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 MicroStrategy Incorporated (NASDAQ:MSTR) 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 software engineer wearing a headset, collaborating with a remote team on a project.
MicroStrategy Incorporated (NASDAQ:MSTR)
Cramer mentioned that many companies have tried to copy MicroStrategy Incorporated (NASDAQ:MSTR) but advised his viewers to go for the stock and not the imitators.
“Next, if the president wants to do a strategic Bitcoin reserve, he might as well buy stock in MicroStrategy, which owns 252,220 Bitcoin at the end of September… This was another company that seemed cockeyed because… it was known as a business intelligence software company. There are many other smaller companies that have tried to mimic MicroStrategy’s pivot but why own a pretender when you can own the real thing, the one that’s up nearly 419% for the year.”
MicroStrategy (NASDAQ:MSTR) offers AI-powered enterprise analytics software and services, and various support, consulting, and educational services. The company is also involved in Bitcoin development. In July, at a conference, founder and executive chairman, Michael Saylor, was vocal about his bullish outlook on Bitcoin. Saylor shared his belief that Bitcoin could reach a price of $13 million by 2045, in what he described as his base case scenario.
Saylor also outlined a more optimistic scenario, suggesting that Bitcoin could rise to $49 million and account for as much as 22% of global wealth. On the flip side, he presented a bear case in which Bitcoin might only reach $3 million, making up 2% of global wealth. The company’s commitment to Bitcoin has continued to grow, with the company actively increasing its holdings over the past few quarters. This aggressive acquisition strategy is part of a broader vision that Saylor refers to as the “21/21 Plan.”
In October, Saylor announced a new phase of this plan, which involves raising $42 billion over the next three years to fund further Bitcoin purchases. Half of the funds would be raised through new at-the-market offerings of company shares, while the other half would come from new fixed-income offerings, primarily in the form of convertible debt.
Saylor’s plan reflects his belief that we are currently in the midst of what he describes as a decade-long Bitcoin “gold rush.” As part of this vision, MicroStrategy (NASDAQ:MSTR) aims to transform itself from an enterprise software company into what Saylor now calls a “Bitcoin Treasury Company” or BTC.
Overall MSTR ranks 8th on Jim Cramer’s list of the best performing stocks. While we acknowledge the potential of MSTR 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 MSTR 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.
