We recently compiled a list of the Jim Cramer’s Top 10 Bullish Stock Picks. In this article, we are going to take a look at where Steel Dynamics Inc. (NASDAQ:STLD) stands against Jim Cramer’s other bullish stock picks.

In a recent episode of Mad Money, Jim Cramer expressed his enthusiasm for the current market, highlighting a significant historical perspective. He reminded viewers that 20 years ago, Google went public at $85 per share and closed its first day up 18%. While many traders were thrilled by this initial gain, looking back, it was a major missed opportunity. The stock has since delivered a 7,736% return, far exceeding the S&P 500’s return of just over 600%. This example illustrates the potential wealth individual stocks can offer compared to broader indices, especially if you choose wisely.

“Twenty years ago today, Google went public at a split-unadjusted price of $85 per share. On its first day, the stock closed up 18%. Many traders, thrilled by this initial gain, took the profit. In retrospect, this was one of the greatest mistakes of all time. It has since delivered a 7,736% return, compared to the S&P 500’s return of slightly more than 600% with dividends. This serves as a reminder of the wealth that individual stocks can generate compared to indices when you choose wisely. And I’m telling you, it’s not that hard if you know how to research. So, I think it’s time to reconsider the average approach, at least for today.”

Cramer noted that, despite a strong recent performance—with the Dow gaining 237 points, the S&P 500 up 0.97%, and the NASDAQ increasing by 1.39%—the short-term market outlook is more complex. The market is currently on its longest winning streak since November of last year, with 93% of S&P 500 stocks showing gains.

However, he cautioned that the market might be “overbought,” as indicated by the Market Edge oscillator, a tool Cramer has relied on since 1987. When the oscillator reaches plus five or higher, it signals that it might be time to sell. Conversely, readings of minus five or lower indicate oversold conditions, suggesting it’s a good time to buy.

“Even though it was another good day for the markets. we need to consider both the short-term and long-term outlooks. The short-term setup isn’t as favorable. We’re currently on a significant winning streak, with the market having risen for straight days, the longest streak since November of last year. Impressively, 93% of the S&P 500 stocks are up. “

This follows a Monday when the market dropped sharply due to the Yen carry trade imploding, which led to a wave of forced selling and subsequent panic.

“As I’ve often said, panic is not a strategy. Since that panic, the market has mostly been trending upward.”

Jim Cramer has also expressed concern about the upcoming Justice Department case challenging the search engine giant’s role in the advertising exchange market. This legal issue could have a significant negative impact on it, a company that has greatly benefited from this setup. A victory for the Justice Department could be even more damaging than the previous issue with Apple over default search engine payments, which contributed to its monopoly concerns.

According to Cramer, the resilience of tech giants is evident, with strong recoveries even after short-term dips. (see 33 Most Important AI Companies You Should Pay Attention To).

Jim Cramer emphasizes that investing in truly exceptional companies, rather than merely following market indices, usually leads to the best returns. Cramer advises investors to avoid panicking during market fluctuations and to maintain their focus on holding strong companies for long-term success.

“As we move forward, it’s important to remember that investing in truly great companies, rather than just following the index, often yields the best returns. The substantial gain from Google over 20 years exemplifies this. Avoiding panic during market turbulence and sticking with strong companies is crucial for long-term success.”

Our Methodology

In this article, we reviewed a recent episode of Jim Cramer’s Mad Money and highlighted ten stocks that he is optimistic about. We also included information on hedge fund sentiment for each stock and ranked them based on how many hedge funds own each one, starting with the least owned.

At Insider Monkey we are obsessed with 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).

Steel Dynamics Inc. (NASDAQ:STLD)

Number of Hedge Fund Investors: 34

Jim Cramer discussed Steel Dynamics Inc. (NASDAQ:STLD) in response to a viewer’s question. He stated that while Steel Dynamics Inc. (NASDAQ:STLD) is a strong company, it faces challenges due to a surge in steel imports from China via Mexico. Cramer noted that there is insufficient enforcement against these imports, which is negatively impacting Steel Dynamics Inc. (NASDAQ:STLD) and its competitor, Nucor Corporation (NYSE:NUE).

“Steel Dynamics is an excellent company, but we are currently facing a wave of steel dumping by China that is coming through Mexico. We are not effectively addressing this issue, which is negatively impacting Steel Dynamics and Nucor, the two best companies in the industry. It’s difficult to watch, and even though the stock is very cheap, I cannot endorse it at this time due to the situation unfolding below the border.”

Steel Dynamics Inc. (NASDAQ:STLD) is set for substantial growth thanks to its strong earnings and efficient operations. Steel Dynamics Inc. (NASDAQ:STLD)’s investment in a new flat-roll steel mill in Sinton, Texas, will increase its production capacity and improve profit margins. This growth is supported by ongoing U.S. infrastructure projects and high demand for steel in the automotive and construction industries. Steel Dynamics Inc. (NASDAQ:STLD) also benefits from its integrated business model, which includes steel production, metal recycling, and steel fabrication, allowing it to manage costs effectively and boost profitability.

Steel Dynamics Inc. (NASDAQ:STLD)’s use of Electric Arc Furnace (EAF) technology supports its commitment to sustainability and meets the growing demand for environmentally friendly steel. Additionally, with a strong balance sheet, low debt, and robust cash flow, Steel Dynamics Inc. (NASDAQ:STLD) is well-positioned to pursue further growth opportunities, including acquisitions and rewarding shareholders.

Here’s what the Chief Financial Officer of Steel Dynamics Inc. (NASDAQ:STLD), Theresa E. Wagler has to say in their latest earnings call:

“Good morning everyone. Thanks for joining us and thanks to teams for another followed performance. Our second quarter 2024 net income was $428 million or $2.72 per diluted share with adjusted EBITDA of $686 million. Second quarter 2004 revenue of $4.6 billion was slightly below sequential first quarter results due to lower realized steel pricing. Our second quarter operating income of $559 million was 26% lower than first quarter results driven by steel metal spread contraction as pricing declined more than scrap raw material costs. Our steel operations generated operating income of $442 million, 34% lower sequentially due to average realized pricing declining $63 to $1,138 per ton, while total shipments were generally steady.

Uniquely, all of our steel mills, except for Roanoke had planned maintenance outages in the second quarter, which impacted utilization and related conversion costs for the quarter. Additionally, our Sinton, Texas flat rolled steel division operated close to 60% of capacity for the quarter compared to almost 70% in the first quarter due to required outages to implement needed changes, which Barry will describe in a moment. Operating income from our mills recycling operations was $32 million, significantly higher than sequential first quarter results despite lower realized pricing as volumes increase and the team continues to gain operating efficiencies. As many of you already know, we’re the largest North American metals recycler processing and consuming ferrous scrap and non- ferrous aluminum, copper and other metals.” (Continue reading here…)

Overall STLD ranks 10th on our list of Jim Cramer’s top bullish stock picks. While we acknowledge the potential of STLD as an investment, our conviction lies in the belief that under the radar 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 STLD 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.