In this article, we will take a detailed look at Jim Cramer Latest Lightning Round: Top 10 Stocks to Watch.
Jim Cramer in a latest program on CNBC talked about the latest rebound in the market.
“Never get tired of all-time highs. We are experiencing a time for the market which is what I said would happen when the Fed starts cutting rates when the economy is still solid.”
Cramer said that the key reason the market roared to highs was strong earnings from top banks. He said since the Fed’s interest rate cuts have just started, investors believe maybe the “best is yet to come.”
Jim Cramer wondered whether this strong performance trend would be a “pattern” in this earnings season.
“We will find out soon enough. We will see if the positive action will be sustained.”
Cramer recommended investors to “listen to the calls” this earning season and “ponder a moment, and only then should you pull the trigger.”
“We are at the beginning of one of the year’s four reporting periods. Probably the most exciting. I can’t believe I still get fired up, but man, am I ever.”
For this article, we watched the latest episodes of Jim Cramer’s ‘Lightning Round’ segment on CNBC and picked 10 stocks he was talking about. With each company, we have mentioned its hedge fund sentiment. 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. Fulton Financial Corp (NASDAQ:FULT)
Number of Hedge Fund Investors: 13
Talking about Fulton Financial Corp (NASDAQ:FULT), Cramer highlighted that the company bought a regional bank in Philadelphia.
“I think it’s a good one. I wish it had a 4% yield. I’d feel better about it.”
Fulton Financial Corp (NASDAQ:FULT)’s performance has shown significant growth over the past year. At the end of last year, Fulton Financial Corp (NASDAQ:FULT) had $21.54 billion in deposits, which increased to $25.56 billion by the end of the most recent quarter. The value of loans also rose during this period, going from $21.06 billion to $23.73 billion. The value of securities expanded from $3.67 billion to $4.18 billion. Fulton Financial Corp (NASDAQ:FULT)’s cash and cash equivalents saw a notable increase, rising from $674.1 million to $1.40 billion. On the debt front, Fulton Financial made progress as well, with its total debt decreasing from $2.49 billion at the end of last year to $2.18 billion by the end of the most recent quarter.
In late April of this year, management announced the acquisition of “substantially all” of the assets and the assumption of “substantially all” of the deposits of Republic First Bank, which had been under the control of the FDIC. This acquisition added approximately $3.8 billion to the company’s deposits, with 47% of those deposits being interest-bearing demand deposits.
9. Affirm Holdings Inc (NASDAQ:AFRM)
Number of Hedge Fund Investors: 34
A caller recently asked Jim Cramer about Affirm Holdings Inc (NASDAQ:AFRM). Here is what he said:
“A lot of people feel it’s related to rates. I think it’s related to the honest ability to be able to judge people’s credit, give them credit, and then watch and see how well they do. Buy now, pay later, Max (Affirm CEO) loves it. I had Max on. I truly enjoy Max. I get along with him. I have to admit I’ve done some charitable stuff in his orientation. And all I can tell you is that I think he’s good to go. I like the stock very much.”
Affirm Holdings Inc (NASDAQ:AFRM) is a key player in the Buy Now Pay Later (BNPL) market. Wells Fargo recently upgraded it from Equal-weight to Overweight. While still considered expensive for a start-up that is not yet profitable, there have been notable improvements in cash flow and adjusted operating margins, making the current price attractive for buyers. Wall Street expects Affirm Holdings Inc (NASDAQ:AFRM)’s revenue to grow about 30% in FY2025 and at a 3-year revenue CAGR of 25% through FY2027.
The stock’s price-to-sales (P/S) ratio stands at 4.9, which is fairly reasonable considering the expected 30% revenue growth in FY2025. Additionally, the P/S to Growth ratio is just 0.2, indicating a low valuation for a company with strong growth potential.
8. Boeing Co (NYSE:BA)
Number of Hedge Fund Investors: 42
When asked about Boeing Co (NYSE:BA) in a latest program on CNBC, Cramer said that he’s “worried” about the company.
“Let me tell you why I’m worried. Because the balance sheet is not great. They should have raised capital when they had a chance to. It was jarring news, and I don’t have any conviction whatsoever that they are getting this right.”
Jim Cramer was previously bullish on Boeing Co (NYSE:BA). Why? The new CEO was the main reason.
Kelly Ortberg has a degree in Mechanical Engineering, and brings a technical background to the role, a shift from the accounting-focused leadership that investors have found concerning.
Boeing Co (NYSE:BA) is also increasing production rates, having already increased output and reactivated its third 737 MAX assembly line. The company has submitted a comprehensive plan to the FAA, aiming to surpass the current cap of 38 MAX airplanes per month. While these measures will not immediately impact earnings, they signal Boeing Co (NYSE:BA)’s commitment to sustainable growth.
On the certification front, Boeing Co (NYSE:BA) is progressing with solutions for the 737 MAX 7 and MAX 10, and has entered a new phase in the 777X certification campaign. These developments are seen as positive.
Boeing Co (NYSE:BA) has made progress with the 737 MAX program. Boeing Co (NYSE:BA) has reduced traveled work, leading to cleaner fuselages and improved quality and reliability. Boeing’s submission of a comprehensive safety and quality plan to the FAA marks an important milestone. Production has increased from a low single-digit rate in the first quarter to 25 airplanes per month in June and July, though still short of the target of 38 airplanes per month by year-end. This increase suggests progress in managing manufacturing quality.
However, with worker strikes ongoing and credit ratings in danger, Boeing Co (NYSE:BA)’s journey back to normality will be long and hard.
7. Royal Caribbean Cruises Ltd. (NYSE:RCL)
Number of Hedge Fund Investors: 48
Talking about Royal Caribbean Cruises Ltd. (NYSE:RCL) in a latest program on CNBC, Jim Cramer said:
“Royal Caribbean. Cruises are a tremendous bargain whereas hotels and other forms of entertainment have gotten to be too expensive. Bookings are explosive. You can still buy the stock.”
Royal Caribbean Cruises Ltd (NYSE:RCL) is benefitting from strong demand from younger customers as people around the world continue to spend on experiences despite inflation. Secular growth trends are expected to keep boosting the company. The global cruise passenger numbers hit 31.7 million last year, a 7% increase over pre-pandemic levels. Projections suggest this figure could approach 40 million by 2027, highlighting the robust demand for cruise vacations.
Amid the after-effects of the pandemic, cruise companies have been reluctant when it comes to expansion of capacity and new orders. This resulted in a shortage of ships, which gives giants like Royal Caribbean Cruises Ltd (NYSE:RCL) a space to raise prices. Royal Caribbean saw its net yield—revenue per passenger per cruise day—rise 13% in Q2 2024 year-over-year.
Royal Caribbean Cruises Ltd. (NYSE:RCL) raised its full-year EPS guidance to $11.25-$11.45 per share, reflecting 68% year-over-year growth, surpassing the consensus of $11.07 per share. Additionally, Royal Caribbean Cruises Ltd (NYSE:RCL) reinstated its quarterly dividend at $0.40 per share, the first since its suspension in 2020.
Ariel Fund stated the following regarding Royal Caribbean Cruises Ltd. (NYSE:RCL) in its Q2 2024 investor letter:
“Global cruise vacation company, Royal Caribbean Cruises Ltd. (NYSE:RCL), advanced on another quarterly earnings beat and subsequent raise in full-year guidance. Stronger than anticipated consumer demand, healthy onboard spend, robust pricing and solid cost containment lifted recent results. Additionally, RCL is benefitting from several new megaships, more island destinations and re-entry into the China market. The resiliency of the core cruise consumer, in combination with management’s superior operational expertise and revised earnings outlook, lays the foundation for RCL to exceed its three-year strategic imperative, the Trifecta Program, a year earlier than expected.”
6. IBM Common Stock (NYSE:IBM)
Number of Hedge Fund Investors: 54
A caller recently asked Jim Cramer about IBM Common Stock (NYSE:IBM) in a recent program. Here was Cramer’s response:
“It yields about 3%. Say I wanted to buy 100 shares of IBM over the course of the next year. I would buy 25 and then let it come back down because it’s had pretty much of a parabolic move. But I would be a buyer of this move. I think Arvind Krishna’s (IBM CEO) doing a remarkable job.”
Can IBM Common Stock (NYSE:IBM) become a top AI stock and compete with peers like Oracle, Salesforce and Microsoft?
The company recently released its Telum II Processor and Spyre Accelerator at Hot Chips 2024, designed to boost the next-gen IBM Z mainframe system. Telum II offers 8 cores at 5.5GHz with 36MB L2 cache per core and a 40% increase in total on-chip cache. Spyre adds AI capabilities with 32 compute cores and 1TB memory. Both chips, built by Samsung on a 5nm process, will launch in 2025, supporting IBM’s AI initiatives. IBM Common Stock (NYSE:IBM) also acquired Accelalpha to strengthen its Oracle consulting expertise, further enhancing its cloud and AI capabilities for enterprise clients.
IBM Common Stock (NYSE:IBM)’s latest quarterly results were driven by software, consulting, and infrastructure, boosted by accelerated enterprise AI adoption. Revenue grew 4% year-over-year, and free cash flow rose 24%, reflecting the company’s strong financial health. IBM Common Stock (NYSE:IBM) is well-positioned to capitalize on AI trends with its watsonx AI platform and Granite models, offering secure and transparent solutions that address data privacy concerns, critical for enterprise AI implementation. Their unique blend of consulting, software, and AI solutions supports large-scale AI projects.
Diamond Hill Capital Long-Short Fund stated the following regarding International Business Machines Corporation (NYSE:IBM) in its first quarter 2024 investor letter:
“Among our bottom Q1 contributors short positions in Dick’s Sporting Goods, International Business Machines Corporation (NYSE:IBM) and Palomar Holdings. Though we believe the quality and durability of IBM’s free cash flow-generating capabilities remain questionable, investor sentiment has improved amid optimism for the company’s still-nascent AI product suite.”
5. Trane Technologies PLC (NYSE:TT)
Number of Hedge Fund Investors: 57
Jim Cramer was recently asked about Johnson Controls. He said he likes the stock but also named Trane Technologies PLC (NYSE:TT) among his favorite names.
Trane Technologies PLC (NYSE:TT) is a manufacturing company focusing on heating, ventilation, air conditioning and refrigeration systems. The stock is already up 67% over the past year. The company has benefitted heavily amid demand increases for energy efficiency, decarbonization, and digital transformation solutions, in addition to pricing tailwinds. This growth helped the company offset declines in residential and transportation end markets in 2023. Trane Technologies PLC (NYSE:TT) still has a strong backlog and its data center investments are expected to bear fruit. It’s positioned to benefit from the data center market because it provides cooling solutions, something that’s direly needed for data centers. Trane Technologies PLC (NYSE:TT) management talked in detail about the data center opportunity during Q1 earnings call:
“We talked a little bit about data centers earlier. But look, this is a vertical that tends to move faster from a technology adoption than others. And we’re working closely with partners and data center customers to understand what the trends are and I would tell you, we’re right in the middle of it. In the data center, Andrew, look at the entire system, okay? We like to look at things at a system level. And you’re hearing a lot right now on the terminal side of data center. So that would be like direct cooling to the chip or immersion cooling. We look at the entire system. So the air handling side of it as well as the sophisticated chillers, the high-efficiency chillers with next-gen refrigerants that are also required.
I think where you’re going to hear a little bit more is on the thermal management side of a data center. They produce a lot of heat that heat is taken out of the data center, how can you repurpose it. And that’s some of the technology that we’re in discussions, kind of at a thought leadership level as to how we can take an asset and — or heat and turn it into an asset in the future.
However, Trane Technologies PLC (NYSE:TT) valuation has been a concern for investors. The stock’s forward P/E of 32 is high when compared with the industry median of 19. Over the past five years its P/E has been around 25.69x. Currently, its P/E on FY24 and FY25 consensus EPS estimates are 31.27x and 27.85x, respectively. These valuation metrics do not show any decent discount.
