We recently published a list of 10 Large Cap Stocks Jim Cramer Can’t Stop Talking About. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against the other large cap stocks Jim Cramer can’t stop talking about.
In a recent episode of Mad Money, Jim Cramer highlights a critical gap in the American education system, which often overlooks financial literacy despite its importance. While students may graduate with extensive knowledge in subjects like chemistry, history, and languages, they rarely receive practical education on managing personal finances. Cramer emphasizes that financial planning, retirement readiness, and investing are seldom covered, leaving many people uninformed about crucial money management skills.
“There is a gaping hole in the American education system, although I hesitate even to call it a system. When you go to high school, they teach you chemistry, geometry, and physics. You have English classes, history classes, and foreign language classes. You can graduate from college speaking three languages with a deep understanding of quantum physics or ancient philosophy. But you know the one thing they almost never teach you in middle school or high school, let alone college? Financial literacy.
And I’m not talking about economics here—you could be an econ major and still learn nothing about financial planning or retirement readiness, let alone investing. Money is just not talked about. Frankly, it’s become the third rail of American education. You’re a thousand times more likely to read Marx’s “Das Kapital” than to read anything about planning a budget or picking stocks.”
Cramer’s mission is to bridge this gap through the CNBC Investing Club, where he and the Charitable Trust provide practical financial guidance. He stresses the significance of retirement planning, noting that while 401(k) plans and Individual Retirement Accounts (IRAs) are key tools for saving, many people lack comprehensive understanding of their benefits and limitations.
“That’s why I’m on a constant mission to teach you how to manage your money, which is what we do every day in the CNBC Investing Club, with the Charitable Trust providing a constant source of examples. When it comes to managing your money, nothing is more important than retirement. Sooner or later, you’re going to stop working—hopefully sooner rather than later, unless you really love your job. I’m betting most of you, even if you don’t own individual stocks, still have some money in a 401(k) plan.
Decades ago, corporate pensions started going the way of the dodo, and now the 401(k) is the main way that Americans save for retirement. They’re offered by your employer, and they’re among the greatest tax-deferred investment vehicles out there, along with the IRA. And I’m not talking about the Irish Republican Army—I’m not even talking about the Inflation Reduction Act, for that matter. I mean the Individual Retirement Account.”
Cramer points out that while contributing to a 401(k) is widely advised, it’s not always the best strategy for everyone. Despite its tax advantages and the ability to defer taxes on contributions, 401(k) plans can have drawbacks, such as hidden fees that diminish returns.
“Hear me out, darn it—you need to know this stuff. Your future self will thank you for getting your retirement funds in order. While you may think you know everything you need to know about these tax-favored accounts, the truth is there’s a lot the so-called experts don’t tell you or don’t want you to know. For example, conventional wisdom says that you absolutely must invest in your 401(k)—you’d have to be a fool not to contribute.
Many experts will even advise you to max out your 401(k) contributions every year if you can afford to. Right now, the maximum contribution is over 20 grand, with room for an additional 7 grand if you’re over 50. It tends to rise gradually over time, usually a little faster than inflation. In 2004, it was $13,000; by 2023, it was $22,500. Either way, that’s a serious chunk of change, even with these contributions coming from your pre-tax income.”
He argues that understanding both the benefits and the shortcomings of these retirement accounts is essential for making informed financial decisions. Cramer encourages individuals to educate themselves about these investment options to ensure their retirement savings are managed effectively.
“However, sometimes I think it can be the wrong approach. I’m not going to sing the praises of the noble 401(k) plan or tell you it’s the key to your financial salvation because 401(k) plans can be a real mixed bag. Sure, they have a couple of really great features, but they also have a lot of bad ones, and those problematic features will eat away at your returns—sometimes through fees that are almost totally hidden from you. I do not like that. So let me lay out the good, the bad, and the ugly of 401(k) plans. Then I’ll tell you whether it makes sense for you to contribute more money to your own 401(k)—maybe there’s a better way for you to invest for retirement.”
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A wide view of an Apple store, showing the range of products the company offers.
Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Investors: 184
Market Capitalization: 3.38T
Jim Cramer explains that while some experts argue that Apple Inc. (NASDAQ:AAPL)’s stock appears expensive, this perspective overlooks the company’s strong cash flow, which supports its value. Cramer highlights a recent insightful piece by Ben Rice from Melius, which argues that despite the market’s current overbought conditions, investors should hold onto their Apple Inc. (NASDAQ:AAPL) stock.
“Another firm mentioned that Apple’s stock is expensive, which it is—unless you consider the cash flow instead of just the earnings. The piece by the irrepressible Ben Rice from Melius made so much sense that you know you need to hold on tight and not feel compelled to sell your Apple stock when the market gets overbought, as it is now. The tech titans, the hyperscalers, the colossal portion of the market—yes, the mega stocks—they just come back every time you sell. But short-term signals say to sell. To me, that means it’s time to bunker down and accept the unavoidable small losses. These stocks are just too good to let go. Bottom line: Hold on to them.”
In Q3 2024, Apple Inc. (NASDAQ:AAPL) reported record revenues of $85.78 billion, marking a 5% increase from the previous year. This growth was driven primarily by a 14% rise in services revenue, which reached an all-time high of $24.21 billion. Key services like iCloud, Apple Music, and the App Store have become significant contributors to Apple Inc. (NASDAQ:AAPL)’s financial success, demonstrating its ability to perform well even amid economic challenges. Apple Inc. (NASDAQ:AAPL)’s net income also grew nearly 8% year-over-year to $21.45 billion, with earnings per share rising to $1.40, exceeding analysts’ expectations.
Apple Inc. (NASDAQ:AAPL)’s investment in artificial intelligence, especially with the launch of the new Apple Intelligence platform, is set to bolster future growth by enhancing user experiences across its ecosystem. Although iPhone sales experienced a slight decline and sales in Greater China fell by over 6%, Apple Inc. (NASDAQ:AAPL)’s focus on expanding its services and AI capabilities provides a solid growth outlook.
Overall AAPL ranks 2nd on our list of the large cap stocks Jim Cramer can’t stop talking about. While we acknowledge the potential of AAPL as an investment, 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 AAPL 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.
