We recently compiled a list of the Jim Cramer’s Best Performers List: Top 10 Stocks. In this article, we are going to take a look at where AppLovin Corporation (NASDAQ:APP) stands against the other stocks on Jim Cramer’s list of best performers list.
On Wednesday’s Mad Money episode, Jim Cramer took a deep dive into ten stocks, each worth over $1 billion, that have seen significant growth this year. While acknowledging that many of these stocks are speculative, he emphasized that they still hold potential as smart investments.
Cramer suggested that when looking back on this year, two trends will stand out: a steady rise in the S&P 500, and a series of moves that initially seemed almost magical, but were grounded in reality.
Cramer also reflected on the common investment approach of sticking with index funds, noting that it is a popular strategy because it requires minimal effort. But, according to him, simply parking your money in an index fund might not be the best way to maximize returns. Instead, he argued that investors should consider individual stocks with unique characteristics, many of which are speculative since they offer opportunities for much larger gains.
Cramer criticized the tendency among experts to dismiss individual stock investments beyond index funds, saying:
“Far too often we become snobs when we talk stocks. So many experts think that if you venture past the index, you could fall off some sort of intellectual cliff. It makes any gains null and void. It’s as if the huge swath of points you could have gained simply don’t count. But that, people, is nonsense.”
READ ALSO Jim Cramer on Microsoft and Other Stocks and 10 Stocks on Jim Cramer’s Radar
During Wednesday’s episode, Cramer highlighted several stocks that have surged by over 200% this year, choosing to focus only on those with a market cap of more than $1 billion. He did clarify, however, that he was not endorsing these stocks, especially given how much they have already appreciated. Instead, his point was that speculative stocks, despite their volatility, have a valid place in an investment portfolio.
While they come with risks, a small stake in one of these stocks could outperform a much larger investment in an index fund. For Cramer, it is not about avoiding speculative stocks altogether, but recognizing their potential when balanced alongside more stable investments like index funds.
Cramer wrapped up by stressing the importance of considering these high-flying, speculative stocks and said:
“The bottom line: Let’s remember this list of frothy stocks and think of them the next time you’re about to ignore a stock for being too speculative because these names are often the epitome of speculating wisely, which can be the key for terrific long-term performance, of course, only when melded with index funds.”
Our Methodology
For this article, we compiled a list of 10 stocks that were discussed by Jim Cramer during the episode of Mad Money on November 13 and listed the stocks in the order that Cramer mentioned them.
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).
A close-up of a mobile device, showing an advertiser reaching out to a consumer via a software-based platform.
AppLovin Corporation (NASDAQ:APP)
Cramer highlighted AppLovin Corporation’s (NASDAQ:APP) recent earnings beat and mentioned the stock’s gains for the year during Mad Money’s episode.
“Not all these big speculative winners are money losers. Take AppLovin, which helps software developers create apps. While it’s been in business for 12 years, it still feels like AppLovin burst out of nowhere, doesn’t it? Reporting earnings of $434 million, analysts were expecting $319 million, that’s called a beat. It has mobile analytics and [an] in-house gaming division and it’s got an AI-powered acquisition platform that apparently everybody loves and that’s how you get more than 612% gain year to date. That’s right, 612% on a company that really isn’t all that speculative.”
AppLovin (NASDAQ:APP) provides software solutions that help advertisers optimize marketing and monetization, including tools for app measurement, analytics, and in-app bidding, while also operating a portfolio of free-to-play mobile games. Its business took a significant leap forward in 2023 with the launch of its Axon 2 advertising technology. Introduced in the second quarter of 2023, Axon 2 utilizes artificial intelligence to improve ad targeting and optimization, and its impact on the company has been notable.
As per its third-quarter earnings call, Axon 2’s self-learning capabilities, combined with ongoing updates from the company’s engineering team, have significantly improved the platform’s performance. Management highlighted that these advancements led to a notable step change in growth, with Axon 2 being the primary driver behind the company’s success in the quarter.
As a result of the improved technology, AppLovin’s (NASDAQ:APP) software platform revenue surged by 66%, reaching $835 million for the third quarter. In contrast, the company’s legacy apps business, which consists of its portfolio of gaming apps, saw more modest growth, with revenue increasing by just 1% to $363 million.
Overall APP ranks 9th on Jim Cramer’s list of the best performing stocks. While we acknowledge the potential of APP as an investment, 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 APP 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.
