As earnings season kicks off, Mad Money’s host, Jim Cramer reminds investors that bad news can often be factored into a stock’s price ahead of an earnings report. He cited the recent example of PepsiCo, which saw its shares decline before rebounding despite reporting a revenue miss.
Cramer highlighted that when a stock has already faced significant sell-offs leading into a quarter, it is challenging for it to drop further unless the results are exceptionally poor. “This is something you need to keep in mind as we head into earnings season,” he advised, emphasizing the market dynamics at play.
Cramer also expressed his disagreement with the Department of Justice’s exploration of a potential breakup of Google. He argued that such companies play a vital role for consumers, businesses, and the U.S. economy. Acknowledging the power of major tech firms, Cramer pointed out that their substantial customer bases and immense financial resources provide them with advantages that are essential for success.
He went on to say that these companies have become the envy of nations, especially considering that many countries invest heavily in nurturing their own national champions. In contrast, Cramer questioned the approach taken in the U.S., emphasizing the need for capital to foster growth.
“The best companies we have, the best companies in the world, we’re dealing with companies that have done amazing things for the American people, and yet they’re vilified by the Justice Department’s antitrust division, [and] of course, the Federal Trade Commission. Think about it.”
He warned that if the courts side with the DOJ and the FTC, consumers might not benefit as expected. Cramer explained that undermining these companies could open the door for foreign entities, particularly those backed by government subsidies, to fill any gaps left in the market.
“Believe me, if the courts agree with the Justice [Department] and the FTC, let me tell you something. Here’s what’s going to happen. Your prices ain’t coming down, they’re going up. We hurt these companies too much and we don’t have to worry, the PRC will come in with something subsidized by their government that will happily step in the void.”
He challenged the perception that wealth generated by these tech giants is solely hoarded by executives, asserting that investors also stand to gain. He stated:
“You could own the stocks right alongside them. In fact, as I tell CNBC Investing Club members daily, you should…I don’t know what will happen when the Biden administration runs its course, but I gotta tell you, I certainly won’t miss the ruthless prosecution and hectoring of Big Tech…The American government [is] so upset at the power of these companies that it’s insisting the tech titans should simply be less good. To which I say, good for who? Good for what? Certainly not us…Bottom line, I find this endless string of government investigations wrong-headed, pointless, and frankly, even anti-American.”
Cramer’s Latest 10 Lightning Round Stocks
Our Methodology
For this article, we compiled a list of 10 stocks that were mentioned by Jim Cramer during the lightning round of his episode of Mad Money on October 9. 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).
10. Equinor ASA (NYSE:EQNR)
Number of Hedge Fund Holders: 14
Talking about Equinor ASA (NYSE:EQNR) during his lightning round, Cramer said:
“It’s okay. I’m not encouraging buying in that sector. I just think that sector just does not offer as much upside as it used to many, many years ago.”
It is an energy company engaged in a wide range of activities, including the exploration, production, transportation, refining, and marketing of petroleum and other energy sources, both in Norway and internationally. Additionally, it is involved in the development of low-carbon solutions and carbon capture and storage projects.
Recently, Equinor (NYSE:EQNR) announced that it would not proceed with plans to construct a hydrogen pipeline connecting Norway to Germany, a project in collaboration with partner RWE AG. The decision came amid challenges related to securing customers, ensuring supply, and navigating an adequate regulatory framework, as reported by Bloomberg in September. The two companies had initially outlined their intentions to collaborate on hydrogen initiatives in January of the previous year.
Additionally, Equinor (NYSE:EQNR) indicated plans to downsize its renewables division, initiating discussions with unions about the workforce in this area, as reported by Bloomberg in August. An internal memo revealed that the renewables sector is currently experiencing a downturn, and the focus for the next few years will be on positioning the company to compete effectively when the market improves. Pal Eitrheim, the head of the renewables unit, mentioned the necessity for adjustments in light of recent project cancellations due to unfavorable economic conditions.
9. McCormick & Company, Incorporated (NYSE:MKC)
Number of Hedge Fund Holders: 29
A caller asked Cramer about McCormick & Company, Incorporated (NYSE:MKC) during the lightning round, and here’s what he said:
“I think buying it right here is a very good idea… I thought that McCormick did a good job when the company was on the show… I know it’s a staple, and the staples are out of favor when the Fed cuts, but I think that they’re doing a very good job. Brendan Foley really explained the situation well.”
The company is a well-known manufacturer and distributor of spices, seasoning mixes, condiments, and a variety of flavorful products aimed at the food industry. On October 1, Cramer discussed the company and commented:
“This morning we got results from McCormick, the leading maker of spices and seasonings. Once again, the number’s pretty solid. McCormick has delivered a series of good quarters. The stock is now up 23% year to date, outperforming the S&P 500.
Today we got more of the same, McCormick delivered better-than-expected sales, [and] positive volume growth for the first time in nearly three years. We gotta talk about that. Throw in some strong margins and you get a 16-cent earnings beat off a 67-cent basis. On top of that, management raised their full-year sales and earnings forecast.”
In its third quarter, McCormick & Company, Incorporated (NYSE:MKC) reported earnings per share of $0.83, an increase from $0.63 in the same period the previous year. Sales during this quarter were stable compared to the prior year, with only minimal effects from currency fluctuations. It was partly influenced by the company’s decision to divest a small canning business, while the Consumer segment saw a 1% growth in volume.
Additionally, the company achieved an expansion of 170 basis points in gross profit margin compared to the third quarter of last year. The improvement stemmed from a favorable product mix and cost savings derived from the Comprehensive Continuous Improvement (CCI) program.
McCormick & Company, Incorporated (NYSE:MKC) has outlined expectations for 2024, projecting earnings per share to be between $2.81 and $2.86, compared to $2.52 in 2023. The company forecasts that sales will remain relatively unchanged, ranging from a decline of 1% to a gain of 1% compared to the previous year, again with minimal currency impact. It expects to benefit from the pricing actions taken in the prior year and is optimistic about improving volume trends as it moves forward.
8. CAVA Group, Inc. (NYSE:CAVA)
Number of Hedge Fund Holders: 33
When asked about CAVA Group, Inc. (NYSE:CAVA), Cramer said that he likes the company a lot and recommends owning the stock.
“I like Cava very much. You’ll be buying right here, just a couple points from the high. That tends to be not what I want. I don’t want you to buy it up here, I do want you to own it. And if it does come back down, even when it has a 10% drop, I would actually be a buyer of more. That’s how much I believe in this stock long-term.”
The company operates a successful chain of Mediterranean fast-casual restaurants across the United States. The brand emphasizes a diverse menu that includes a variety of dips, spreads, and dressings, which are also available in grocery stores, appealing to a growing consumer interest in Mediterranean cuisine.
Cramer has liked the company for a while now. Back in September, he said:
“It is time to buy Cava. I had Cava CEO Brett Schulman on “Mad Money” Thursday night, and he detailed compelling expansion plans for the fast-casual Mediterranean chain.”
CAVA Group (NYSE:CAVA) has established itself as a rising participant in the fast-casual dining sector. Since its IPO in June 2023, the company has set ambitious growth targets, aiming to expand to 1,000 locations by 2032. By the end of the first quarter following the initial public offering, it operated 279 restaurants, and this number rose to 341 by the second quarter of 2024.
For 2024, it plans to introduce approximately 55 new locations, indicating a strong commitment to its expansion goals. This swift growth shows management’s determination to rapidly increase the company’s footprint in the market. During the second quarter alone. CAVA Group (NYSE:CAVA) reported an average unit volume of $2.7 million, further highlighting the strong appeal of its offerings and the efficiency of its business model.
7. GSK plc (NYSE:GSK)
Number of Hedge Fund Holders: 36
Cramer talked about GSK plc (NYSE:GSK) when a caller mentioned the company’s settlement over its drug, Zantac. He said:
“Yeah, that was huge. I’ve been waiting for that. I was hoping for that. They got the settlements behind them. Now we’re moving on. GSK goes higher.”
The company is a big name in the pharmaceuticals sector and specializes in the research, development, and production of vaccines and both specialty and general medicines aimed at preventing and treating various diseases. One of its products, Zantac, gained widespread recognition after receiving US approval in 1983. Within a relatively short period, Zantac became the top-selling drug globally, achieving annual sales exceeding $1 billion.
However, Zantac’s legacy has taken a complicated turn. In 2020, US regulatory authorities made the decision to withdraw Zantac from the market due to concerns that its active ingredient, ranitidine, could convert into a potentially cancer-causing substance when subjected to heat. The regulatory action triggered a wave of legal challenges against the manufacturer of the drug, leading to tens of thousands of lawsuits.
In response to the growing number of claims, on October 9, GSK plc (NYSE:GSK) announced plans to allocate up to $2.2 billion (£1.68 billion) to settle a significant number of these lawsuits in the US, which include allegations that the discontinued formulation of Zantac was linked to cancer. The company disclosed that it has reached agreements with ten law firms representing approximately 80,000 claimants, covering 93% of the outstanding cases.
In addition to the settlements related to Zantac, GSK plc (NYSE:GSK) will pay $70 million to resolve a whistleblower complaint from a laboratory that accused the company of defrauding the US government by not fully disclosing the potential cancer risks associated with the drug. Despite the settlements and the legal battles, the company has maintained that it does not admit any wrongdoing in these matters.
6. Nextracker Inc. (NASDAQ:NXT)
Number of Hedge Fund Holders: 38
During the lightning round, Cramer discussed Nextracker (NASDAQ:NXT) and said:
“… I talk about some ones that I’ve had winners. When I have a loser, I got to talk about them too. This is a loser. Maybe it can make a comeback.
I got too enthusiastic about it. I thought that the CEO told a really good story, but it was a very uneven story. And now we need many, many things right before it comes back. We’re not buying any more right here until we see something positive occurring.”
The company is a provider of energy solutions that focuses on solar tracking and software technologies tailored for utility-scale and distributed generation solar projects both in the United States and globally.
In its first fiscal quarter, Nextracker Inc. (NASDAQ:NXT) made some strides by acquiring Ojjo, Inc. in June for approximately $120 million. Shortly after, in July, the company also acquired the foundations business of Solar Pile International for about $48 million. Dan Shugar, the founder and CEO, expressed optimism about the company’s performance, noting a strong start to the fiscal year driven by healthy demand for solar trackers in both domestic and international markets.
However, recent developments have led to some caution among analysts. On October 2, Barclays lowered the price target on Nextracker (NASDAQ:NXT) to $47 from $61 and kept an Equal Weight rating. The firm’s analyst highlighted that delays and challenges are likely to persist into the following year, predicting that the installation pace may remain flat or increase only modestly. This subdued market outlook for 2025 suggests that competition for market share will intensify, potentially exerting pressure on average selling prices and profit margins for solar trackers in the U.S.
5. Reddit, Inc. (NYSE:RDDT)
Number of Hedge Fund Holders: 39
During the lightning round, a caller asked Cramer if Reddit, Inc.’s (NYSE:RDDT) stock was still in play and this was his response:
“I like Reddit very much. Steve Huffman’s going to put up some really good numbers. He’s got a great long-term model. I think he’s doing a rather remarkable job at Reddit.”
The company operates a dynamic platform that facilitates the formation of digital communities centered around specific interests, allowing users to engage in conversations by sharing experiences, posting links, and uploading multimedia content. Since March 20, the company has been listed on the New York Stock Exchange, marking a significant milestone in its growth trajectory.
In August, Cramer, mentioning “the eighth-largest IPO”, called it a “pleasant surprise”. He went on to say:
“After speaking to CEO Steve Huffman, a.k.a. “spez,” I think Reddit has the potential to be a good destination for advertisers, but the digital advertising market’s gotten tougher as of late. That didn’t stop Reddit from reporting a pair of strong quarters since it became public. I say keep up the good work, spez—you’re going higher.”
On October 9, Jefferies analyst John Colantuoni initiated coverage on Reddit (NYSE:RDDT) with a Buy rating and a price target of $90. Colantuoni forecasts that the company’s EBITDA will more than double in the next two years, potentially reaching around $450 million. The forecasted growth is attributed to a significant expansion in the user base, which is expected to narrow the monetization gap with competitors.
Moreover, the analyst sees potential for Reddit (NYSE:RDDT) to secure additional high-margin data licensing agreements, which could give a boost to profitability. As the applications for generative AI continue to evolve, the value of the company’s extensive database of contextual content is likely to increase, positioning the company to capitalize on these emerging opportunities.
4. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 47
Super Micro Computer, Inc. (NASDAQ:SMCI) specializes in the development and manufacturing of high-performance server and storage solutions. The company offers various products, including complete server systems, modular blade servers, workstations, networking devices, and various server subsystems. Cramer has made note of the stock being down the past few weeks. Here’s what the Mad Money host had to say:
“It’s too hard. Just go Buy Nvidia. SMCI was down terrible, terrible last few weeks, but I really want you to be in Nvidia, not SMCI.”
While Super Micro Computer (NASDAQ:SMCI) stock went up earlier this year, it was subsequently followed by a significant decline after Hindenburg Research, a short-seller, published a report raising serious concerns. The report alleged accounting irregularities, undisclosed related-party transactions, sanctions violations, and issues with customers. The company responded to these claims, labeling them as “false or inaccurate.”
However, the situation worsened when the company announced a delay in filing its 10-K annual report for the fiscal year ending June 30, which further impacted investor confidence and led to a decline in share prices. Adding to the challenges, recent reports indicate that the U.S. Department of Justice has initiated an investigation into the company. This development raises additional concerns for stakeholders.
On October 9, Barclays maintained an Equal Weight rating and $42 price target on Super Micro Computer (NASDAQ:SMCI). Additionally, the firm revised its fiscal year 2025 earnings per share estimate down to $3.09 from $3.50. The analyst noted that the company is moving towards the midpoint of its guidance, but is experiencing softer gross margins due to an adverse mix shift. Uncertainties surrounding internal controls and the ongoing delay in the 10-K filing are contributing to a cautious outlook, making it difficult to predict a clear resolution for the company.
3. GE HealthCare Technologies Inc. (NASDAQ:GEHC)
Number of Hedge Fund Holders: 49
When asked if it is a good time to get back in the stock, Cramer said:
“It just had a very big run… Sells 21 times earnings. I wouldn’t be surprised. I feel like many analysts hate it. I’d wait for another downgrade and buy more. I would not buy more right here. One of these analysts will flinch and downgrade it. They hate the stock.”
GE HealthCare Technologies Inc. (NASDAQ:GEHC) specializes in the development, production, and marketing of a diverse range of products and services aimed at improving patient diagnosis, treatment, and monitoring. The company’s offerings include advanced imaging technologies, ultrasound devices, patient monitoring systems, and diagnostic agents, all designed to improve clinical outcomes.
During the second quarter, GE HealthCare (NASDAQ:GEHC) announced a collaboration with Amazon Web Services (AWS) to leverage generative AI in transforming healthcare delivery. The partnership aims to streamline processes and improve patient care through innovative technology. Additionally, the company is expanding its capabilities by acquiring a clinical artificial intelligence business from Intelligent Ultrasound, which is expected to further add to its offerings in the ultrasound sector.
Recently, GE HealthCare (NASDAQ:GEHC) announced FDA’s approval of its Flyrcado (flurpiridaz F 18), a new diagnostic agent for heart health. The product is designed for the detection of coronary artery disease (CAD), a leading cause of mortality. Flyrcado is notable for its ability to provide higher diagnostic accuracy than traditional single-photon emission computed tomography (SPECT), offering a more reliable means of assessing blood flow in the heart.
2. Cadence Design Systems, Inc. (NASDAQ:CDNS)
Number of Hedge Fund Holders: 64
Cadence Design Systems, Inc. (NASDAQ:CDNS) is a provider of software, hardware, services, and reusable integrated circuit (IC) design blocks on a global scale. The company specializes in offering functional verification services through its platforms. In addition, it supports digital IC design with tools like Genus synthesis and Modus DFT software, as well as solutions for physical implementation. When a caller asked Cramer if they should stay long with the stock or take a quick profit, he said:
“Not an issue. Stay long [on] it. I just checked in with them again. I think they’re doing incredibly well. Cadence is a winner. Stay long [on] it. Buy some more.”
In recent years, Cadence Design Systems (NASDAQ:CDNS) has seen a notable acceleration in revenue, driven in part by the growing interest from major cloud companies in developing their own chip designs. In the second quarter, the company reported a revenue increase of 9%, reaching $1.06 billion.
Meanwhile, adjusted EPS rose by 1.2% to $1.28, slightly surpassing market expectations. While these growth figures may seem subdued compared to the past few years, they still show a positive trajectory. Furthermore, Cadence Design Systems (NASDAQ:CDNS) adjusted its revenue guidance upward, now forecasting a growth rate of 13% for the year. However, the company also revised its adjusted EPS expectations downward due to increased investments.
1. Accenture plc (NYSE:ACN)
Number of Hedge Fund Holders: 68
Recently, during a lightning round, Cramer highlighted the company praising their strong relationship and effective integration services. He believes the stock is a great investment opportunity at this time.
“That’s one of Jensen Huang’s go-to. Nvidia and Accenture are having a fantastic relationship, doing a terrific job. A lot of companies, indeed, they call Accenture and say how do we get integrated? And then they do it. They just really are good. I think Accenture is a great buy here.”
Accenture plc (NYSE:ACN) is a global professional services firm that specializes in strategy and consulting, technology, and operations. The company has a range of offerings, including but not limited to, application services and intelligent automation.
On October 2, Accenture (NYSE:ACN) and NVIDIA announced an expanded partnership, which will include Accenture’s formation of a new NVIDIA Business Group aimed at accelerating AI adoption among enterprises.
The partnership is particularly significant given the surging demand for generative AI, which contributed to $3 billion in the company’s bookings for the last fiscal year. The new group will support clients in establishing foundational capabilities for agentic AI through its AI Refinery, leveraging the complete NVIDIA AI stack to innovate in areas like process transformation and AI-driven simulations.
Additionally, Accenture (NYSE:ACN) is set to introduce the NVIDIA NIM Agent Blueprint, a tool designed for simulating virtual robot fleets. The blueprint incorporates NVIDIA’s Omniverse, Isaac, and Metropolis software, empowering industrial firms to develop autonomous, robot-operated facilities.
The company plans to implement these advanced capabilities at Eclipse Automation, a manufacturing automation subsidiary. The initiative is expected to advance operational efficiency, achieving design timelines that are up to 50% faster and reducing cycle times by 30% for its clients.
While we acknowledge the potential of Accenture plc (NYSE:ACN) 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 ACN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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