We recently compiled a list of the 10 Best Jim Cramer Stocks To Buy According to Analysts. In this article, we are going to take a look at where Cadence Design Systems, Inc. (NASDAQ:CDNS) stands against the other Jim Cramer stocks.
Jim Cramer recently highlighted a promising start to earnings season, pondering whether the two-year-old bull market can continue its upward trajectory during an episode of Mad Money. To address this, Cramer emphasized the importance of keeping emotions in check, cautioning against complacency. He turned to analysis by Jessica Inskip, a prominent figure in the investment community who currently serves as the Director of Investor Research at StockBrokers.com. Inskip, who co-hosts the Market MakeHer podcast, has made important forecasts, including identifying the bottom in big tech growth stocks earlier this year.
“… She nailed the bottom in big tech growth stocks this spring, and she’s been generally bullish, constructive on the major averages all year. And those are terrific calls. Well, as Inskip sees it, things are looking pretty darn good. But even as the rally’s broadening out, moving away from just the Magnificent Seven to a whole host of smaller stocks, she says, we still need tech to participate if we’re going to get another leg higher. Tech doesn’t have to lead the way anymore, but it has to at least follow the leaders.”
Cramer then shifted the conversation to the broader market, querying the potential of stocks outside the tech giants. He pointed out the value of the S&P 500 Equal Weight index, where all 500 components carry equal importance, contrasting it with the traditional market capitalization-weighted index, which heavily favors a few large companies. Cramer noted that 2024 has been particularly favorable for the 493 other stocks within the S&P 500, as the Equal Weight index has shown impressive performance.
“First, you can see this thing’s been doing great because 2024 has been all about the other 493 stocks in the index. Second, Inksip sees a lot to like here. The trading cycle for the S&P 500 Equal Weight is bullish. “
Cramer mentioned that Inskip is keenly watching for higher highs in this sector. While some technicians may view a rising RSI as a warning sign, Inskip reassures that it is not a concern as long as prices continue to climb. Currently, the S&P Equal Weight index remains well above its key quarterly moving averages, according to Inskip. Cramer reiterated the importance of this Equal Weight perspective, emphasizing that the performance is not overly reliant on the Magnificent Seven, as the broader index is being supported by the remaining stocks.
Turning to the Nasdaq 100, which features the hundred largest non-financial stocks on the Nasdaq, Cramer acknowledged that while Inskip sees it in a bullish trading cycle, it hasn’t yet reached new highs like the S&P. Nevertheless, the quarterly moving averages are still trending upward, providing support. Inskip pointed out that the Nasdaq made a higher high back in July, but for it to gain real momentum, it must surpass that peak. Once that level is breached, she believes it could trigger a broader market rally.
Coming toward the conclusion, Cramer said:
“Bottom line, the charts interpreted by Jessica Inskip are looking pretty darn good for the S&P and the Nasdaq 100… We’ve got a much broader bull market than we had six months ago. But if it’s going to keep running, Inskip says we need to see some meaningful participation from tech.”
Our Methodology
For this article, we compiled a list of stocks that Cramer was bullish on during episodes of Mad Money aired in October. We narrowed the list to 10 stocks that were most favored by analysts. We listed the stocks in ascending order of their average analyst price target upside as of October 18. The average price target upside was calculated while the market was open. We also mentioned the hedge fund sentiment around each stock, which was taken from Insider Monkey’s Q2 database of more than 900 hedge funds.
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).
An office of software engineers and designers collaborating on a digital project.
Cadence Design Systems, Inc. (NASDAQ:CDNS)
Average Price Target Upside: 23.05%
Number of Hedge Fund Holders: 64
On October 9’s episode of Mad Money, Cramer said to buy more of Cadence Design Systems, Inc. (NASDAQ:CDNS) shares.
“Stay long [on] it. I just checked in with them again. I think they’re doing incredibly well. Cadence is a winner. Stay long [on] it. Buy some more.”
Cadence Design (NASDAQ:CDNS) offers software, hardware, services, and reusable integrated circuit (IC) design blocks on a global scale. In the previous year, the company achieved sales of $4.09 billion through a diverse network operating across 26 countries. On October 15, TipRanks reported recent insights from Berenberg analyst Nay Soe Naing that highlight the company’s strong position within the semiconductor design solutions sector. Naing emphasizes that the company plays a vital role in fostering innovation in the industry, benefiting from structural trends driven by ongoing technological advancements.
The analyst points out that its business model, heavily reliant on research and development spending, insulates the company from the cyclical nature often seen in the semiconductor market. This unique positioning allows Cadence Design (NASDAQ:CDNS) to maintain stability while capitalizing on growth opportunities.
The report indicates that the company is outpacing its competitors, thanks in part to its high-quality product portfolio and operational efficiency. Furthermore, the potential for capturing market opportunities in AI-driven semiconductor design is expected to accelerate this growth. Supporting this positive outlook, Naing has assigned a Buy rating to the company’s stock, with a price target of $320.
Overall CDNS ranks 4th on our list of Jim Cramer stocks to buy according to analysts. While we acknowledge the potential of CDNS 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 CDNS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
