We recently published a list of 10 Small-Cap Stocks Jim Cramer is Talking About Amid Latest Market Rotation. Since ATI Inc (NYSE:ATI) ranks 3rd on the list, it deserves a deeper look.
Recently Jim Cramer talked about the rally in the small-cap-heavy Russell 2000 Index, saying these kinds of rebounds show you have to “stay invested” in the market to make “big money.”
“When I say stay in I mean you have to be as invested as you possibly can be so you don’t miss monster moves.”
Cramer said the Russell 2000 index rally was led by several “oddball” stocks that many people aren’t aware of.
“The biggest winners in the Russell today are all the companies I either don’t know or I barely heard of. You know I know thousands of stocks!”
Cramer highlighted that almost half of the stocks rising in the Russell 2000 index were biotech or healthcare companies that are losing money. Cramer believes these companies might be worth something only “years from now” and called them “risky” stocks.
Jim Cramer talked about what he called “small- and medium-sized businesses” which he believes can benefit from two possible developments in the near term: a Trump win in the election and rate cuts. A Donald Trump presidency, according to Cramer, could provide a level-playing field for these small companies which often get left behind by major companies amid tough regulation. Since Trump is expected to decrease regulations if he comes to power, these small companies could thrive in this new environment. Cramer said that money is coming from the “sidelines” as investors begin to invest in stocks instead of hoarding cash to earn interest income.
Cramer has been talking about several small-cap stocks in his programs lately. In a recent program, he mentioned several small-cap stocks that were moving recently and briefly discussed their businesses. We picked these stocks and analyzed their fundamentals and growth potential. We also mentioned hedge fund sentiment around these stocks. 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).
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ATI Inc (NYSE:ATI)
Number of Hedge Fund Investors: 31
Jim Cramer called ATI Inc (NYSE:ATI) the “best specialty steel company on earth” including stainless and tungsten. Cramer said that much of the company’s steel is used in aerospace.
“I really like it. That’s a small cap you’d want.”
ATI Inc (NYSE:ATI) has revealed $4 billion in new sales commitments through 2040. Out of this, about $2.2 billion of this revenue will be realized by the end of this decade. Most of these contracts are for nickel alloys in the jet engine market.
At the start of the year, ATI Inc (NYSE:ATI) Advanced Alloys and Solutions segment faced demand headwinds but those were offset by strengths in High-Performance Materials and Components segment.
Some other headwinds ATI Inc (NYSE:ATI) is facing are related to 737 Max plans including technical errors and production rate reductions. But analysts believe strong demand in other business segments can offset these in the short term.
ATI Inc (NYSE:ATI) business of supplying specialty materials to major engine and airframe OEMs and is gaining market share all over the world, including Russia. Defense sales are also growing due to strong foreign military sales and new programs like the U.S. Army’s latest armored fighting vehicle.
Overall, ATI Inc (NYSE:ATI) ranks 3rd on Insider Monkey’s list titled 10 Small-Cap Stocks Jim Cramer is Talking About Amid Latest Market Rotation. While we acknowledge the potential of ATI Inc (NYSE:ATI), 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 ATI 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 is originally published at Insider Monkey.