We recently published a list of Jim Cramer Latest Lightning Round: Top 10 Stocks to Watch. Since IBM Common Stock (NYSE:IBM) ranks 6th on the list, it deserves a deeper look.
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).
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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.
Overall, Trane Technologies PLC (NYSE:TT) ranks 5th on Insider Monkey’s list titled Jim Cramer Latest Lightning Round: Top 10 Stocks to Watch. While we acknowledge the potential of Trane Technologies PLC (NYSE:TT), our conviction lies in the belief that 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 TT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
