We recently published a list of Jim Cramer Latest Portfolio Update: Top 10 Stocks. Since Fair Isaac Corp (NYSE:FICO) ranks 9th on the list, it deserves a deeper look.
Jim Cramer during his October 14 program on CNBC looked excited as he celebrated the rebound of major tech stocks, saying these companies are showing their “staying power” despite the odds.
“We’re back. That’s right. Whatever you want to call them, these big tech plays are demonstrating their staying power no matter what happens.”
Cramer said that the latest earnings season would be critical for the overall market and investor portfolios. He also pointed out the broadening of the rally, saying other groups besides the tech industry are also rebounding.
“This rally is not a zero-sum equation where the rest of the market does nothing. Other groups can work, too, in this market. There’s a lot of money going around, and we know there’s a lot of money coming into the market. The Fed is cutting rates, and friendly cash won’t be worth as much as it was. But the staying power of the Magnificent 7 is truly unbelievable.”
For this article we watched several latest programs of Jim Cramer aired on CNBC and picked 10 important stocks he’s talking about. With each company we have mentioned the number of hedge fund investors. 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).
20 New Technology Trends for 2024
Fair Isaac Corp (NYSE:FICO)
Number of Hedge Fund Investors: 43
Talking about Fair Isaac Corp (NYSE:FICO) in a recent program on CNBC, Jim Cramer said:
“The FICO score is universally used, and no competitor comes close to its predictive power. I believe Fair Isaac could be purchased even tomorrow morning, despite the stock being up 390% in the past year.”
Cramer also said he gives “full endorsement” to the company.
Fair Isaac Corp (NYSE:FICO) is the data analytics company behind the famous FICO score used by lenders to assess an individual’s creditworthiness.
The company has margins of about 85% to 90% in its core credit-scoring business. However, its performance was closely tied to the credit markets. If the credit markets slowed down, FICO’s quarterly results would reflect that decline, making the company vulnerable to market fluctuations. About five years ago, Fair Isaac Corp (NYSE:FICO) expanded its offerings by adding a software segment. This strategic move allowed the company to generate organic growth while maintaining the stability provided by its high-margin scores business. The combination of these two segments creates a robust dynamic for FICO, enabling high-quality and profitable growth.
Still, FICO’s unique position in the market is attributed to its mathematical scoring model, which, when combined with credit bureau data, produces the final Fair Isaac Corp (NYSE:FICO) score. This business-to-business (B2B) aspect accounts for a significant portion of FICO’s revenue. B2B clients, who purchase the FICO score, typically pass any price increases along to the consumers through credit bureaus. Since the cost of a FICO score is often less than $1, it is considered negligible compared to the overall costs associated with loans, such as mortgages. This pricing structure means that even if Fair Isaac Corp (NYSE:FICO) were to double or triple its charges overnight, it would likely go unnoticed by consumers.
Headwaters Capital Management stated the following regarding Fair Isaac Corporation (NYSE:FICO) in its Q3 2024 investor letter:
“Top Contributors: Fair Isaac Corporation (NYSE:FICO) +31%: FICO was the largest contributor to performance during Q3 given the size of the position in the portfolio. FICO’s stock performed well during the quarter as declining mortgage rates stimulated both refinance and purchase mortgage volumes.”
Overall, Fair Isaac Corp (NYSE:FICO) ranks 9th on Insider Monkey’s list titled Jim Cramer Latest Portfolio Update: Top 10 Stocks. While we acknowledge the potential of Fair Isaac Corp (NYSE:FICO), 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 FICO 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.