Jim Cramer, host of Mad Money, shared his thoughts on factors that could lead to market growth in 2025, pointing out some key changes that could benefit investors. He expressed optimism about the shift in leadership at the Federal Trade Commission (FTC) and the Justice Department, particularly with the departure of current FTC Chief Lina Khan, whom he criticized for her harsh stance on large businesses.
“The brooming of Biden’s antitrust regulators as the FTC and the Justice Department, that will be fabulous, fabulous for the market.”
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According to Cramer, Khan’s approach was one of hostility toward any major business deal, regardless of the potential positive effects on the economy or on workers. He argued that with the removal of the old guard, a wave of deals could emerge that would help rationalize various industries.
This, in turn, would give smaller companies in sectors like banking, retail, entertainment, pharmaceuticals, and enterprise software a better chance to compete against larger corporations. Cramer was enthusiastic about the potential for these changes, stating, “Fantastic for the stock market. Just fantastic.”
Cramer also touched on an important issue in the market: a shortage of equities. He noted that the lack of available stock could lead to higher prices. He explained that mergers and acquisitions activity could help remove some of the available stock from the market, reducing supply and potentially driving up stock prices.
“Always remember the stock market is indeed a market and like any other market, when there’s not enough supply, you get higher prices.”
Moving on to the housing market, Cramer discussed the effects of overbuilding, like in Florida, where housing prices have been impacted. He explained that when mortgage rates rise, housing prices tend to drop. This price drop often leads to a wait-and-see approach from buyers, who hold out for even lower prices. As sellers grow more desperate, they typically lower prices further in a bid to move their properties.
“It’s called the cycle, although it hasn’t been operating normally for the last few years. I think 2025 will be the year the cycle reasserts itself and the Fed will win big on this one. Big enough to be able to cut rates slowly but cut nonetheless, which of course is what we need.”
7 Stocks on Jim Cramer’s Radar
Our Methodology
For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during an episode of Mad Money aired in January. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, 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).
7 Stocks on Jim Cramer’s Radar
7. Lazard, Inc. (NYSE:LAZ)
Number of Hedge Fund Holders: 19
A caller asked Cramer about Lazard, Inc. (NYSE:LAZ) and commented that as per their research, the company’s shareholders are “sitting prettier than owners of La-Z-Boys going into 2025”. Here’s what Cramer had to say:
“Absolutely. I’ve gotta tell you, I think Lazard’s really inexpensive… I think you’re absolutely right.”
Lazard (NYSE:LAZ) offers financial advisory services, including mergers and acquisitions and capital markets, along with asset management services. In the first nine months of 2024, the company’s financial advisory division saw net revenues reach $1,236 million, marking a 38% increase from $896 million during the same period in 2023. The firm also strengthened its financial advisory team by hiring 16 new managing directors specializing in areas such as restructuring, liability management, and capital solutions.
As reported by Reuters, the company ranked as the ninth most active investment bank globally in mergers and acquisitions during this period, based on fees, according to Dealogic data. According to The Banker, in a memo shared with the Lazard community in September 2023, CEO Peter Orszag outlined his vision for the firm’s long-term growth.
He expressed his ambition to double the company’s revenue by 2030 and increase total shareholder return by 10% to 15% annually through that same period. Additionally, he aims to make Lazard (NYSE:LAZ) more relevant to its clients.
6. Labcorp Holdings Inc. (NYSE:LH)
Number of Hedge Fund Holders: 28
While Cramer noted that at 15 times earnings, Labcorp Holdings Inc. (NYSE:LH) stock seems reasonable, he pointed out that the real issue lies in the healthcare sector itself, as investors these days have a reluctance toward healthcare stocks.
“You know, LabCorp did have a spike over Covid and that was about when I interviewed the CEO. I think the stock at 15 times earnings is fine, but the problem is it’s healthcare and people do not like the healthcare stocks. What can I say?”
Labcorp (NYSE:LH) offers a wide range of laboratory services, including routine and specialty tests such as blood analysis, genetic testing, disease-specific tests, and health services. During its last earnings call, Adam Schechter, Chairman and CEO, expressed confidence in the company’s momentum, noting positive progress in both its diagnostics and central laboratory business.
He highlighted that early developments are expected to drive growth in the fourth quarter and continue into 2025. Schechter also referred to the company’s long-term outlook, which anticipates organic revenue growth of 3.5% to 5.5%, along with an additional 1.5% to 2.5% from inorganic growth. He emphasized that Labcorp (NYSE:LH) remains on track and is entering 2025 with significant momentum and strength.
5. Nucor Corporation (NYSE:NUE)
Number of Hedge Fund Holders: 32
Cramer noted that Nucor Corporation (NYSE:NUE), a major manufacturer and supplier of steel products, is being hurt by China dumping steel.
“I thought Nucor was bottoming. It’s been very, very tough to own this great steel maker. I really gotta see what, look, the material stocks are all weaker and there’s a lot of dumping of steel from China, yet they, all they do is hack and dump and hack and dump and they get away with it. So that’s what’s hurting the stock.”
Nucor (NYSE:NUE) reported its full-year 2024 earnings on January 28. Its consolidated net earnings attributable to Nucor stockholders are $2.03 billion, or $8.46 per diluted share. It shows a significant decline from the previous year, where net earnings totaled $4.53 billion, or $18.00 per diluted share. The company’s consolidated net sales for 2024 amounted to $30.73 billion, marking an 11% decrease from $34.71 billion in 2023.
Nucor (NYSE:NUE) also reported that the total tons shipped to external customers in 2024 were about 24,767,000 tons, a 2% drop compared to the previous year. Additionally, the average sales price per ton decreased by 10% from 2023.
4. PENN Entertainment, Inc. (NASDAQ:PENN)
Number of Hedge Fund Holders: 37
PENN Entertainment, Inc. (NASDAQ:PENN) offers integrated entertainment, sports content, and casino gaming, and it provides online sports betting and iCasino services under various brands. Here’s what Mad Money’s host had to say about it:
“No, I don’t like Penn Entertainment. They, yeah, you know, a new broom needs to sweep clean there. Let me tell you.”
On January 24, Barclays increased its price target on PENN Entertainment (NASDAQ:PENN) to $23 from $22 and maintained an Overweight rating on the stock as part of a Q4 preview for the gaming industry. While the analyst expects Vegas, Macau, and digital sectors to potentially underperform, this appears to be already factored in, and “beaten-down regionals” may surpass low expectations, offering hope for modest growth. The firm expects positive Q4 gaming reports for regional operators.
Additionally, as of the third quarter of 2024, PENN Entertainment (NASDAQ:PENN) reported a total liquidity of $1.8 billion, which includes $834 million in cash and cash equivalents. The company has no debt maturities until 2026 when its $330 million convertible notes are due.
Looking ahead, the company expects to continue generating positive free cash flow in 2025 and beyond, with the Interactive segment anticipated to make a significant contribution to adjusted EBITA by 2026. Additionally, four retail growth projects are slated for completion by the first half of 2026, which should further support the company’s financial performance.
3. The AES Corporation (NYSE:AES)
Number of Hedge Fund Holders: 47
When asked about The AES Corporation (NYSE:AES) by a caller, Cramer remarked, “What is that, 5% yield? It’s down way too low. I think it’s time to pick up that utility.”
AES Corporation (NYSE:AES) is a diversified power generation and utility company that owns and operates power plants and utilities, using various fuels and technologies to generate and sell electricity. During Q3 2024, the company secured long-term contracts for 2.2 gigawatts of renewables and new data center load growth within its U.S. utilities. During this period, it also completed the construction of 1.2 GW worth of new projects, as reported by AES President and CEO, Andrés Gluski.
Additionally, the company made significant progress toward its asset sale target, closing or announcing transactions for nearly three-quarters of the $3.5 billion in asset sales it plans to complete by 2027. The company reaffirmed its 2024 guidance for adjusted EBITDA in the range of $2.6 to $2.9 billion, although it noted that it would likely be toward the lower end of this range due to the impact of extreme weather in Colombia and reduced margins in its Energy Infrastructure segment.
Despite this, AES Corporation (NYSE:AES) maintained its annualized growth target for adjusted EPS, expecting a 7% to 9% increase through 2025, based on a 2020 base year. The company also reiterated its growth target for adjusted EPS from 2023 guidance of $1.65 to $1.75, projecting a 7% to 9% increase annually through 2027.
2. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 106
Cramer mentioned one of the leading global pharmaceutical companies, Eli Lilly and Company (NYSE:LLY), during the Mad Money episode and said:
“Okay, the problem with Eli Lilly is people are saying, you know what, after a year, people are no longer taking the drugs, they’re going off it, a huge percentage’s going off it. I think that you own this thing because it’s about cardiac… It’s about high blood pressure. It’s about dementia, may even be about cancer, not just about weight and diabetes. So I think you hold on to Eli Lilly. We continue to hold it for the trust. I do think there’ll be good numbers, but that last quarter wasn’t good. I totally understand the trepidation about the stock, but I still like it.”
Toward the mid of January, Cramer discussed Eli Lilly’s (NYSE:LLY) stock drop, noting that the company had projected $58 to $61 billion in revenue for the coming year, driven by its GLP-1 drugs for diabetes, weight loss, and obstructive sleep apnea. However, its fourth-quarter results fell short of Wall Street’s expectations. Despite this, Cramer saw the drop as a buying opportunity, particularly due to Mounjaro’s potential in treating a wide range of conditions.
He acknowledged challenges with the drug’s launch but remains optimistic about its long-term prospects. Cramer also highlighted political factors affecting the company, including criticism of GLP-1 drugs from Robert Kennedy Jr. Despite some short-term concerns, he believes in Eli Lilly’s (NYSE:LLY) future potential and recommended buying the stock.
1. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 136
Cramer suggested to take advantage of the dip and buy Uber Technologies, Inc. (NYSE:UBER).
“I want you to buy more Uber. I know it’s up two bucks today, but I think it’s really down way too much.”
Uber (NYSE:UBER) develops technology for mobility, delivery, and freight services, linking consumers with transportation options, enabling retailer deliveries, and managing a digital logistics platform for shippers and carriers. About the company, Cramer also commented:
“Despite the selloff we got last quarter, there were some huge positives in this quarter if you listened to the conference call. Although Uber’s stock has started rebounding in the new year… It’s still darned cheap versus its growth rate, and I think you’re getting a great chance to buy it at a discount. That’s right, the stock of Uber is a buy.”
Cramer acknowledged the long-term potential of Waymo and Tesla’s robotaxi plans but emphasized that Uber’s (NYSE:UBER) current prospects are strong, downplaying concerns about the distant future.
While we acknowledge the potential of Uber Technologies, Inc. (NYSE:UBER) 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 UBER but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
