We recently compiled a list of the Jim Cramer’s 10 Handpicked Stocks to Watch. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against Jim Cramer’s other handpicked stocks.
In a recent episode of Mad Money, Jim Cramer expressed concern that there’s too much negativity in the market despite recent movements. He pointed out that while the Dow gained 38 points on Wednesday, the S&P fell 1.16%, and the NASDAQ dropped 3%, people seemed overly focused on what was going wrong. Although he’s not calling it a market bottom, he suggests it’s worth paying attention to what’s going right.
“On a day when the Dow inched up 38 points, the S&P dipped 1.16%, and the NASDAQ declined 3%, I’m willing to declare that there’s too much doom and gloom out there. Look, I’m not trying to call a bottom, let’s make that crystal clear, but I think it’s worth taking a hard look at what’s actually going right—not just what’s going wrong.”
Cramer emphasized that even though the market has been strong this year, heading into a historically tough election season and the worst month of the year means it’s not the time to declare everything is fine. He noted that according to his trusted S&P oscillator, which measures overbought or oversold conditions, the market isn’t oversold yet, so it’s risky to go all-in.
“Sure, the market’s up a lot this year as we head into a tricky election period and historically the worst month of the year. So, only a fool would ring the all-clear bell. Plus, we aren’t even oversold yet—at least not according to the S&P oscillator I swear by, which gauges whether there’s too much buying or selling compared to normal times. You don’t go all-in when the market is overbought like it is now; that rarely works.”
Cramer also countered the idea that a recession is inevitable due to the Federal Reserve’s struggle to control the economy. He agreed the economy is slowing, which is why consumer packaged goods and utility stocks are rallying while more sensitive sectors are struggling.
“At the risk of sounding too bullish, let me refute some of the biggest and baddest stories out there. First, let’s tackle the popular narrative that the economy is slowing at a faster pace than the Federal Reserve can control, leading to an inevitable recession. That’s why consumer packaged goods stocks and utilities are rallying while economically sensitive stocks have been crushed. I won’t deny that the economy is weakening.”
However, he stressed that a Fed rate cut is meant to counter economic weakness, not strength, and hoping for a rate cut while ignoring the downturn is unrealistic. He added that if the upcoming labor report is weak, recession-proof stocks may surge, but if it’s strong, hopes for a rate cut will fade.
“But let’s be realistic: You can’t hope for a Fed rate cut without acknowledging that there’s going to be some economic fallout. The Fed doesn’t cut rates when business is booming. That’s foolish thinking. Rate cuts are meant to combat economic weakness, not strength. If Friday’s labor report is weak, sure, we might see a huge rally in the so-called “recession-proof” stocks. But if the non-farm payroll number is too strong, forget about any rate cut hopes. You can’t have it both ways.”
Our Methodology
The article summarizes a recent episode of Jim Cramer’s Mad Money, where he discussed and recommended several stocks. This article focuses on ten companies that Cramer highlighted and examines how hedge funds perceive these stocks. The companies are ranked based on their level of hedge fund ownership, starting with the least owned and moving to the most owned.
At Insider Monkey we are obsessed with 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).
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
Apple Inc. (NASDAQ:AAPL) is set to release a new phone, which Cramer believes will be impressive. However, he questioned whether the Justice Department might argue that Apple Inc. (NASDAQ:AAPL)’s new success could give it too much bargaining power over app developers.
“On September 3rd, 2020, Apple lost $180 billion in market cap, but it soared 83% versus the S&P’s 60% gain.
Apple Inc. (NASDAQ:AAPL), is about to unveil a new phone that should be fabulous. But maybe it’ll be too fabulous for the Justice Department? They might argue that Apple’s success could give it even more bargaining power over app developers if this phone is that good. But there are plenty of strong competitors to Apple. If you don’t like Apple, you can just buy a Samsung. There’s no smartphone monopoly, so how can there be monopolistic behavior?”
In Q3 2024, Apple Inc. (NASDAQ:AAPL) achieved record revenues of $85.78 billion, a 5% increase from the previous year, driven by a strong 14% rise in services revenue, which hit an all-time high of $24.21 billion. This growth highlights the success of key services like iCloud, Apple Music, and the App Store, showcasing Apple’s resilience and ability to thrive even in challenging economic conditions.
Apple Inc. (NASDAQ:AAPL)’s net income also grew nearly 8% year-over-year to $21.45 billion, with earnings per share reaching $1.40, surpassing analysts’ expectations. Despite a slight decline in iPhone sales, Apple Inc. (NASDAQ:AAPL)’s wearables, home, and accessories segment continued to perform well, contributing $8.4 billion in revenue. Additionally, Apple Inc. (NASDAQ:AAPL)’s gross margin improved to 44.5%, reflecting effective cost management and operational efficiency.
Recent innovations, including the iPhone 15 with new features and the upcoming Vision Pro AR/VR headset, demonstrate Apple Inc. (NASDAQ:AAPL)’s ongoing commitment to technological advancement
Mar Vista Focus strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter:
“Investors were reminded of the strength of the Apple Inc. (NASDAQ:AAPL) ecosystem as management demonstrated how generative AI solutions would be integrated into Apple’s 1.2 billion iPhone installed base. Apple plans to integrate generative AI features into its iOS 18, which will be broadly released in the fall with the iPhone 16. We believe Apple should benefit from generative AI as it will spur a meaningful iPhone upgrade cycle and create new avenues of monetization through its app store and advertising offerings. We believe this will support intrinsic value growth that will range between high-single-digits and low-double-digits over our investment horizon.”
Overall AAPL ranks 3rd on our list of Jim Cramer’s handpicked stocks to buy. 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.