We recently published a list of Jim Cramer October Portfolio: Top 10 Stocks to Buy and Sell. Since Rivian Automotive Inc (NASDAQ:RIVN) ranks 7th on the list, it deserves a deeper look.
Jim Cramer in a latest program commented on the latest stronger-than-expected jobs report, calling it “good news” and expressed surprise at how the stocks “roared” on the report.
“For years, we have been taught that when buying yields go up, stocks go down. Ever since the Fed gave us that double rate cut last month, we have been afraid that they have been acting so decisively. Something might be wrong with the economy—something they knew about, but we didn’t.”
Jim Cramer was also surprised by bank stock gains. He said that these stocks probably rose because a strong employment situation means fewer bad loans. Cramer also said we might be heading to “no landing at all.”
“People have a collective sigh of relief that we weren’t headed for a crash landing. They held onto their stocks with both hands.”
For this article we watched several latest programs of Jim Cramer and picked 10 stocks he’s talking about. With each company we have mentioned its number of hedge fund investors. 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).
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Rivian Automotive Inc (NASDAQ:RIVN)
Number of Hedge Fund Investors: 37
Rivian Automotive Inc (NASDAQ:RIVN) recently cut its production guidance citing parts shortage. Commenting on the development, Cramer said:
“I want to believe that Rivian is right; I believe they’re terrific and have the backing of Amazon. I want to believe they’re right that it’s a part and not a demand. This sector, away from Tesla, is sheer hell right now.”
Jim Cramer seemed reluctant to fully accept that this was a parts problem since he said no one in the industry is having parts shortage issues because supply-chain headwinds are now behind us. However, he called the company “terrific.”
Rivian Automotive Inc (NASDAQ:RIVN) indeed deserves a wait-and-see approach. As of the end of Q2, Rivian reported $7.88 billion in cash and $5.53 billion in debt, resulting in a net cash position of $2.35 billion. The company recorded a free cash flow burn of $2.56 billion in the first half of FY24, largely attributed to significant capital expenditures aimed at transitioning its manufacturing operations. Adjusted EBITDA losses for the same period were lower, at $1.66 billion. The company has maintained an adjusted EBITDA loss forecast of $2.70 billion. This suggests that losses in the second half will amount to $1.04 billion, reflecting a 33% improvement over the first half, driven by cost savings from its second-generation R1 vehicles.
Rivian Automotive Inc (NASDAQ:RIVN) current cash reserves, coupled with additional investments from Volkswagen—which will help offset substantial R&D costs associated with launching the R2 model—should provide the company with a sufficient runway through 2026 and beyond.
Meridian Hedged Equity Fund stated the following regarding Rivian Automotive, Inc. (NASDAQ:RIVN) in its Q2 2024 investor letter:
“Rivian Automotive, Inc. (NASDAQ:RIVN) is a US-based electric vehicle manufacturer focused on the design, development, and production of electric adventure vehicles, pickup trucks, and commercial delivery vans. We own Rivian because we believe the company is a future leader in the growing electric vehicle market with a strong brand, compelling products, and a vertically integrated business model. During the quarter, Rivian’s stock price was driven by its progress on cost reduction initiatives and management’s stated confidence in achieving positive gross margins by the end of 2024. The recent announcement of a joint venture with Volkswagen, involving up to $5 billion in investment, also significantly boosted Rivian’s financing outlook and validated its technology. We trimmed our position in Rivian given the strong performance in the quarter.”
Overall, Rivian Automotive Inc (NASDAQ:RIVN) ranks 7th on Insider Monkey’s list titled Jim Cramer October Portfolio: Top 10 Stocks to Buy and Sell. While we acknowledge the potential of Rivian Automotive Inc (NASDAQ:RIVN), 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 RIVN 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.