In this article, we’ll explore Cramer’s Morning Thoughts: 20 Stocks to Watch.
In a recent episode of Mad Money, Jim Cramer explains that if you’re investing with real money, not just playing a simulation like a stock market game, it’s essential to open a real investment account. Reflecting on his own experience from 1979, he recalls that there were no online accounts back then. Since he already had some money in a Mellon Fund account through Fidelity, he decided to open his individual stock account with them as well.
In the early days of his investing journey, Cramer admits he didn’t have a clear source for stock ideas, so he turned to Forbes, a magazine he trusted. One article caught his eye about American Agronomics, a promising orange-growing company in Florida. It looked like a good opportunity, so he invested in 10 shares. Unfortunately, disaster struck when a frost destroyed the crops, slashing his investment in half. Cramer likens this experience to the storyline of the movie Trading Places. While the loss was painful, he emphasizes that it didn’t crush his determination to keep learning and investing.
“At first, I didn’t know where to look for stock ideas, so I turned to a magazine I liked, Forbes. No offense to Forbes, but I read an interesting article about American Agronomics, a compelling orange grower in Florida. It seemed like a solid pick, so I bought 10 shares. Later, a frost hit, wiping out the crops and cutting my investment in half— a bit like the plot of Trading Places, if you’ve ever seen that classic Eddie Murphy movie. I was devastated but not defeated.”
Jim Cramer’s 1st Investment Lesson: Know What You Own
Jim Cramer shares a story about one of his early investing experiences. After suffering a loss on his previous investment, he sold off his remaining shares and used the leftover money to buy seven shares of Bobby Brooks, a clothing company recommended by Forbes. Unfortunately, the company reported poor financial results, and Cramer lost even more money. At the time, he had a stable job at American Lawyer magazine, earning $20,000 a year, and was living in a small, affordable studio apartment. This low cost of living allowed him to quickly rebuild his stock portfolio despite his earlier losses.
During his work travels, Cramer once had a great breakfast at Bob Evans Farms and discovered the company was publicly traded. Intrigued, he returned to New York and went to the Midtown Manhattan Public Library, where he studied everything he could find about Bob Evans Farms and compared it with other companies in the same industry. Based on this research, he bought 20 shares of the company. His investment paid off when the stock rose after a strong financial quarter and a stock split. Through this experience, Cramer learned an important lesson: “Know what you own.”
“During my travels for work, I once had an amazing breakfast at Bob Evans Farms and learned that the company was publicly traded. When I returned to New York, I visited the Midtown Manhattan Public Library, read everything I could about Bob Evans, and compared it with other companies in the industry. Armed with that research, I bought 20 shares. The stock rose immediately following a good quarter and a stock split. That’s when I learned my first key investment lesson: know what you own.”
From Childhood Curiosity to Financial Empire: The Rise of Jim Cramer
Jim Cramer shared that his passion for stocks didn’t ignite in adulthood after law school or college, or even in high school. It started much earlier, back in the fourth grade. According to him, his father would bring home the Philadelphia Bulletin, one of the largest newspapers in the country at the time. While most kids would eagerly flip to the comics or sports section, Jim was a huge Phillies fan, he found himself intrigued by something else. Curiosity got the best of him.
The business section of the paper, full of lists of names and numbers, looked like an indecipherable code compared to the baseball stats he regularly pored over. Terms like “open,” “range,” and “close” didn’t make any sense to him, so he asked his dad, who had some experience dabbling in the stock market.
His dad encouraged him, and Jim began tracking stock names he heard on the radio, keeping a record of their daily performance in a ledger. For him, it became a fun game of prediction, much like analyzing baseball stats. He didn’t know much about the companies he was tracking, many were defense stocks that were performing well due to the Vietnam War, but it didn’t matter. The thrill of figuring out the next move kept him hooked.
The Stock Game
Not long after, Jim introduced this “stock game” to his fifth-grade class during show-and-tell, showing off his ledger and inviting his classmates to join in the fun. Though not everyone was interested, the lesson was clear: starting early can ignite a lifelong interest. For Cramer, this early exposure to the stock market became the foundation of his love for investing.
“Fast forward a bit, and I introduced this “stock game” to my fifth-grade class during show-and-tell, showing off my ledger and challenging my classmates to play. Not everyone was into it, but the lesson here is clear: get them started early. That’s how I fell in love with the stock market.”
Jim Cramer’s takeaway from his childhood stock obsession is simple: start young. The stock market is a long-term game, and the earlier you get involved, the higher your chances of winning will get.
Our Methodology
This article delves into Jim Cramer’s latest Morning Thoughts posts which list the top stocks Cramer’s watching before the markets open. After going through his posts, we sorted the picks from his watchlist by hedge fund sentiment. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
At Insider Monkey we are obsessed with 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’s Morning Thoughts: 20 Stocks to Watch
20. On Holding Ag (NYSE:ONON)
Number of Hedge Fund Investors: 34
On Holding Ag (NYSE:ONON), the sneaker and sports apparel company, was upgraded by Bank of America from an “underperform” rating to “neutral” after the company showed strong revenue growth.
“Sneaker and sports apparel company On Holdings was upgraded to neutral from an underperform sell rating at Bank of America after revenues accelerated.”
On Holding Ag (NYSE:ONON) saw a 28% rise in net sales, reaching CHF 567.7 million, and a substantial jump in net income to CHF 30.8 million, up from CHF 3.3 million in Q2 2023. This growth reflects the brand’s strong momentum, particularly in the Americas and APEC regions, where sales skyrocketed by 73.7%. Additionally, the apparel segment saw a 63% increase in net sales.
On Holding Ag (NYSE:ONON)’s commitment to innovation is evident with the introduction of technologies like LightSpray and upcoming launches such as the Cloudboom Strike and Cloudsurfer Next, positioning the company for long-term growth. Management remains confident about achieving at least 30% net sales growth for the full year (in constant currency), along with an adjusted EBITDA margin of 16-16.5%.
On Holding Ag (NYSE:ONON)’s strong brand presence is further boosted by partnerships with high-profile figures like Zendaya and its involvement in major events like the Olympics. While facing some supply chain and warehouse capacity issues, On Holding Ag (NYSE:ONON)’s focus on expanding its direct-to-consumer business helps mitigate these challenges and sets the stage for continued growth.
Artisan Small Cap Fund stated the following regarding On Holding AG (NYSE:ONON) in its first quarter 2024 investor letter:
“We initiated new GardenSM positions in On Holding AG (NYSE:ONON) during the quarter. On is an emerging global athletic sports brand focusing on performance footwear. Performance running footwear is one of the most challenging categories to break into, requiring a high degree of technical knowledge, significant investment spending and marketing prowess, each of which On has acheived over the years. The company’s foundation in performance footwear provides a high barrier to entry and a strong and credible foundation for the brand to continue growing. We believe On will generate attractive growth as it scales across product categories, channels and geographies within the $300 billion global sportswear market.”
19. Keurig Dr Pepper Inc. (NASDAQ:KDP)
Number of Hedge Fund Investors: 41
Citi upgraded Keurig Dr Pepper Inc. (NASDAQ:KDP) to a “buy” rating, citing improved coffee sales in the U.S. as the driving factor. The stock was highlighted in Cramer’s recent Morning Thoughts post.
“Citi upgrades Keurig Dr Pepper to buy on improving U.S. coffee sales.”
Keurig Dr Pepper Inc. (NASDAQ:KDP) offers a strong investment opportunity, backed by positive financial trends and strategic initiatives detailed in its Q2 2024 earnings report. Keurig Dr Pepper Inc. (NASDAQ:KDP) reported net sales of $3.92 billion, marking a 3.5% increase from the previous year, and earnings per share (EPS) of $0.45, which aligns with analysts’ expectations, demonstrating operational stability.
A standout aspect of Keurig Dr Pepper Inc. (NASDAQ:KDP)’s performance is its international segment, which saw net sales rise by 15.5% and operating income grow by over 30%. This growth was fueled by increased sales volume and successful market penetration outside the U.S., positioning Keurig Dr Pepper Inc. (NASDAQ:KDP) to take advantage of global opportunities.
Keurig Dr Pepper Inc. (NASDAQ:KDP) also improved its operating margin through productivity savings and careful cost management, achieving a 130 basis point increase in gross margin. This enhancement boosts profitability even amid inflationary pressures. Keurig Dr Pepper Inc. (NASDAQ:KDP) continues to innovate, introducing new products like Dr Pepper Creamy Coconut and Canada Dry Fruit Splash, and has formed strategic partnerships with brands such as Electrolit and La Colombe to strengthen its presence in the premium beverage market.
Oakmark Equity and Income Fund stated the following regarding Keurig Dr Pepper Inc. (NASDAQ:KDP) in its Q2 2024 investor letter:
“Keurig Dr Pepper Inc. (NASDAQ:KDP) is one of North America’s leading beverage companies, with dominant positions in single-serve coffee and flavored soft drinks. The soft drink portfolio has an enviable track record of volume growth and market share gains. We believe this strong performance can continue well into the future thanks to favorable demographic trends, brand strength, and its unique distribution network.
Recently, the stock price came under pressure due to fundamental weakness in the Keurig coffee division. At-home coffee consumption is normalizing as people return to work, while price hikes are also weighing on demand. We believe these industry-wide challenges will prove transitory, as coffee remains a popular beverage across demographics.
Keurig is poised to capitalize on this demand with the largest installed base of single-serve brewers and ample runway to further increase household penetration. At the current quote, the market as cribes minimal value to Keurig. We were happy to purchase shares in this above-average business that is trading at a discount to the market, other beverage peers and private market transactions.”