In this article, we will take a detailed look at Jim Cramer is Talking About These 10 Stocks as Markets Rebound.
Jim Cramer in his latest program on CNBC talked about the latest rebound in the markets followed by a major selloff on Monday, saying we can “fret” about the interest rates, jobs market or mortgage rates, or we can just buy the stocks of “tremendous” companies and hold on to them.
“Stock prices have become so dependent on the macro, the carry trade, the Fed chatter, that it’s impossible to give you a pat answer even as I’ve told you over and over again that corporate America is doing much better than anyone would expect at this point in the cycle,” Cramer said.
Cramer lamented yet again that people believe a 25bps decline in interest rates could somehow “motivate” people to increase spending and on these hopes they often buy “phony” ETFs.
Cramer also said that the Fed won’t begin to cut rates until it sees consumers “rebelling” against higher prices forcing companies to roll back price increases to pre-COVID levels. Jim Cramer believes we now have an “empowered consumer” who is willing to make choices and choose options that are cheaper and better.” He said that during the pandemic, amid higher liquidity, people were willing to accept higher prices, but not anymore.
For this article we watched several latest programs of Jim Cramer and picked 10 stocks he’s talking about. 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. Bank of Montreal (NYSE:BMO)
Number of Hedge Fund Investors: 13
When asked about Bank of Montreal in a latest program, Jim Cramer said that it’s a “very, very good bank.”
“I don’t understand why it’s priced so cheaply,” Cramer added.
He said that he’d be a buyer of the stock “right here.”
9. Logitech International SA (NASDAQ:LOGI)
Number of Hedge Fund Investors: 20
When asked about Logitech, Cramer said that the company’s CEO Hanneke Faber is doing a “really good job.”
However, Cramer said that he’s not “as excited about the PCs yet.” Cramer believes LOGI could be a “Christmas play, not so much now.”
Logitech International SA (NASDAQ:LOGI) makes computer peripherals like headsets, mouse, keywords, etc. Analysts believe the company is expected to benefit following rate cuts as consumer discretionary spending will go up. The company recently posted strong fiscal first-quarter results and upped its full-year guidance for operating income and sales growth. During the quarter, gaming revenue was up 16% and keyboards & combos was up 19% year over year. The headset segment saw the strongest growth. The webcams category declined, but (NASDAQ:LOGI) remains the market leader. The company has also increased its market share across most categories.
LOGI is working hard to improve its efficiency and margins, with sales and marketing expenses down in the fiscal first quarter to 17% of total sales, a 30 bps decrease YoY. R&D expenses fell to 6.4% of sales, down 40 bps, and G&A expenses dropped by 60 bps to 3.1% of sales. Inventory turnover improved by 20%, and days of inventory were reduced by 10.
The biggest growth opportunity for the company is gaming. The peripherals market is expected to grow at a CAGR of about 9% through 2030. The company is launching products for the complete gaming experience, software included. It launched a slim keyboard combo for desktop work and three new products focused on gaming and livestreaming. The Mevo Core, a high-definition professional livestreaming camera, enables direct streaming to YouTube or Twitch. The company’s livestreaming tools now allow users to stream on TikTok without a direct stream key. The company also launched the “60 Percent Keyboard,” a compact gaming keyboard featuring “KEYCONTROL” technology for dynamic mouse movement in gaming competitions without sacrificing essential keys.
8. Dover Corp (NYSE:DOV)
Number of Hedge Fund Investors: 28
Jim Cramer was recently asked about Vertiv during his program on CNBC. He instead recommended buying Dover.
“It has a lot more than just data center going for it and it’s not as concentrated,” Cramer said of Dover.
Dover Corp’s (NYSE:DOV) business is offering products and services via five segments: engineered products, clean energy & fueling, imaging & identification, pumps & process solutions and climate & sustainability technologies. Each segment’s revenue is over $1 billion on an annual basis. In 2023 the company’s full-year free cash flow came in at $1.1 billion, nearly double the previous year’s figure. This increase was due to effective working capital management and reduced capital expenditures. The free cash flow conversion rate has risen above 90%.
What makes Dover Corp (NYSE:DOV) a promising data center stock? The company talked about that during its latest earnings call:
We are also benefiting from our exposure to data centers and the secular growth in infrastructure investment with the significant power requirements of next generation chips that support artificial intelligence adoption are now requiring liquid cooling methods. We are exposed to liquid cooling of data centers in both our heat exchanger business, which enables heat transfer within the coolant distribution units and in the connector business which provides leak free liquid connection points at the server racks and manifolds and now directly to the individual chip cooling cold plates. I’ll leave the data center infrastructure market forecast to our end customers further down the chain. For us, it’s clearly an area of robust growth in the foreseeable future as evidenced by our recent order trajectory and high profile specification wins with the chip OEMs. Importantly, we have proactively installed production capacity and are well positioned to meet any meaningful inflections in demand with industry best lead times.
Dover Corp (NYSE:DOV) has an astonishing dividend growth history, with over 50 straight years of dividend hikes.
Wall Street expects the Dover Corp (NYSE:DOV) earnings to grow 9.20% next year, while the average analyst price estimate on the stock is $195, about 6% higher than the current stock price. The stock’s forward P/E ratio of 20 looks attractive based on these factors.
7. Constellation Energy Corp (NASDAQ:CEG)
Number of Hedge Fund Investors: 54
Jim Cramer in a latest program said Constellation Energy is a “solar play” which is already up a lot this year(62%).
“This is a solar play, that is a very good company,” Cramer said.
He recommended investors to hold the stock and not sell it.
Constellation Energy Corp (NASDAQ:CEG) is set to benefit from the rise in clean energy demand amid the data center and AI boom. Constellation Energy Corp (NASDAQ:CEG) has a diverse range of power generation assets including nuclear, solar, wind, natural gas, and hydroelectric. Constellation is expected to benefit from secular growth catalysts. Goldman Sachs projects a 2.4% annual increase in power demand until 2030, driven by data centers, with the transportation sector’s electricity consumption growing by 0.6% annually due to the rise in electric vehicles.
Constellation Energy Corp (NASDAQ:CEG) is one of the leaders in the nuclear energy space. It generated 41.1 TWh of electricity from nuclear plants and 5.8 TWh from other assets in Q1 2024/ As of July last year Constellation Energy Corp (NASDAQ:CEG) was generating 26,270 megawatts in nuclear power, 157% more than Duke Energy’s 10,210 megawatts.
While Constellation Energy Corp (NASDAQ:CEG) management was very practical and cautious talking about data center-related opportunities during Q1 earnings call, it did said that it’s seeing a level of demand that it never experienced in the last 20 years.
We’re seeing interest in developing projects that are on a size and scale that presently don’t exist, but will be needed for training systems and other things to kind of build out and support the need for all of these foundational models. I think they’re up to 170 plus now. Foundational models that are going to require training, data centers. These are things could be aerodynamics or pharmaceuticals, but essentially, these very, very large computers that would do nothing more than train for a period of time on all of the learnings in every country, in every language, from the beginning of time until now, be positioned to answer the questions of the future to advance these different industries.
Read the full earnings call transcript here.
ClearBridge Global Infrastructure Value Strategy stated the following regarding Constellation Energy Corporation (NASDAQ:CEG) in its first quarter 2024 investor letter:
“On a regional basis, the U.S. and Canada was the top contributor for quarter, with U.S. electric utility Constellation Energy Corporation (NASDAQ:CEG) and U.S. rail operator CSX the lead performers. Constellation Energy is primarily a nuclear generation company and is the largest producer of carbon-free electricity in the U.S., serving states including New York, Illinois, Maryland, Pennsylvania and New Jersey. The company’s combined generation capacity is more than 32 GW and 90% of annual output is carbon free. Constellation has been a beneficiary of AI and subsequent power demand as its 24/7 base load nuclear generation can get premium contracts.”
6. McDonald’s Corp (NYSE:MCD)
Number of Hedge Fund Investors: 63
Jim Cramer in a latest program praised McDonald’s efforts to launch affordable meals to woo customers.
“Kudos to McDonald’s for recognizing they have to come up with a cheap alternative that people can afford, I wish other companies would follow suit.”
Cramer shared some excerpts from the latest earnings call from MCD. Here is one of those:
We’ve seen a lot of enthusiasm and the number of $5 meal deals sold are above expectations. Trial rates of the deal are highest amongst lower-income consumers and sentiment towards the brand around value and affordability has begun to shift positively. To date, 93% of our restaurants in the US have committed to extending the offer even further into the summer. And there are other ways customers can experience great value at McDonald’s. We continue to provide a steady stream of offers on the mobile app, including nationwide free Free Fries Fridays, where you can get a free medium fry every Friday with any $1 purchase on the app. And as we work through the important details of the future US value platform, we will continue to make decisions grounded in insights with the customer at the center.
At the end of the day, we expect customers will continue to feel the pinch of the economy and a higher cost of living for at least the next several quarters in this very competitive landscape.
Read the complete transcript of MCD’s latest earnings call here.
McDonald’s Corp (NYSE:MCD) recently missed second-quarter estimates for both earnings and revenue as consumers worldwide push back on rising prices. In response, the company has launched a $5 value meal to woo customers. McDonald’s Corp (NYSE:MCD) said this deal is gaining traction.
McDonald’s Corp (NYSE:MCD) bulls believe with inflation beginning to decline and interest rates on the horizon, MCD could be a good buy on the dip for long-term investors. Despite the inflation-related headwinds the company still aims to continue on its path to open 10,000 new stores by 2027. Despite the massive headwinds this year it still plans to open 1,600 net new restaurants in 2024, contributing nearly 2% to systemwide sales growth in constant currencies. McDonald’s Corp (NYSE:MCD) projects its 2024 operating margin to be in the mid-to-high 40% range, underscoring confidence in its expansion pace.
Following the latest dip after earnings, the stock is trading at around 22 times the 2025 earning estimate set by Wall Street. McDonald’s Corp (NYSE:MCD) revenue is expected to increase by 7.90% next year. With over 40 years of consistent dividend increases and growth plans, MCD is a decent buy for investors looking for stable (albeit slow) growth stocks.
5. Shopify Inc (NYSE:SHOP)
Number of Hedge Fund Investors: 65
Jim Cramer was asked about Shopify in a latest program, here is what he said:
“I like that stock very very much. It has come down a lot, and I think it’s a really really good position to be able to take.”
Cramer said that Shopify had to spend a lot of money which they didn’t want to but “it’s really paying off.”
BofA added Shopify Inc (NYSE:SHOP) to its list of the best of breed stocks for the third quarter of 2024. Wall Street continues to shower positive ratings and comments for the Canadian ecommerce store platform Shopify Inc (NYSE:SHOP). Last month, Goldman Sachs analyst Gabriela Borges upgraded the stock to Buy from Neutral and increased their price target for SHOP to $74, saying Shopify Inc (NYSE:SHOP) investments in marketing are “about to pay off” and will drive revenue growth into 2025.
Recently, JPMorgan started covering the stock with an Overweight rating. Analysts at JPMorgan said Shopify Inc’s (NYSE:SHOP) competitive advantages include product breadth, ease of use and scale. These moat points, according to the bank, will keep powering Shopify’s “industry-leading” growth.
While Shopify Inc (NYSE:SHOP) results were strong and better than expected, Shopify Inc (NYSE:SHOP) weak guidance threw water on the enthusiasm around the stock as it fell sharply. SHOP is down 12% so far this year. Analysts believe this is a buying opportunity and that the reaction to guidance was overblown. The weak guidance came amid the effects of Shopify’s Inc (NYSE:SHOP) sale of logistics business and because of latest pricing changes. Shopify’s Monthly Recurring Revenue, or MRR, has been showing strengths over the past several months and the company is expected to maintain its 20%+ revenue growth rate in the second quarter, while Shopify Inc’s (NYSE:SHOP) Gross Merchandise Value (GMV) and international growth remains strong. Wall Street expects the company’s earnings to grow 28.60% next year and at about 50% over the next five years on a per-annum basis. Based on these growth estimates, the stock’s higher P/E is justified.
Polen Focus Growth Strategy stated the following regarding Shopify Inc. (NYSE:SHOP) in its Q2 2024 investor letter:
“In the second quarter, we purchased new positions in Shopify Inc. (NYSE:SHOP). Shopify, a leading cloud-native commerce software platform, is a business we’ve been studying since 2018 and have long admired. Shopify’s business model combines 1) a mission-critical software business where merchants can run all their business operations from one dashboard and 2) a payments business with a long runway to increase attach rates and grow alongside merchants. Additionally, we believe the business possesses significant optionality to continue attaching existing merchant solutions and adding more merchant services as high-margin cross-sells. With several powerful tailwinds at their back (e-commerce, mobile commerce, social media, digital payments, seamless omnichannel, DTC, cloud software digitization) and a highly scalable business model, we think their growth will likely be stronger for longer than investors expect.”
