We recently published a list of Jim Cramer Recently Shed Light on These 9 Stocks. In this article, we are going to take a look at where The Honest Company, Inc. (NASDAQ:HNST) stands against other stocks that Jim Cramer recently highlighted.
Jim Cramer, host of Mad Money, recently discussed a possible looming energy crisis in the U.S. that has taken many by surprise. He warned that if the country doesn’t act swiftly, it will soon be overwhelmed by an energy shortfall. According to Cramer, we need to tap into every available energy source including natural gas, wind, geothermal, and hydroelectric power. However, he stressed that the most critical energy source right now is nuclear power. He added:
“Crisis comes down to the fact that we had no real industrial growth in this country for decades so we haven’t had to build much energy infrastructure. Now all of a sudden these data centers start coming online like the ones that will be part of Stargate, the Oracle, SoftBank, OpenAI project… And these data centers consume insane amounts of electricity. It’s a level of demand that nobody saw coming. So after years where we spent more time decommissioning power plants and building new ones, we suddenly gotta go back into growth mode.”
READ ALSO: 8 Stocks on Jim Cramer’s Radar and Jim Cramer Discussed 9 Stocks for This Week’s Game Plan
Cramer went on to discuss an energy source that many are reluctant to consider: coal. While it may seem counterintuitive, he argued that coal could make a comeback in the U.S. energy mix.
“When the president gave his inaugural address on Monday, he declared a national emergency aiming to produce more domestic fossil fuels, including coal. Once the mainstay utility fuel, coal has been phased out year after year after year because it is terrible for the environment. 10 years ago, coal-based fuel was responsible [for] about 33% of electricity. Now it’s fallen to 15%.”
Yet, with the push to decommission nuclear plants, and the rising cost of natural gas, Cramer suggested that coal might need to be reintegrated into the energy mix. He argued that, despite the environmental drawbacks, the demand for power is now so great that coal’s long decline could be nearing its end.
“Under this president, coal could have… a renaissance. Sure, coal’s time has come and gone, but it will come again because the data center inspired energy crisis really is so pressing that there’s not really a choice anymore. Yes, the demand is that great, [and] we so foolishly mothballed good nuke plants that it wouldn’t surprise me if coal’s long decline may have finally run its course.”
Our Methodology
For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on January 22. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 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).
A close up of different packs of diapers and wipes, demonstrating the company’s main product range.
The Honest Company, Inc. (NASDAQ:HNST)
Number of Hedge Fund Holders: 19
Cramer said that he cannot recommend The Honest Company, Inc. (NASDAQ:HNST) at this point as the company does not make money.
“Look, I totally get it. I get the fascination with it and when they make money, I will recommend it. Now, that means that someone might say, Jim, it was at six bucks, you kept me out of it until it went to $10. I don’t care. I only wanna recommend companies in 2025 that are making money.”
Honest Company (NASDAQ:HNST) produces and sells a range of products, including diapers, wipes, skincare, personal care, household items, wellness products, and baby clothing and bedding. Laura Champine of Loop Capital recently expressed concerns about the company’s fundamentals, particularly regarding potential tariffs on China under the incoming Trump administration. Since the company’s popular baby wipes are produced there, higher shipping costs could negatively impact profitability.
In her opinion, relocating production to U.S. suppliers is not a feasible solution. Despite these worries, Champine highlighted several positive aspects of Honest Company’s (NASDAQ:HNST) business, including its strong relationship with major retailer Amazon, which drives significant sales.
Moreover, the company raised its full-year 2024 projections for both revenue and adjusted EBITDA. It now expects revenue to grow by a high single-digit percentage compared to 2023. For adjusted EBITDA, the revised outlook is in the range of $20 million to $22 million, up from the previous forecast of $15 million to $18 million as of Q2 2024.
Overall, HNST ranks 7th on our list of stocks that Jim Cramer recently highlighted. While we acknowledge the potential of HNST 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 time frame. If you are looking for an AI stock that is more promising than HNST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
