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 Shopify Inc. (NYSE:SHOP) 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).

Shopify Inc. (NYSE:SHOP)

Number of Hedge Fund Holders: 56

Shopify Inc. (NYSE:SHOP) is a leading global commerce company that provides a versatile platform and a suite of services designed to assist merchants in managing their businesses across various markets. Its platform allows merchants to display, market, and sell products through a multitude of sales channels, which include online and mobile storefronts, physical retail spaces, pop-up shops, social media platforms, native mobile applications, and various marketplaces. Merchants using the platform benefit from an array of tools designed to streamline operations.

When asked about the prospects of the stock, Cramer commented:

“… Yes, I think that Shopify is at a great level to buy. I think that Harley Finkelstein is doing a terrific job and the stock should be purchased here.”

As e-commerce continues to expand globally, Shopify Inc. (NYSE:SHOP) is well-positioned to capitalize on this growth. The company reported a gross merchandise value (GMV) of $67.2 billion in the second quarter, which is a year-over-year increase of 22%.

The company’s revenue for the same period reached $2 billion, driven by a mix of subscription fees, transaction-processing charges, and advertising revenue from its app store. The launch of financial services such as Shopify Payments and Shop Pay has proven particularly successful, with Shopify Inc. (NYSE:SHOP) processing $41.1 billion in payments during the second quarter, which accounted for approximately 61% of the total GMV.

Rowan Street Capital stated the following regarding Shopify Inc. (NYSE:SHOP) in its Q2 2024 investor letter:

“Shopify Inc. (NYSE:SHOP) has been an incredibly rewarding investment for those lucky enough to get in early after the company’s initial public offering (IPO) in 2015. The shares have delivered a return of 2,600% or 42% annual. Its revenues have grown at 49% per annum since the end of 2014 from $105 million to estimated $8.6 billion in 2024. The massive e-commerce market is a huge opportunity, as the company’s growth indicates. As you tell from the chart below, revenues are forecasted to grow above 20% for the next 3 years. Keep in mind, Shopify has been around for more than a decade — and it’s still growing at these high rates.

We have owned Shopify for only 2.5 years, establishing our position in the first quarter of 2022 at a cost basis of $60, after the stock collapsed from its highs of $169 in November 2021. In hindsight, our entry may have been a bit premature, as the stock continued to plunge, eventually reaching a low of $27 in October 2022. However, such market movements are inherently unpredictable, and we seized the opportunity to invest in a company we had long admired…” (Click here to read the full text)

Overall, SHOP ranks 2nd on our list of stocks discussed by Jim Cramer during the latest lightning rounds. While we acknowledge the potential of SHOP 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 SHOP 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.