the following regarding McDonald’s Corporation (NYSE:MCD) in its Q3 2024 investor letter:
“McDonald’s Corporation (NYSE:MCD) performed well as it met the expectations of investors looking for improvements in relative market share trends. The company’s introductions of menu items at premium- and medium-price tiers are picking up pace, allowing it to capture value more effectively.”
11. Kimberly-Clark Corporation (NYSE:KMB)
Number of Hedge Fund Holders: 45
Including Kimberly-Clark Corporation (NYSE:KMB) among stocks that are smart investment options for kids, Cramer said:
“There’s a good company, Kimberly Clark. These are things we aren’t even taught, they’re imprinted.”
Kimberly-Clark (NYSE:KMB) is a leading manufacturer of personal care and tissue products, providing a variety of goods such as disposable hygiene items, facial tissues, paper towels, and professional hygiene products. Cramer laid out his packaged goods playbook a few days ago and noted, “Kimberly-Clark gave you a pretty darn good report last week, but people still weren’t happy. It goes on and on.” Over the past 12 months, the stock gained a modest 9.98% at the time of writing.
10. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 81
Johnson & Johnson (NYSE:JNJ) was among Cramer’s choice of stocks that are kid-friendly and he stated:
“I don’t know about Johnson & Johnson’s band-aids and shampoo. They were staples and they’ve since been moved to Kenvue. I knew then as well as I know now that Kleenex is something you use to wipe your nose.”
Johnson & Johnson (NYSE:JNJ) is a healthcare company engaged in the research, development, manufacturing, and marketing of a diverse range of healthcare products. Before the company reported its earnings in January, Cramer remarked:
“The market has turned against these kinds of stocks viciously. Too slow growing. I think you can put either way though and make good money just by reinvesting their juicy dividends.
Doesn’t help that all pharma’s are under the microscope as President Biden rushed out a series of drugs that Medicare will try to get better prices for. This is the one part of the Inflation Reduction Act that actually reduces inflation at the expense of the drug companies.”
9. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 76
Cramer was bullish on The Walt Disney Company (NYSE:DIS) due to its various appealing offerings, including resorts, theme parks, and more.
“And then there were the real easy ones. What kid doesn’t wanna go to Disney World? It’s that factor and not how many people sign up for the streaming service that will always drive me back to the stock. The Disney Library alone should be enough to make you wanna own shares in the company. But the theme park, I mean, come on, let’s not outthink this game.”
Disney (NYSE:DIS) is an entertainment giant that produces and distributes film and television content, offers streaming services, and operates theme parks and resorts globally, while also providing sports entertainment and live event services. A few days ago, the company posted its first-quarter earnings for fiscal 2025.
Disney (NYSE:DIS) reported a 5% increase in revenue for Q1 fiscal 2025, reaching $24.7 billion, along with a 27% rise in income before taxes to $3.7 billion. Diluted EPS grew by 35%, reaching $1.40, while segment operating income increased by 31%, totaling $5.1 billion.
8. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 30
Cramer, discussing that kids should be advised to invest in stocks of companies that they are familiar with, mentioned General Mills, Inc. (NYSE:GIS) and commented:
“We had a box of Cheerios on our breakfast table every day of our lives. We could have bought General Mills. What a fantastic stock.”
General Mills (NYSE:GIS) produces and sells a variety of branded consumer food products, such as cereals, snacks, meal kits, frozen foods, and pet food. In December 2024, Cramer highlighted a probable problem that the company might face under the new administration and said:
“General Mills, which caught an upgrade today thanks to accelerating pet food sales. Actually, I’m more worried about sugar cereal and I say that having interviewed incoming Health and Human Services Secretary-designate Bobby Kennedy (Robert F. Kennedy Jr.) on the floor of the New York Stock Exchange yesterday. I think that his chief objective is not vaccines, it’s healthier eating and he seemed to confirm that yesterday when I spoke with him. If that’s the case, then General Mills could be in trouble because, well, sugared cereal is a major profit generator for the company.”
Since the election’s outcome became known, General Mills (NYSE:GIS) stock declined over 10%.
7. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 82
Discussing 3M Company (NYSE:MMM), Cramer said:
“Can you imagine if my father had bought shares in a nice dividend stock for me, 3M, rather than national video… In retrospect, I learned the most about stocks from two 3M board games. Yes, they used to have board games. Those board games were called Acquire and Stocks & Bonds.”
3M Company (NYSE:MMM) offers a wide range of technology solutions, including industrial products, transportation and electronics materials, safety equipment, and consumer goods such as home cleaning items, bandages, and stationery. Earlier in February, Cramer noted the company’s journey, containing challenges for some time, which led to the company making a reappearance in the market.
“Well, let’s start with the year’s biggest winner so far, 3M. This one’s [a] fabulous conglomerate, used to have new products that… created entire markets out of nothing… but then 3M got caught up in forever chemical lawsuits that wouldn’t go away. I was appalled, by the way, at the disclosure of these because they were buried in footnotes when a former CEO retired. Then the new CEO, Mike Roman came in…
Now, in May of ‘24, Bill Brown, former CEO of L3Harris, took over 3M. This guy’s known as an incredibly tough hombre, a guy who’s in a hurry to get things done. I think that the old 3M, one that my father once worked for, is back. I await the innovations that will remind me of the halcyon days when this company used to be known as Minnesota Mining and Manufacturing. In the meantime, Wall Street’s getting reacquainted with 3M and the market increasingly likes what it sees. I know, I gotta tell you, I think it’s terrific.”
6. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 235
Cramer mentioned that Meta Platforms, Inc. (NASDAQ:META), formerly Facebook, Inc., stayed relevant with teenagers and penetrated the lives of its users.
“At the same time, you also want to give your kids something with a little more juice like the great growth stocks of an era. I mean, I’m talking about the, the Apples, the, the NVIDIAs, the Teslas, the Metas…My kids were on Facebook earlier. My youngest got sick of Facebook early on probably because I got on it. But then she went on to Instagram, which Facebook cleverly acquired and then kept as something separate. So you really didn’t know it was part of something that older people had discovered.
I didn’t think the ads worked until we were inundated with Red Hot Chili Pepper merchandise bought on a click for something that, as my daughter said, wasn’t an ad, just a link… But it seems that only Mark Zuckerberg has the forethought to care about the user experience to such an extent that it works. Because the ads actually make sense, you do wanna click on them.”
Meta (NASDAQ:META) develops products that enable global connections through apps like Facebook, Instagram, Messenger, and WhatsApp, as well as augmented and virtual reality hardware, software, and content.
5. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Discussing stocks that would be good choices for newborns, Cramer listed Tesla, Inc. (NASDAQ:TSLA) among “great growth stocks”.
“At the same time, you also want to give your kids something with a little more juice like the great growth stocks of an era. I mean, I’m talking about the Apples, the, the NVIDIAs, the Teslas, the Metas.”
Tesla (NASDAQ:TSLA) designs and manufactures electric vehicles and energy systems, offering a variety of services including vehicle sales, insurance, financing, leasing, and solar energy products, while also providing energy storage solutions and related services.
Aristotle Atlantic Partners, LLC stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) detracted from performance in the fourth quarter of 2024. The stock had a strong performance in the fourth quarter, and our portfolio has an underweight position relative to the benchmark weight. Tesla reported better-than-expected third quarter earnings in late October. Given the CEO of Tesla’s position as an advisor to President-elect Trump, performance in the shares accelerated following the U.S. presidential election. There are expectations that regulation for autonomous driving will be centralized with the federal government. There have been reports in the press that tax incentives for electric vehicles will be eliminated or reduced, which could have a negative impact on Tesla’s subscale competitors.”
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) was mentioned during the episode. Here’s what Mad Money’s host had to say:
“At the same time, you also want to give your kids something with a little more juice like the great growth stocks of an era. I mean, I’m talking about the Apples, the, the NVIDIAs, the Teslas, the Metas.”
NVIDIA (NASDAQ:NVDA), a dominant force in graphics, computing, and networking technologies, is fueling substantial growth with its GPUs and the CUDA software platform, both of which play an important role in AI infrastructure. Earlier in January, Cramer explained the company as he said:
“The stock was up 171% last year and also by the way, had a very strong close today of 4.3%. Of course, for a decent chunk of the year, there was a lot of worry about a late product and a fractured client base that wants to design its own chip because NVIDIA’s cost too much even if the return on investment’s really large here.
Believe me, if I thought anyone could touch NVIDIA’s products and platforms, I’d be happy to say, sell it and book the gain but I can’t justify that because this company’s peerless. Frankly, the biggest thing working against the stock is, well, the terrible way it trades, giving up huge clumps after making soft climbs. For any other company, I’d say abandon the stock, but NVIDIA’s products are too good, too indispensable and its CEO runs harder than anyone else I’ve ever met. I expect a great speech from Jensen Huang at CES next Monday.”
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Cramer, with the help of a personal example, explained that Apple Inc. (NASDAQ:AAPL) is attractive to teenagers and can make a good investment option for them.
“At the same time, you also want to give your kids something with a little more juice like the great growth stocks of an era. I mean, I’m talking about the Apples, the, the NVIDIAs, the Teslas, the Metas… Many of you know the story of how I got religion on Apple. Roughly 20 years ago, my youngest daughter asked for a second iPod… My various employers have never embraced Apple, but my kids for a long time, they’d rather be caught dead than use a Windows machine. They only wanted Macs.”
Apple Inc. (NASDAQ:AAPL) creates and sells a diverse array of consumer electronics, such as smartphones, computers, tablets, and wearables, as well as a variety of accessories and services. The company also provides subscription services.
2. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 58
Another good choice for young kids is PepsiCo, Inc. (NASDAQ:PEP) because of its dividend history according to Cramer.
“We often hear the term dividend aristocrats, companies that have long histories, certainly more than 25 years of increasing dividends. Love them. It’s hard to go wrong with the big well-run consumer packaged good plays. Here I’m talking about a company like tried and true Procter & Gamble, PepsiCo.”
PepsiCo (NASDAQ:PEP) specializes in the production, marketing, and distribution of various beverages and snacks, featuring well-known brands such as Lay’s, Gatorade, Pepsi, Doritos, Tropicana, and Aquafina. While Cramer picked the company as a kid-friendly investment, he did outline a few challenges PEP is facing a few days ago as he commented:
“The other day, PepsiCo got crushed on weaker than expected earnings… So take PepsiCo, I don’t know if people realize how excellent this company really is. The stock always carried a premium price to earnings multiple, meaning we’re willing to pay extra for its profits. They have terrific brands at Pepsi, Mountain Dew… FritoLay, the latter being one of the most dependable of all staples.
But now PepsiCo’s got a problem because FritoLay is not delivering the consistent numbers that it used to. Why? Management says it’s because younger generations fixate on health and there’s nothing particularly healthy about potato chips or Cheetos. They’ll buy smaller portions. That’s what their hope is. Me? Look, I’m sure that a part, that’s a part of it, but I do think that PepsiCo’s in somewhat of denial about the impact of GLP-1 weight loss drugs from Novo Nordisk, which reported a terrific quarter this morning, and Eli Lilly, which reports tomorrow.”
1. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 68
Cramer discussed that dividend aristocrats like The Procter & Gamble Company (NYSE:PG) are beginner-friendly investments and would work well for infants.
“We often hear the term dividend aristocrats, companies that have long histories, certainly more than 25 years of increasing dividends. Love them. It’s hard to go wrong with the big well-run consumer packaged good plays. Here I’m talking about a company like tried and true Procter & Gamble, PepsiCo.”
Procter & Gamble (NYSE:PG) offers a wide range of consumer packaged goods, including beauty, grooming, health care, fabric and home care, and baby, feminine, and family care products, under various well-known brands.
While we acknowledge the potential of The Procter & Gamble Company (NYSE:PG) 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. If you are looking for an AI stock that is more promising than PG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article was originally published at Insider Monkey.
