In this article, we will take a detailed look at Jim Cramer Latest Portfolio: 10 Stocks to Buy and Sell.
Jim Cramer in his latest program talked about how the China factor is affecting US stocks. He said that companies that have exposure to China are getting hammered and he does not see that changing “anytime soon.”
Cramer said that currently there are many “pernicious forces working against the bulls.” The CNBC host said many growth stocks are declining right when interest rates are around the corner. He said that companies that don’t benefit from rate cuts are going down. Cramer also mentioned weak earnings reports which show companies having challenged client bases. Cramer mentioned a consumer products company that was recently hammered because of weakness in China.
Cramer thinks the problem in China is twofold: there’s a government that does not like America or American businesses while the population is “cash-strapped” even if they “like our country.”
Cramer said “China is so darn complicated.” He said at one point the Chinese government was “so business friendly” that Western companies thought it’s “insane” not to go there. But since the Trump administration, the country has been engaged in trade wars with the US.
Cramer said the Chinese government “took advantage of us on trade.”
For this article we watched several latest programs of Jim Cramer and picked 10 important stocks he’s talking about. With each stock 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. Dream Finders Homes Inc (NYSE:DFH)
Number of Hedge Fund Investors: 14
Jim Cramer was recently asked about Dream Finders Homes. He said that he “likes the business very much” and people don’t know much about the company.
Homebuilding company Dream Finders Homes Inc (NYSE:DFH) is poised to benefit from the expected rise in home construction activity in the US amid a severe shortage of homes. According to a report from Zillow, the US is short on over 4.5 million homes. While the industry has seen headwinds amid rising rates, in the long term, secular growth catalysts are intact. Dream Finders Homes Inc (NYSE:DFH) net income surged from $121.6 million to $295.9 million over the past three years.
Operating cash flow increased nearly sixfold from $65 million to $374.2 million, while adjusted operating cash flow more than doubled from $160 million to $350.5 million. EBITDA also expanded from $200.2 million to $535.6 million. The cancellation rate of house orders is also inching lower. The cancellation rate, which had surged from 12.2% in 2021 to 21.5% in 2022, fell to 18.3% in 2023.
This year Dream Finders Homes Inc (NYSE:DFH) expects to close 8,250 properties, a 12.8% increase from 2023. This growth would be driven by net new orders and the acquisition of Crescent Homes which the company bought for $185 million.
9. Torm PLC (NASDAQ:TRMD)
Number of Hedge Fund Investors: 16
Jim Cramer was recently asked about Torm plc during a program on CNBC. Here is what he said:
“It has a remarkably high dividend yield. And as long as it has that dividend yield, the stock’s going to stay up. But, when things start going bad, and they always do in this business, that yield’s going to start going down…Be aware, right now, still going up. But these things are slopes, and they just get crushed when that dividend goes down, yield will go down with it.”
Torm PLC (NASDAQ:TRMD) is a shipping company that operates tankers for oil products such as gasoline, jet fuel, naphtha and diesel oil. Torm PLC (NASDAQ:TRMD) is set to benefit in the short term amid a rise in refinery capacity in the Middle East and Africa. Middle East refinery production is estimated to rise 10-15% from the end of 2023, adding over 1 million barrels per day as newly completed refineries ramp up. Torm PLC (NASDAQ:TRMD) is also implementing its strategy of vessel upgrades and expansion. It bought eight medium-range tankers, aged 9-10 years, for $238 million in cash and 2.65 million in company stock. The company also divested an 18-year-old MR tanker for $23.3 million, increasing its fleet to 96 vessels. Torm PLC (NASDAQ:TRMD) bulls believe the company’s 15% dividend yield is safe for the next two years at least amid rising refinery volumes in the Middle East and Africa.
8. Toyota Motor Corp (NYSE:TM)
Number of Hedge Fund Investors: 17
A caller recently asked Jim Cramer about his thoughts on Toyota Motors. Cramer recommended investors to stay away from Toyota and auto stocks in general.
While Toyota Motor Corp (NYSE:TM) shares have gained about 14% over the past one year, analysts are turning bearish on the stock, mostly due to a lack of EV strategy. Instead, the company seems to be doubling down on ICE and traditional cars, which shows the management may be resisting the global shift towards EV which is inevitable. Toyota Motor Corp (NYSE:TM) Chairman Akio Toyoda in a recent statement pitched making better engines to reduce carbon emissions and the company published its strategy in a release entitled “The Engine Reborn.” Analysts took it as a horse cart company pledging to make better horse carts at a time when engine-based cars were starting to appear on the road. This strategic flaw is reflected in the numbers too. Toyota Motor Corp (NYSE:TM) Corolla has lost its title of the most popular car to Tesla Model Y. The company was also in the news amid a safety scandal allegedly involving cheating on certification tests for seven vehicle models.
Toyota Motor Corp (NYSE:TM) overall outlook is also soft. For fiscal Toyota expects to sell 9.5 million units, down from 11.09 million in FY 2024.
7. AeroVironment, Inc. (NASDAQ:AVAV)
Number of Hedge Fund Investors: 20
When asked about AVAV during a latest program, Cramer said people keep telling him the stock is “way too expensive and it has to come down versus the price of Iranian drones.”
“All I know is their drones work and therefore it’s a buy.”
AeroVironment, Inc. (NASDAQ:AVAV) is a defense contractor that makes unmanned aerial vehicles. AVAV shares are up about 41% so far this year, thanks to geopolitical tensions worldwide that have caused the company to double its sales from 2020 to 2024 to nearly $750 million. The company has three business segments: Loitering Munitions (LMS), Uncrewed Systems (UxS), and MacCready Works (MW). While competition is rising in the industry, AeroVironment, Inc. (NASDAQ:AVAV) moat is strong because of its strong R&D spending in innovation that has made its drone reliable. Governments need reliability as compromised data links, unreliable GPS systems could result in destructive defeat for militaries.
Despite the latest pullback in share price following a softer fiscal Q4 earnings report and rival Anduril Industries winning a $300 million contract from the US government, AeroVironment, Inc. (NASDAQ:AVAV) trades at around 50x forward earnings. This valuation is not outlandishly high amid the growth prospects of the AV industry and about a 19% revenue growth estimate set by Wall Street for the company for 2025.
6. SAP SE (NYSE:SAP)
Number of Hedge Fund Investors: 24
Jim Cramer said in a latest program that SAP stock is “incredible.”
“I think SAP is not done going higher.”
SAP SE (NYSE:SAP) is in the news after posting solid Q2 results. Revenue jumped 10% while EBIT exceeded expectations, reaching EUR 1.94 billion, 7% above consensus. Free cash flow came in at EUR 1.3 billion.
The results show that the S/4 HANA migration cycle is bearing fruit and the long-term outlook is also positive.
Ave Maria World Equity Fund talked about this business transition in its first quarter 2024 investor letter:
“SAP SE (NYSE:SAP) provides enterprise application software products worldwide. SAP is successfully transitioning from a perpetual license model to a SAAS model, which we believe will lead to an increase in TAM (total addressable market), higher margins and lower capital intensity.”
SAP SE (NYSE:SAP) restructuring efforts are showing results. In fiscal Q4 its EBIT margin came in at 23.4%, compared with 19.1% in Q2 2023. The company has increased its restructuring provision to EUR 3 billion from the previous EUR 2.2 billion.
The biggest growth catalyst for SAP is AI. AI is now a central part of SAP SE (NYSE:SAP) cloud offerings. About 20% of all deals now include premium AI features, and all ERP and line of business deals had AI in the conversion. SAP SE (NYSE:SAP) talked about the role AI is playing in its business during the latest earnings call:
“Every ERP and LOB deal we closed, our AI strategy played a key role, and AI had a direct impact on our bookings. In the second quarter, almost 20% of all deals included premium AI use cases. And this is just the beginning. Customers have clear plans to expand their AI consumption on their RISE and GROW transformation journeys.
Let me give you some quick updates on our key items in Business AI. Joule is quickly becoming our new user experience, our one front end. We are making our AI copilot an incredible productivity engine for the 300 million people worldwide using our cloud software.”
Read the full earnings call transcript here.
5. Reddit Inc (NYSE:RDDT)
Number of Hedge Fund Investors: 31
Jim Cramer in a latest program said Reddit is one of the “new companies” investors should be “in” because of their “advertising dollars.”
With over 80 million daily active users, Reddit Inc (NYSE:RDDT) remains one of the fastest-growing social media platforms in the world. While Facebook and Twitter show signs of maturing growth, Reddit Inc (NYSE:RDDT) still has huge upside potential as more and more people flock to Reddit discussion boards for authentic opinions and discussion. User input from millions of people on various topics freely accessible to anyone is Reddit Inc (NYSE:RDDT)’s moat. As of 2023, users posted 16 billion comments on the platform, according to the company. That’s why companies are flocking to pay money to Reddit to use its data to train their AI models. Reddit Inc (NYSE:RDDT) has licensing agreement with Alphabet Inc.’s Google worth $60 million to help train large language models. Reddit Inc (NYSE:RDDT) has signed licensing agreements totaling $203 million, with terms lasting two to three years. The company generated approximately $20 million from AI content deals last quarter and expects to exceed $60 million by year-end. Reddit Inc (NYSE:RDDT) has signed licensing agreements totaling $203 million, with terms lasting two to three years.
During the first quarter Reddit Inc (NYSE:RDDT) revenue soared 40% year over year. Wall Street expects the company’s fiscal 2025 revenue to rise 21% on a YoY basis. Daily active users in the first quarter jumped 37% y/y.
4. Axsome Therapeutics Inc (NASDAQ:AXSM)
Number of Hedge Fund Investors: 33
A caller recently asked Jim Cramer about AXSM. Here is what he said:
“This is central nervous system, CNS. If you can make a breakthrough in CNS, your stock will double. If not, it will just go down. That’s a double or nothing stock right there.”
Axsome Therapeutics Inc (NASDAQ:AXSM) is making treatments for central nervous system (CNS) disorders. The company has two approved drugs on the market. The first is Sunosi, which is used for treating excessive daytime sleepiness in patients with narcolepsy or obstructive sleep apnea. The second is Auvelity, approved for treating major depressive disorder. But what makes the stock interesting is the list of several candidate drugs. These include an oral candidate for Alzheimer’s disease agitation, a candidate treatment for acute migraines, a potential treatment for narcolepsy, and a candidate treatment for fibromyalgia.
As of the end of the first quarter, Axsome Therapeutics Inc (NASDAQ:AXSM) had $330 million in cash and marketable securities on its balance sheet.
Needham recently started covering the stock with a Buy rating, citing revenue growth potential. The firm sees Axsome Therapeutics Inc (NASDAQ:AXSM) risk-adjusted revenue growing by 8 to 10 times in five years.
3. Trane Technologies PLC (NYSE:TT)
Number of Hedge Fund Investors: 46
When asked about Trane Technologies, Cramer hit the “buy, buy, buy” button and said:
“Hard to stop a Trane…Trane is for real.”
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.
NZS Capital stated the following regarding Trane Technologies plc (NYSE:TT) in its fourth quarter 2023 investor letter:
“We had no major shifts in our portfolio positioning, but what changes we made stemmed from stock-specific opportunities. We remain highly exposed to information technology given our focus on innovation and disruption, but we are increasingly finding opportunities in other sectors. For example, we shifted Trane Technologies plc (NYSE:TT) into our resiliency sleeve. Trane, which we discuss in greater detail below, is a leader in HVAC, an attractive industry aligned with decarbonization.
Our disciplined approach considers two types of stocks: resilient and optional. In both cases, we consider a broad range of outcomes. Rather than making one prediction and investing behind it, we consider the range of scenarios that provide a favorable return. A stock with a broader range of outcomes, and thus more uncertainty, is considered optional and remains less than 1.5% typically. A company with a narrower range of outcomes gives us more confidence and can fit in the resilient sleeve, which typically includes positions sizes from 2.5% positions to 6% of the portfolio
2. Texas Instruments Inc (NASDAQ:TXN)
Number of Hedge Fund Investors: 49
Jim Cramer in a latest program praised Texas Instruments’ latest earnings.
Cramer said that historically Texas Instruments has been “spiteful” of Wall Street and their conference calls were “very uncomfortable.”
“But that’s gone. The contemptuous attitude is gone.”
Cramer said the upcoming CapEX meeting of Texas Instruments is going to be “very positive.”
UBS recently published a list of high-quality stocks that also pay dividends. Texas Instruments Inc (NASDAQ:TXN) made it to the list. The stock has a 2.61% dividend yield as of July 3.
Texas Instruments Inc’s (NASDAQ:TXN) valuation has been a concern for many amid a lack of strong growth catalysts. The stock’s forward P/E is 37.80, much higher than the industry median of 24. The average analyst price target on the stock is $181, which is lower than its July 3 closing price of $198. According to data from Yahoo Finance, Wall Street expects Texas Instruments Inc’s (NASDAQ:TXN) earnings to fall by 6% over the next five years on a per-annum basis.
Texas Instruments Inc (NASDAQ:TXN) makes most of its revenue from Industrial applications, Automotive and Personal Electronics. During the first quarter earnings call the management said the industrial segment was down “upper-single digits. The automotive market was down mid-single digits. Personal electronics was down mid-teens. Next, communications equipment was down about 25%.”
“First, we saw personal electronics was the first market that went into the correction. It really is — was the first to come out in the last few quarters, I’d describe it as behaving more seasonal. If you go to the other end of the spectrum, we have, had industrial, which has been declining sequentially from some time. And over the last few quarters, we’ve been talking about how there’s some asynchronous behavior inside of the 12, 13 sectors that we have there. That continued inside of the quarter. So we have got some of the later-cycle sectors that are continuing to decline and declining at double-digit rates. But there are some that are beginning to — begin to slow in the declines and even a couple that grew sequentially.”
Madison Investors Fund stated the following regarding Texas Instruments Incorporated (NASDAQ:TXN) in its Q2 2024 investor letter:
“At semiconductor manufacturers Analog Devices and Texas Instruments Incorporated (NASDAQ:TXN), sales and profits continue to decline due to weak demand, as well as customers and distributors reducing inventory after building it up during the supply chain induced shortages a few years back. However, the shares of both companies appreciated nicely during the quarter as the cycle appears to be bottoming, and investors better appreciate the industry’s secular demand characteristics. We believe this sets the conditions for a nice rebound in profits for these companies over the coming years.”
1. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 186
Cramer in a latest program talked about several positive developments for Nvidia stock. A Wall Street analyst has said the stock will go to $175, while media reports suggest the company is making a chip for China that won’t be “prosecuted” or “pulled off” by “this administration” according to Cramer. But Cramer questioned the possibility of a China chip from Nvidia getting approval if Trump comes to power.
“A Harris presidency is much more benign for Silicon Valley than a Trump presidency. Do you think they’ll be able to come up with a Chinese chip that Trump would approve of? You kidding me?”
Raymond James analyst Javed Mirza recently said in a report that NVDA has “triggered a mechanical sell signal” based on a moving average convergence/divergence indicator. In a technical analysis report, he stated that the stock is trading below its 50-day moving average and exhibiting early signs of selling pressure. This, according to Mirza, shows there is a looming corrective phase lasting 1-3 months. He added that a sustained break below the 50-day moving average could lead to a decline towards 94.94, representing a further 16.9% drop from current levels.
NVIDIA Corp (NASDAQ:NVDA) rapid run and soaring valuation have started to make some circles on Wall Street uneasy. New Street Research recently downgraded the stock to Neutral from Buy and set the stock’s price target at $135.
“We downgrade the stock to Neutral today, as upside will only materialize in a bull case, in which the outlook beyond 2025 increases materially, and we do not have the conviction on this scenario playing out yet.” New Street analyst Pierre Ferragu said.
NYU professor and valuation guru Aswath Damodoran has also been skeptical about NVDA over the past several months, saying repeatedly that the stock looks overvalued. In March, when he was asked about his previous predictions (that proved wrong) about NVDA valuation, the professor said that either he has “no idea what I’m talking about” or it’s the market that just does not understand.
Aswath Damodoran at the time said that while Nvidia was in the “driving seat” of the AI bandwagon, its path to profits won’t be as easy as the market assumes.
Recently, Oppenheimer’s Rick Schafer joined the NVIDIA Corp (NASDAQ:NVDA) chorus, raising the chipmaker’s price target to $150 from $110 following the 10-1 stock split.
Patient Capital Opportunity Equity Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) continued to lead both the market and the portfolio, remaining a top performer in the period gaining 36.7%. Nvidia is the market leader in designing and selling Graphics Processing Units (GPU), which has recently benefited from the insatiable demand of artificial intelligence (AI) models. The company currently captures 92% market share of data center GPUs and grew revenue, earnings and free cash flow (“FCF”) an astounding 126%, 392%, and 610%, respectively, over the last year. While we expect competition to increase, we think NVDA can continue to maintain top market share. While many are concerned with backlog times shortening, we think the rollout of the B100, which promises 2.5x better performance for only 25% more cost, later this year will create more shortages. With leading edge technology, an increasing innovation cycle and strong cash generation, the company is well positioned for the increased adoption of artificial intelligence (AI).”
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA), 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 NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
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