In this piece, we will look at the stocks Jim Cramer recently discussed.
In a recent appearance on CNBC’s Squawk on the Street, Jim Cramer commented on why the flagship S&P index remained stable despite multiple catalysts such as a trade war, DeepSeek, and a new administration. Cramer believes that “there’s still an undercurrent that the President is good for business.” He recalled how hedge fund billionaire David Tepper’s comments about the market were precarious and didn’t reflect the way it was behaving. Cramer outlined “I mean yesterday we had an individual talking about how the situation’s precarious on Squawk Box. And it’s not.”
Instead, Cramer shared “These are things where if you check the cadence of what happened, the President does something, it looks really, really harsh on Mexico. Claudia Sheinbaum comes back and says, you know what, I agree. Uh, the President does something it looks really harsh on Canada. And Canada comes back and says, let’s make a talk. Let’s do something. He does something that looks really harsh about China, it’s not harsh at all. So China then comes back, I mean these are all signs that the President’s strategy, I think people say, is working.” As a result, he wondered why there was any need to sell stocks. Replying to his question, Cramer pointed out “And the answer is why you would sell is because you don’t believe in the President. And you think that the President has got a strategy that doesn’t exist. I come back and say, well I don’t know. I mean there was a lot of success yesterday, so why sell?”
The CNBC TV host also commented on a JPMorgan note saying that policy shifts are moving towards business unfriendliness. Cramer holds a mixed opinion in this regard. On one hand, while he countered by wondering “how can it, look, deregulation is what businesses have been asking for. And they’re getting that in spade,” on the other hand he agreed that “Yes, did President Trump not do it in the order we wanted? Which would be first we get big tax cuts, we get deregulation. And then after that, you what we’re gonna hit them it [inaudible]. He went faster than that. And that was something that was perceived anti business.”
In fact, Cramer was surprised by the President’s China approach. He had “expected [a] sixty percent tariff on China. . . expected that the President would say listen, we will no longer import any steel from Mexico cause so much of it is from China. . . [and] thought that there would be tariffs on things that are necessary to China that would have made it horrible.”
Further commenting on the White House’s approach towards China, Cramer stated:
“If you’re China you’re saying, hey you know what, this guy really wants a deal with us. And let’s sit down. Now I remember when the President . . .he said look I think that things could be better with China. Now if you go back and read Peter Navarro’s book, about, when he talks about Trump and China. Oh man. There were people. . . Steve Mnuchin, who, he calls out, Navarro, as being China-poligists, and in a really harsh way, the book is. . . well written. And I just think that Navarro lost here, because these were not harsh.”
Our Methodology
To make our list of the stocks that Jim Cramer talked about, we listed down the stocks he mentioned during CNBC’s Squawk on the Street aired on February 4th.
For these stocks, we also mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds invest in? 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).
11. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders In Q3 2024: 56
International Business Machines Corporation (NYSE:IBM) is one of the oldest and largest technology companies in the world. While originally a personal computing firm, it has now pivoted itself to cater to the needs of the enterprise software industry. International Business Machines Corporation (NYSE:IBM) also boasts one of the most important semiconductor design divisions in the world, and in the age of AI, its shares have gained 39% over the past year. The stock jumped by 13% in late January after the firm’s enterprise AI software business added $2 billion in bookings over the third quarter. Here is what Cramer said about International Business Machines Corporation (NYSE:IBM):
“IBM had a remarkably good quarter. It’s a software company. They’re 42% software and they’ve got the annual contracts. We’ve always wanted that to happen. It’s what I was hoping would happen with Cisco. It’s really happening with IBM.”
10. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders In Q3 2024: 58
Lockheed Martin Corporation (NYSE:LMT) is one of the most important defense contractors in the US because of its advanced fighter jets. The firm enjoys a wide moat in its industry owing to the fact that its aircraft are indispensable for US air superiority. Lockheed Martin Corporation (NYSE:LMT)’s stock, on the other hand, has gained a modest 3.6% over the past year. The stock has struggled due to slipping sales and mounting losses for the F35 program have continued to impact the income statement. Cramer’s statements for the firm surrounded cost-cutting initiatives at the US government:
“And I think that this is a central and existential attack, ultimately, not mentioned on the call, on the companies that run our Defense Department. Now I’m talking about here Lockheed, I’m talking Northrop Grumman. I would not want to be those companies after we, they should read this conference call because this company’s coming for them. Coming for them.”
9. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders In Q3 2024: 58
PepsiCo, Inc. (NASDAQ:PEP) is one of the biggest carbonated beverages and snack companies in the world. Its shares have lost 14.7% over the past year as rising inflation coupled with high prices has dented the demand for its products. Cramer believes that the struggles that PepsiCo, Inc. (NASDAQ:PEP) is facing are also secular instead of being purely driven by high prices. The secular trend affecting the firm is increasing health awareness among younger consumers. Here are his remarks for PepsiCo, Inc. (NASDAQ:PEP) in detail:
“Yeah, Raymon Laguarta is doing a terrific job as CEO of Pepsi but the problem here is again, snacks. And snacks are part of either a healthy cohort, the change in people particularly younger people shifting to things that are better for you. Or it’s GLP-1 which I believe will ultimately have about forty million people on it between 12 and 13 months in persistence. We don’t know but Raymon thinks that it’s just, it’s the healthy, health is here to stay. And remember they have Frito Lays. And Frito Lay is historically salty snacks are not healthy. so they’re making smaller sizes, doing bake, they’re doing what they can, emphasizing Sabra, emphasizing a lot of different stuff that I think is good for you. But they don’t have enough that’s good for you. So, you’ll see the stock down. It’s obviously underperformed. And the question is, is it a real crisis in that they are producing food that may never be loved again. . . and we just think that the younger people don’t wanna snack the way they used.”
“Now Raymon I think can do a good job, it does yield 3.7, uh, it is historically a fantastic company as we know. It can reinvent. But it has to pivot so quickly because this is a trend, trend that came out of COVID. So COVID would come out and we’re snacking at home. And then we develop a whole new thesis about our bodies. And this is also in liquor. Liquor’s actually far worse. Diageo pulled its guidance this morning. But if you want to buy a high quality company and bet that they would figure what needs to be figured out, it is Pepsi.”
8. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders In Q3 2024: 75
Costco Wholesale Corporation (NASDAQ:COST) is a discount retailer that has been one of the primary beneficiaries of the inflationary wave in America. Its shares have gained 49% over the past year as the firm has seen customers turn to its stores for a variety of products. While Costco Wholesale Corporation (NASDAQ:COST) is typically known for selling grocery items in bulk, price-conscious customers have also started to rely on it to buy expensive items such as furniture and jewelry. Cramer is appreciative of the firm’s price-reducing strategies as he holds the view that American consumer goods companies will have to reduce prices to stimulate demand. Here is what he said about Costco Wholesale Corporation (NASDAQ:COST):
“This is the Costco lesson. If you look at Costco. . . . Costco doesn’t let this stuff gum on. You wanna sell into Costco, you cut your price.”
7. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Holders In Q3 2024: 76
Chipotle Mexican Grill, Inc. (NYSE:CMG) is a casual dining restaurant firm that has held its ground in today’s inflationary era. The firm’s shares are up by 10.2% over the past year primarily on the back of its expansion strategy and efficiency initiatives. Chipotle Mexican Grill, Inc. (NYSE:CMG) aims to open hundreds of new stores this year, and it has improved its restaurant process flows through equipment such as expediters. However, President Trump’s tariffs on Mexico did create uncertainty for the stock. Here is what Cramer said:
“Now Scott Boatwright, new obviously, because we know that Brian Niccol went to Starbucks. But I think what’s interesting is that guac, guacamole’s from Mexico. They even went to a couple of states that you typically would not go to because they’re not as much as in control by the government. And that shows you how important guac is to them. I’d like to hear about their comments on it.”
6. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders In Q3 2024: 82
3M Company (NYSE:MMM) is an industrial conglomerate and a consumer products firm. It is one of the few industrial stocks that have managed to perform well in an environment where the sector as a whole has struggled due to high rates and reduced economic activity. 3M Company (NYSE:MMM)’s shares have gained 93% over the past year as the firm’s cost-cutting initiatives have yielded results. Since its fourth-quarter earnings, the stock is up by 5.6%. Here is what Cramer said about the firm:
“By the way the industrials are where the action is. Well 3M is still going up after they reported.”
5. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders In Q3 2024: 86
Merck & Co., Inc. (NYSE:MRK) is a pharmaceutical company that Cramer commonly discusses on his show. Its shares are down by 31.7% over the past year primarily due to troubles in China over the firm’s GARDASIL HPV. Merck & Co., Inc. (NYSE:MRK)’s stock dropped by 9.8% in July last year after the firm shared that the HPV vaccine’s shipments in China dropped due to anti-corruption and anti-bribery initiatives in the country. The stock lost another 9% in February after it shared that it had paused GARDASIL shipments in China to allow inventory to clear up. Cramer also commented on Merck & Co., Inc. (NYSE:MRK)’s China woes:
“[GARDASIL China pause] This is an inventory backup by the middleman in China and they basically said, listen we can’t take anymore. They haven’t been able to sell it. It’s a major defeat for Rob Davis. It’s unfortunate because they have tremendous franchising in KEYTRUDA. But they had to put this behind them. They had to be able to say, hey look, we gotta restart here. We’re not selling any GARDASIL. Which by the way is a terrific vaccine, and you would think that the Chinese, if they were good to their people would allow this to be sold. So it was something that I felt was, just came out of nowhere. You know David, we know that Merck is a great company. But the inventories, they could not, help the middleman, and say listen, we’ll take it back. They just had to say, okay we won’t ship anymore. And they have to work the inventory down.”
“It’s a giant franchise. And a great franchise. And I think that if you would have told me you know what the Chinese are not going to let it be sold, I . . .it’s a fantastic vaccine, but [the] fact is it got caught up in what I regard as being a geopolitical tension. And I think that there’s nothing Rob could do about it. But it is gonna bring down the drug stocks. Particularly ugly situation because people are in it for KEYTRUDA and didn’t expect the GARDASIL would be just, that there’s an inventory backup in a drug that’s so important.”
4. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders In Q3 2024: 90
PayPal Holdings, Inc. (NASDAQ:PYPL) is a financial technology company that allows users to receive and send money worldwide. As a result, its narrative is dependent on transaction volumes which in turn depend on economic activity. PayPal Holdings, Inc. (NASDAQ:PYPL)’s shares are up by 31% over the past year, but these gains are primarily due to optimistic profit forecasts provided in 2024’s first half. Since October 2024, when the firm’s low single-digit Q4 revenue forecast missed analyst estimates of 5.4%, the stock is down by 8.6%. PayPal Holdings, Inc. (NASDAQ:PYPL)’s shares fell another 13% in February after its payment volume percentage dropped by 27 points annually. Here is what Cramer said about the firm:
“They didn’t have real growth. There’s no real growth there.”
“To read it was to think that they did well. I hate that when . . . .because they’re actually, they did not have the growth that people expected. But I do believe that they can turn it on, and I do think Chris is doing a good job, but the stock was up very, very big expecting that there was going to be some good growth here.”
3. Spotify Technology S.A. (NYSE:SPOT)
Number of Hedge Fund Holders In Q3 2024: 98
Spotify Technology S.A. (NYSE:SPOT) is an audio streaming platform that enjoys the advantage of being the first mover in its industry. This has allowed the firm to establish a foothold in a new industry that has grown along with Internet use. Spotify Technology S.A. (NYSE:SPOT) has more than 200 million subscribers, with user growth allowing the firm to continuously beat analyst forecasts. As a result, the stock is up by 170.5% over the past year. Cramer believes that Spotify Technology S.A. (NYSE:SPOT) has a moat similar to Netflix’s in its industry:
“[On Netflix causing media companies anxiety] Except for Spotify. The people at Spotify are, they are thrilled.”
“I mean, monster quarter, highest quarter for, fourth quarter ever for monthly average users. The additions were incredible. Quarterly record highs for revenue. By the way, they’re talking about maybe video podcasts, higher priced tier coming.”
2. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders In Q3 2024: 121
Netflix, Inc. (NASDAQ:NFLX) is the global leader in the online streaming industry. The firm has managed to consistently grow its subscriber base over the past year. More importantly, Netflix, Inc. (NASDAQ:NFLX) has also delivered on its ability to monetize its user base and introduce multiple subscription tiers on this front. When coupled with mega events such as Mike Tyson’s boxing return being streamed on its platform, its strategies have allowed it to grow while traditional media networks struggle. Cramer continued to remain optimistic about Netflix, Inc. (NASDAQ:NFLX):
“And then FANG’s kind of back. I mean you know Netflix is going up without a problem.”
“And they don’t beat their chest. They just deliver, and deliver, and deliver. And Carl when I find companies that are doing something like that, they remind me of the subscription model. Netflix, Amazon, Spotify. It’s just such a good buisiness to be a subscription model. . . it is uh, it’s going higher.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders In Q3 2024: 193
NVIDIA Corporation (NASDAQ:NVDA) is the world’s largest GPU designer whose stock has long been a bellwether for investor sentiment regarding AI. However, following January’s DeepSeek selloff that saw NVIDIA Corporation (NASDAQ:NVDA)’s shares bleed 17% in a day, investors are now on the sidelines to determine whether the billions of dollars in expected GPU spending will materialize. Cramer also believes that GPU orders are the key to evaluating NVIDIA Corporation (NASDAQ:NVDA)’s stock now. Here’s what he said about the firm:
“but we have some tech doing badly. And I think that the tech that’s doing badly, once again its NVIDIA which is coming back. But we don’t know what NVIDIA’s going to report, there’s a [inaudible] I’ve got NVIDIA saying that we’re trophy in terms of negativity. I think you have to wait to see what the numbers are because the company’s in quiet period.”
NVDA is a stock Jim Cramer recently discussed. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some 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 NVDA 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. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
