In this article, we will take a detailed look at Jim Cramer is Talking About These 10 Stocks.
Jim Cramer in a latest program on CNBC discussed the reasons behind the recent market declines after the ISM Services Index data. Cramer said many are still expecting more rate cuts from the Federal Reserve soon but they are wrong.
“This survey showed surprising strength, so much strength that it makes you think that the FED might not give us more rate cuts anytime soon. Right now, a ton of investors believe that the FED needs to push through a bunch of rate cuts in order to revive the economy. Lots of those bulls are counting on those cuts. That seems wrong today. They were rocked to the core because not only have they been wrong, but they’re starting to question the FED’s credibility. They know nothing,” Cramer said.
Cramer said he was “mystified” by the Fed’s rate cuts amid strong economic data.
“These traders are wondering why the heck the FED cut short rates by 50 basis points September then give another 25 in November another 25 in December what the heck did they see that made them so aggressive judging by the data. Nothing. The credibility issue, if you claim you’re data dependent, and the data is strong then why the heck are you cutting so aggressively.”
Cramer at the time said the latest nonfarm payrolls report would be one of the most important indicators of the economy and it would set the “dialog” in the coming days. Sure it will. The latest jobs data showed unemployment fell and job additions crushed Wall Street expectations. Many now believe the Fed is set to put brakes on rate cuts.
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For this article, we picked 10 stocks Cramer recently talked 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).
10. Energy Transfer (NYSE:ET)
Number of Hedge Fund Investors: 29
Answering a question about Energy Transfer (NYSE:ET), Jim Cramer said:
“I want you to keep owning it. It’s got a 7% yield, and if it goes down, just buy more. I like Energy Transfer. I used to dislike it, but I’ve liked it now for the last five points.”
Energy Transfer is among the largest midstream companies in the world, with over 130,000 miles of pipelines and nearly 900,000 barrels per day in natural gas liquids (NGL) gathering capacity. The company makes about 90% of its EBITDA from fees, which makes it less cyclical compared to upstream energy companies that produce oil and gas. The company can benefit in the coming days amid an expected end to the pause on pending and future export permits for new liquefied natural gas projects. Energy Transfer’s $13 billion LNG-export facility in Louisiana is one of the projects impacted by this pause.
Then there’s AI. Energy Transfer is expected to be one of the biggest beneficiaries of the AI-based data center boom.
The company talked about this opportunity in Q3 earnings call:
“Given Energy Transfer’s extensive interstate and intrastate natural gas pipeline footprint, we are the best positioned to capitalize on the anticipated rise in natural gas demand for AI data centers, natural gas power plants and industrial and onshore manufacturing for decades to come. We have never seen this level of activity from a demand pull standpoint and these opportunities are truly spread across our natural gas footprint from Arizona to Florida and from Texas to Michigan.
We currently serve gas-fired power plants in 15 states with approximately 185 plants served via direct or indirect connections throughout these states, and our opportunities have only increased since our last call. We have had requests to connect to approximately 45 power plants that we do not currently serve in 11 states that in aggregate could consume gas loads up to 6 Bcf per day. In addition, we have had requests from over 40 prospective data centers in 10 states. These data centers in aggregate could consume gas loads up to 10 Bcf per day. Some of these may be behind the electric meter for reliability purposes.” [read the full transcript]
9. Sempra (NYSE:SRE)
Number of Hedge Fund Investors: 33
Jim Cramer in a recent program said he prefers Sempra (SRE) over Constellation Energy.
“Constellation Energy, it has a habit of bouncing back because it’s really involved with the data center, but it’s got way too much volatility for me, and I think that when it gets back to 250-260, I think you should take some off the table and go put it in Sempra”
8. Kinder Morgan Inc (NYSE:KMI)
Number of Hedge Fund Investors: 42
Answering a question about Kinder Morgan Inc (NYSE:KMI), here is what Jim Cramer said:
“Kinder Morgan’s good. I mean, look, obviously it’s been straight up. It still yields four. It’s finally getting its act together for this year. It’s a good situation.”
7. Stryker Corp (NYSE:SYK)
Number of Hedge Fund Investors: 55
Jim Cramer in a latest program on CNBC was asked about medical technologies company Stryker Corporation (NYSE:SYK).
“Stryker is a really good company. I have been recommending Stryker for a very long time. They have… it’s just one of those companies that you just want to own it. I hate to say this and forget about it because that’s how good it is,” Cramer said.
Parnassus Core Equity Fund stated the following regarding Stryker Corporation (NYSE:SYK) in its Q3 2024 investor letter:
“We view Stryker Corporation (NYSE:SYK) as a best-in-class medical technology provider. It is a leader in most of its end markets and has a broad product offering, which has helped it achieve significant revenue and market share growth compared to its competitors. Stryker is particularly dominant in orthopedics, and we are optimistic about upcoming product launches, including the expansion of its Mako robotic assisted surgery arm. The company also has one of the top industry CEOs with a strong track record of leading successful innovations and mergers and acquisitions to help the company grow.”
6. Abbott Labs (NYSE:ABT)
Number of Hedge Fund Investors: 63
A caller recently asked about Abbott Labs (NYSE:ABT) in a recent program on CNBC. Here is what Cramer said:
“I think it’s a terrific idea. I think that their legal stuff is really largely behind them, and we will find out now that the FDA and the NIH said, ‘Listen, this thing, we need that formula.’ I think that the plaintiffs don’t have a leg to stand on, honestly, and I know their situation is tragic, but this is not the venue for them to be able to do okay in.”
5. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Investors: 81
Asked about Johnson & Johnson (NYSE:JNJ), Cramer said he’d recommend this stock amid its attractive valuation and dividend.
“”Oh man, this stock is just so, it’s 3.3% yield. It’s got really fabulous drugs. I know the whole drug stocks, the whole cohort is down, but if you can get this company for 14 times next year’s owner, this is J&J. Even with the talc litigation, I do want to buy it down here. Drug stocks are way out of favor.”
4. Advanced Micro Devices Inc (NASDAQ:AMD)
Number of Hedge Fund Investors: 107
Earlier in December, someone asked Jim Cramer in a program on CNBC about his thoughts on Advanced Micro Devices Inc (NASDAQ:AMD). The questioner said he is worried about Advanced Micro Devices Inc (NASDAQ:AMD) and the stock’s underperformance. Here is what Cramer said:
“This is very difficult, and you’re absolutely right to bring it up, and I’m glad you did. Here’s the problem. It is absolutely true—it is absolutely true that they’re not doing as well as Nvidia. It is true that they do not have the big Amazon orders that I’ve been looking at. But can we just remember that Lisa Su has built an amazing company, taking a lot of share from Intel? She got the number two when it comes to the data center, when it comes to AI, and come on, she just did the great deal where she got all these engineers to come in.
I think the stock is actually cheap, and it should be bought, and we are buying for the charitable trust. And I wish I had bought some yesterday in the weakness”.
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2024 investor letter:
“Shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) lagged the market after the company reported earnings results that, while generally strong, left the market wanting more. The company reported AI revenue of ~$600 million and increased its forward-looking outlook for AI revenue growth, but shares took a breather, as results missed elevated expectations after the stock’s strong performance. Despite the stock’s underperformance during the quarter, the company’s AI story remains very much intact. The growth outlook for the company is supported by better cloud demand, enterprise recovery and continued share gains ahead of the company’s new AI product launch.”
3. Alibaba Group (NYSE:BABA)
Number of Hedge Fund Investors: 115
A questioner recently asked Jim Cramer his thoughts on JD.com. Cramer recommended the investor to stay away from JD and instead buy Alibaba Group (NYSE:BABA).
“JD.com, oh man, you know, like I like, I’ll go for Alibaba, but it’s too much of a stretch for me. Do JD.com, you’re 18. I don’t want you to fall behind the all. Let’s move into, let’s do Baba if you want to own China, that one is not good enough for you.”
Conventum – Alluvium Global Fund stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its Q3 2024 investor letter:
“On 24 September the People’s Bank of China unveiled a massive three part stimulus package involving: (1) slashing the amount of cash banks need to hold in reserve and lowering the main policy interest rate; (2) cutting mortgage rates on existing home loans by 0.5% and reducing down payment requirements for second homes from 25% to 15%; and (3) supporting equity markets by a USD 114b lending pool to encourage companies to buy back shares and non-bank financial institutions to buy local equities (which may be expanded by the same amount two more times)5 . We are flabbergasted. But we shouldn’t be. After all, these types of arrangements have been all too common over the last 15 years. The local equity markets responded with gusto, and for the last week of the quarter the CSI 300 Index (Shanghai and Shenzen listed companies) was up 25.1%. Alibaba Group Holding Limited (NYSE:BABA) was not lost in all this, and returned 26.8% over that one week period. But Alibaba had already performed well so during the whole September quarter it was up a staggering 56.0%. As a result, Alibaba is no longer the cheap stock it once was. It now trades at a premium to our valuation – a valuation which admittedly had been progressively reduced over our holding period as a result of deteriorating business fundamentals. As a result of Alibaba’s significant outperformance, by the end of the quarter it had reached 3.7% of the Fund. We are weighing up our options here, considering the relative risk.”
2. Netflix Inc (NASDAQ:NFLX)
Number of Hedge Fund Investors: 121
A caller recently asked Jim Cramer whether there’s still more runway left for Netflix Inc (NASDAQ:NFLX). Here is what Cramer said:
“You bet. There is. Netflix is a subscription business.”
Sensing major threats amid rising competition in the market from Disney Plus, Peacock (CMCSA), Max. Amazon and YouTube, Netflix Inc (NASDAQ:NFLX) has fired all engines and is using a multi-pronged approach to thrive. Netflix Inc (NASDAQ:NFLX) is expanding into emerging markets, aggressively focusing on user engagement and tapping into advertisement and gaming. Netflix Inc (NASDAQ:NFLX) is also expanding into NFL games and WWE. Netflix’s ad-tier now has 40 million global monthly active users, up from 23 million in January.
1. Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Fund Investors: 128
In early November, answering a question about a company, Jim Cramer said:
“The semiconductor stocks are so hated that I have to urge you to buy a regular semiconductor right now because they are being put for sale like you wouldn’t believe. But go buy Broadcom, go buy Broadcom, AVGO, and you will like it more than Ultra. I’ll tell you, really.”
Broadcom Inc (NASDAQ:AVGO) continues to be a leader in the AI ASCI and networking chips market. Broadcom Inc (NASDAQ:AVGO) has 3nm AI ASIC chip deals with Alphabet and Meta in addition to many other tech giants aiming massive spending for AI hyperscaling.
However, the stock could face the impact of what Nvidia is facing today: too high expectations.
In the latest quarterly results, Broadcom Inc (NASDAQ:AVGO) revenue was largely in line with estimates. The company has narrowly exceeded revenue expectations by less than 5% in most cases. Some analysts suggest Broadcom’s growth rates will moderate to below 20% CAGR starting the first quarter of 2025. In fiscal Q4, it was +50% topline growth. The market won’t be kind to the stock when the revenue growth rate slows. Broadcom has about $58 billion in net debt, which is relatively high.
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q3 2024 investor letter:
“Similar to the earnings results for Nvidia, shares of Broadcom Inc. (NASDAQ:AVGO) initially sold off after the company reported solid earnings that fell light of elevated market expectations, but the stock did recover from its drawdown in the matter of a few weeks. With an enticing combination of custom chip offerings as well as networking assets, Broadcom remains one of the best positioned companies as part of the AI revolution. Broadcom outlined a path to derive a majority of its revenue from the AI end market within a couple of years, and the non-AI part of the business has stabilized after a deep correction. The company’s dominant market position in its end markets, along with durable growth, strong margins and best-in-class capital allocation, presents an opportunity to compound capital over time.”
While we acknowledge the potential of Broadcom Inc. (NASDAQ:AVGO), our conviction lies in the belief that under the radar 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 AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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