We recently published an article titled, Jim Cramer’s Latest Lightning Rounds: 15 Stocks to Watch. In this article, we are going to take a look at where Crown Castle Inc. (NYSE:CCI) stands against other stocks discussed by Jim Cramer during the latest lightning rounds.
Recently on Mad Money, host Jim Cramer stressed the necessity of staying updated on economic indicators, government actions, and industry developments to make informed investment choices. He emphasized that speculation should be approached with the mindset of a “pro” rather than a novice. Cramer mentioned that while he does not oppose speculation, it must be done with an understanding of the risks involved. He remarked:
“Otherwise, if things go south, you’ll be caught playing a game of endless musical chairs, led by me getting a huge number of lightning round calls about some very sketchy outfits that all belong to what I call the hot money segment.”
Cramer provided insight into this hot money segment, describing it as a segment with limited capital that cannot satisfy all the demand. He specifically pointed to China, explaining that the current policies from the Chinese government have created an environment where, for the moment, it seems nearly impossible to incur losses. He elaborated that the government is actively subsidizing stock purchases and promoting buybacks and insider buying through liquidity support.
It has led to significant price movements in the market. When considering investments in Chinese stocks, Cramer advised caution, suggesting that investors should focus on companies capable of withstanding market fluctuations. He pointed out that many people are tempted to buy Chinese auto stocks, especially given their impressive advancements in electric vehicle technology. Nonetheless, he warned that the electric vehicle market is becoming increasingly saturated.
Cramer added that with the limited amount of hot money available, speculative stocks now face competition from cryptocurrencies. He expressed his belief that Bitcoin and Ethereum are the only cryptocurrencies with a good chance of recovery, dismissing most others as “junk”.
He shared that he only invests in these two digital currencies and avoids common stocks tied to the cryptocurrency market, deeming them too risky compared to Bitcoin and Ethereum, which benefit from exchange-traded products backing them. Cramer concluded by mentioning that speculation should be done wisely, saying, “With any speculative trade, there’s a beginning and an endpoint.”
Our Methodology
For this article, we compiled a list of 15 stocks that were mentioned by Jim Cramer during the lightning rounds of his episodes of Mad Money on October 4 and October 7. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 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).
Cramer Says Crown Castle Inc. (NYSE:CCI) Is ‘Just Okay’
Crown Castle Inc. (NYSE:CCI)
Number of Hedge Fund Holders: 38
Crown Castle Inc. (NYSE:CCI) operates as a significant player in the communications infrastructure sector, owning and managing over 40,000 cell towers and approximately 90,000 route miles of fiber that support small cell and fiber solutions throughout major markets in the United States. The extensive portfolio includes around 115,000 small cell nodes that are either operational or under contract, establishing a comprehensive network that links urban areas and communities to critical data and wireless services.
About the company, Cramer said, “Crown Castle is just okay. It’s not that well run. It’s got a decent yield of 5.6%. I would not chase the stock. It just had a nice move up. I don’t want to be there.”
Since entering the fiber market in 2015, Crown Castle Inc. (NYSE:CCI) has expanded its fiber operations through various acquisitions. Despite this growth, the high expenses associated with constructing fiber infrastructure have negatively impacted financial performance, leading the company to reconsider its approach to the fiber business and implement cost-cutting measures.
In light of these challenges, the company has been evaluating potential options for its fiber assets, particularly after reaching an agreement with activist investor Elliott Investment Management, which aimed at altering the company’s board structure.
Speculation surrounding its fiber and small cell assets intensified when Reuters’ report emerged about potential bids from EQT-backed Zayo and TPG, suggesting a valuation in the range of $8 billion to $10 billion.
On October 2, Wells Fargo kept an Equal Weight rating and $100 price target on Crown Castle Inc. (NYSE:CCI). The firm mentioned that expectations in the market were leaning towards a valuation exceeding $10 billion.
The firm mentioned that the reported figures falling short of these expectations contributed to a decline in share prices. The firm was not surprised by the lower-than-expected valuation, given recent assessments showing relatively limited demand for the company’s portfolio.
Aristotle Capital Management, LLC stated the following regarding Crown Castle Inc. (NYSE:CCI) in its Q2 2024 investor letter:
“We first invested in Crown Castle Inc. (NYSE:CCI), a provider of telecommunications infrastructure (including towers, fiber and small cells), in 2021. During our holding period, tenancy ratios for the company’s tower business increased. However, the company’s fiber and small cell business segments have yet to deliver the expected benefits from the 5G network transition. Additionally, the CEO of Crown Castle stepped down at the end of 2023, influenced by Elliott Investment Management, an activist investor. Concurrently, the company has initiated a strategic and operational review of its fiber segment to determine whether to pursue a turnaround or a complete/partial sale. Given the uncertainty surrounding the company’s business strategy and new management team, we decided to exit the investment. We will continue to monitor the company from the sidelines.”
Overall, CCI ranks 5th on our list of stocks discussed by Jim Cramer during the latest lightning rounds. While we acknowledge the potential of CCI 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 CCI 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. This article is originally published at Insider Monkey.
