We recently compiled a list of the Jim Cramer’s Latest Game Plan: 15 Stocks to Watch. In this article, we are going to take a look at where Ferrari N.V. (NYSE:RACE) stands against the other stocks in Jim Cramer’s latest game plan.
Jim Cramer, host of Mad Money, recently weighed in on the factors that will shape market movements this week, pointing to the Federal Reserve’s upcoming meeting and a slew of corporate earnings reports as key developments. However, despite the importance of these earnings, Cramer believes that the presidential election will take center stage and dominate the market’s attention.
READ ALSO Jim Cramer is Talking About These 7 Stocks and Jim Cramer on AMD and Other Stocks
While acknowledging the significance of the election, Cramer emphasized that the Federal Reserve’s next decision is perhaps even more crucial for the markets. He noted that the bond market has been moving in an unfavorable direction, with the situation further complicated by a disappointing non-farm payroll report.
Though this report was skewed by hurricanes and labor strikes, it initially sparked a positive reaction in the bond market, pushing rates lower. Cramer had hoped that this would signal a positive shift, but the optimism was short-lived, as bond sellers quickly drove rates back up to their highest levels since early July.
“In my opinion, the Fed needs to cut rates again. In the last couple weeks, we’ve heard from too many businesses that have made it clear that we have a real slowdown on our hands. Economy’s a little shaky.”
Cramer also reflected on the Fed’s decision to reduce rates in September. He acknowledged that the bond market reacted negatively to the rate cuts at the time despite an economy that appeared relatively strong and a healthy labor market. Cramer discussed the possibility that if the Fed were to cut rates again, the market could see another unfavorable response. However, he remained unconcerned about this potential backlash, arguing that a rate cut could help to generate optimism in certain sectors.
“At this point in my view, if the Fed cuts rates next week, psychologically there’s some hope that we could see a pickup, particularly in housing and autos, two industries that seem to be losing strength by the day.”
Cramer highlighted that both presidential candidates appear willing to expand the federal budget. His main concern, however, was whether either candidate would be able to push their proposed agendas through Congress, a process he described as extremely difficult. Cramer noted that, in his opinion, presidential candidate Trump would likely be a bigger proponent of increasing the budget deficit than presidential candidate Harris, particularly due to the tax cuts Trump favors, which tend to result in larger deficits.
Stating his bottom line, Cramer said:
“… At the end of the day, the market’s still going to be hostage to the election, and perhaps more important, to the Fed meeting.”
Our Methodology
For this article, we compiled a list of 15 stocks that were discussed by Jim Cramer during the episode of Mad Money on November 1. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s 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).
A classic Ferrari sports car against a lush green hillside, symbolizing the company’s luxurious performance.
Ferrari N.V. (NYSE:RACE)
Number of Hedge Fund Holders: 30
Calling Ferrari N.V. (NYSE:RACE) “the king of vehicles”, Cramer said:
“I’m actually talking about Ferrari, which is a monster of a stock. Everything luxury, and I mean everything, has been doing poorly because of China. See, it doesn’t matter for Ferrari because Ferrari’s more of an American stock. It would be shocking if it didn’t have more upside surprise. People keep betting against it, that’s been a sucker’s bet.”
Ferrari (NYSE:RACE) is a renowned Italian company engaged in the design, engineering, production, and global sale of luxury performance sports cars. Known for its high-performance vehicles, it offers a diverse lineup that includes special series, Icona models, supercars, limited-edition cars, and bespoke one-off creations. The company also manufactures racing cars and provides a wide range of after-sales services, such as repair, maintenance, and restoration.
In its third-quarter earnings report, released on November 5, the company revealed a 12.5% increase in adjusted earnings, reaching €2.02 per share, which slightly exceeded analysts’ expectations of €1.99 per share, as reported by Barron’s, citing data from FactSet. The company’s net revenue for the quarter came in at €1.64 billion, aligning with Wall Street’s forecast.
However, Ferrari (NYSE:RACE) faced a slight dip in shipments, with a 2% decrease in the total number of cars delivered compared to the same period last year, amounting to 3,383 vehicles. The decline in shipments was particularly sharp in mainland China, Hong Kong, and Taiwan, where sales dropped by 29% year-over-year. The slowdown in these markets has been attributed to ongoing challenges in China, where efforts to revive growth after the stringent zero-COVID lockdowns have been sluggish, leading to weaker demand for luxury products.
Despite these challenges, the company has largely been able to weather the downturn in its key markets, and its stock price had largely remained resilient prior to the earnings report. The company reaffirmed its guidance for the full year, projecting that annual sales would grow by more than 9%, reaching approximately €6.55 billion by the end of 2024, a forecast it initially issued in August.
Overall RACE ranks 14th on our list of the stocks in Jim Cramer’s latest game plan. While we acknowledge the potential of RACE 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 RACE 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.