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 FTAI Aviation Ltd. (NASDAQ:FTAI) 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 FTAI Aviation Ltd. (NASDAQ:FTAI) Is Too Expensive
FTAI Aviation Ltd. (NASDAQ:FTAI)
Number of Hedge Fund Holders: 33
FTAI Aviation Ltd. (NASDAQ:FTAI) is engaged in owning and acquiring aviation and offshore energy equipment to facilitate global transportation solutions. The Aviation Leasing segment focuses on acquiring and managing aviation assets, including aircraft and engines, which are subsequently leased and sold to various clients. On the other hand, its Aerospace Products segment is engaged in the development, manufacturing, repair, and sale of aircraft engines along with their aftermarket components. Cramer said:
“That stock is too hot for me. I would prefer to be in RTX… I understand this is a momentum stock. I’m not going to say people don’t play it, but it’s too expensive for me.”
While Cramer thinks the stock is too hot, it is worth taking into account that, on September 30, Jefferies analyst Sheila Kahyaoglu raised the price target on FTAI Aviation Ltd. (NASDAQ:FTAI) to $155 from $140 and kept a Buy rating.
The analyst’s projections indicate a potential EBITDA of $1.75 billion by 2026, based on the expectation of handling 750 CFM56 modules at a rate of $1.25 million per module, which is 40% higher than the target. Furthermore, an optimistic scenario of full factory utilization at 1,350 modules could lead to an EBITDA of $2.8 billion.
Moreover, recently, FTAI Aviation Ltd. (NASDAQ:FTAI) made a significant move by completing the acquisition of Lockheed Martin Commercial Engine Solutions, which includes a sizable 526,000-square-foot aircraft engine maintenance and repair facility located in Montréal, Québec.
The facility was obtained from Lockheed Martin Canada, marking an expansion in the company’s Maintenance, Repair, and Exchange (MRE) operations.
With this acquisition, it is better positioned to advance maintenance services offered to airline customers, aligning with its goals of growth in this sector. Integrating the maintenance capabilities of LMCES with those already present at FTAI’s QuickTurn facility in Miami, Florida, allows for increased operational capacity.
Together, these facilities can perform up to 1,350 CFM56 module overhauls and conduct over 500 engine tests annually. Following the acquisition, both facilities will adopt the FTAI Aviation brand, with the Montréal site being rebranded as FTAI Aviation Canada and the Miami facility as FTAI Aviation USA.
Next Century Growth Investors, LLC stated the following regarding FTAI Aviation Ltd. (NASDAQ:FTAI) in its Q2 2024 investor letter:
“FTAI Aviation Ltd. (NASDAQ:FTAI) is an aftermarket aerospace company focused on engine repair and maintenance for commercial airlines. They have carved out a strong competitive position in the CFM56 engine, which is one of the largest commercial aftermarket opportunities, and they recently added the V2500 engine to their addressable market. We believe the aerospace aftermarket will continue to experience strong demand, allowing FTAI to deliver strong revenue and profit growth.”
Overall, FTAI ranks 8th on our list of stocks discussed by Jim Cramer during the latest lightning rounds. While we acknowledge the potential of FTAI 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 FTAI 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.