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 New Fortress Energy Inc. (NASDAQ:NFE) 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).
A cutaway view of a modern energy infrastructure and its power generation facilities.
New Fortress Energy Inc. (NASDAQ:NFE)
Average Price Target Upside: 76.41%
Number of Hedge Fund Holders: 20
Cramer has previously praised New Fortress Energy Inc.’s (NASDAQ:NFE) CEO and said:
“… This Wes Edens, he is so good. It’s down like three quarters, like down like 75%. I think that you have to stick with it. I’ve been wrong. I’ve been wrong in New Fortress because I believe in Wes so closely. I’d love Wes to come back on the show.”
New Fortress Energy (NASDAQ:NFE) operates as an integrated company focused on transforming gas into power and providing energy infrastructure services worldwide. It has been navigating a challenging landscape recently, prompting significant adjustments to its financial strategy. On October 5, Morgan Stanley downgraded the company stock to Equal Weight from Overweight with a price target of $15, down from $35.
The company has recently taken several measures to tackle issues related to liquidity and refinancing, which helps alleviate a significant concern. The firm notes that although the company’s shares are currently valued below the fair market price for its existing assets, it faces increased execution risks due to high leverage and an elevated interest burden. The analyst pointed out that project delays, cost overruns, and the premature termination of the FEMA contract in Puerto Rico have exerted additional pressure on the company’s financial health.
To address these challenges, New Fortress Energy (NASDAQ:NFE) has recently negotiated with creditors to exchange several outstanding notes—6.75% notes due in 2025, 6.50% notes due in 2026, and 8.75% notes due in 2029—for new notes with a higher interest rate of 12%, due in 2029. The arrangement also involves securing the new notes with a 49% stake in the company’s operations in Brazil, providing creditors with enhanced collateral.
Additionally, the company moved to improve its capital position through a public offering, successfully selling 46.3 million shares at a price of $8.63, which resulted in a capital raise of approximately $400 million. It is important to note that chairman and CEO Wesley R. Edens demonstrated confidence in the company by purchasing 5.8 million shares in this offering.
Overall NFE ranks 1st on our list of Jim Cramer stocks to buy according to analysts. While we acknowledge the potential of NFE 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 NFE 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.
