On Monday, Jim Cramer discussed the insights of chartist Bob Lang, who expressed an optimistic view about a number of subscription-based stocks. Mad Money’s host said:
“Of course, the one thing we don’t have in this environment is any sense of certainty and when the fundamentals are uncertain, I like to fall back on the technicals and that’s why tonight, we’re going off the chart with the help of Bob Lang.”
Cramer pointed out that in today’s unpredictable market, where the fundamentals often lack clarity, he tends to rely on technical analysis and this is where Lang’s expertise comes in. Cramer explained that Lang, who founded ExplosiveOptions.net and authored Know Your Options, is known for his ability to read charts and identify promising stocks.
READ ALSO: Jim Cramer Focused On These 9 Stocks Recently and Jim Cramer Talked About 7 Stocks & Stagflation Fears
The focus of Lang’s analysis was on consumer-oriented companies that can still perform well, even when economic conditions slow down. According to Lang, businesses with strong subscription models are particularly appealing in such an environment. Cramer echoed the sentiment, saying he has always been a fan of subscription-based models and fully agreed with Lang’s perspective.
Cramer also turned his attention to several technical indicators that can help predict potential changes in a stock’s direction, specifically the Moving Average Convergence/Divergence (MACD). He explained that it is a tool that technicians, like Lang, often rely on. Cramer explained that the MACD is a powerful momentum indicator, capable of identifying shifts in a stock’s trajectory before they occur. By acting on these early signals, investors can position themselves ahead of potential price movements. Another important tool Cramer mentioned was the Chaikin Money Flow, which tracks the buying and selling pressure of a stock, providing further insight into a company’s potential performance.
Our Methodology
For this article, we compiled a list of 5 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on March 24. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Jim Cramer Recently Talked About These 5 Subscription Stocks
5. Spotify Technology S.A. (NYSE:SPOT)
Number of Hedge Fund Holders: 101
Cramer shared that Lang observed Spotify Technology S.A. (NYSE:SPOT) recently tested its 50-day moving average, only to bounce back with a solid increase in volume. He went on to say:
“Then the stock’s MACD line has already made that crossover that we like so much. See that right there? They’re all about to do this. That’s one of the most reliable signs of the business. Lang says Spotify is now building a base at a higher level.
It started trading sideways, but in this view that often means the next move will be in the same direction as the previous move, which means it’s going higher. Spotify’s Chaikin Money Flow, not bad, right? Still positive. In fact, it’s been positive since November. Even the big sell didn’t scare the big money away from Spotify. With the stock’s recent rebound, it broke a key downtrend line and rose above its ceiling resistance on healthy volume… Lang sees it, the big institutions are still buying this thing and he wouldn’t be surprised if this $600 stock makes a run at $700. Good story. I remember it was like in the $300. That’s amazing.”
Spotify (NYSE:SPOT) provides audio streaming services through subscriptions, allowing users to enjoy a broad range of music and podcasts.
4. Roku, Inc. (NASDAQ:ROKU)
Number of Hedge Fund Holders: 37
Cramer noted that Lang is a fan of Roku, Inc. (NASDAQ:ROKU), but he pointed out that the company’s stock chart is volatile and difficult to interpret, with Lang considering it more of a speculative investment. He added:
“I would say it’s completely speculative. But from its highs in February to its lows earlier this month, Roku plunged from just under $105 to $66 in change. However, the stock looks like it’s put in a bottom about a week ago… and it’s rebounded all the way to the low $80s…. The thing is, Roku just started to rebound. Lang points out that the Chaikin Money Flow down at the bottom is still pretty darn bearish. It’s down below that. That’s not good at all and very ugly.
… Now, Lang expects an upside breakout with the stock only ripping back to the recent highs near $105. If the stock lingers in the current range between $75 and $80, this one would be a good one for you. Okay? It’s a good sign. It might be a good option. Good one for call options too, if you’re really, you know, a little bit more into it. Lang’s not ready to give you an all-clear here, but if Roku does trade sideways for a few weeks, you might want to get ready to pounce.”
Roku (NASDAQ:ROKU) operates a streaming platform offering a wide range of content, along with advertising and subscription services. It also sells streaming devices, Roku-branded TVs, smart home products, and audio accessories, while engaging in licensing arrangements with service providers.
3. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 144
Cramer discussed Netflix, Inc.’s (NASDAQ:NFLX) stock performance, focusing on a significant rise in January after the company reported strong quarterly results. He pointed out that the surge in stock price was driven by positive investor reactions to the company’s impressive growth.
“Then starting in mid-February, the stock rolled over along with everything else in the group to the point where it completely filled the gap. As Lang sees it, that reset the stock and Netflix has been rebounding ever since…. At this point, it’s up more than 9% for the year, better performance than most tech or tech-adjacent names.… Now take a look at this chart that highlights the Relative Strength Index or RSI. That’s another momentum indicator…. It started bouncing after hitting oversold territory earlier this month.
Alright, and you can see, these are things that you can see where boom oversold, okay? Right now, it’s still around 50, which is very good, which tells Lang that Netflix has a long way to go with this rally before it gets overbought… Lang also likes the stock, been flirting above the 50-day. That’s what I like, okay?… In recent sessions, it’s above that level, which is very, very positive. Put it all together and you’d be a buyer of Netflix right here, right now, and so would I.”
Netflix (NASDAQ:NFLX) runs an international streaming platform that provides a wide variety of movies, TV series, and original programming to millions of subscribers around the world.
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
Cramer mentioned Amazon.com, Inc. (NASDAQ:AMZN) during the episode when he was highlighting that companies that stand a chance to weather a slowdown are those that have terrific subscription-based business models.
“Once people get locked to a great service, they almost never cancel, whether it be Costco, Amazon Prime, Netflix.”
Amazon (NASDAQ:AMZN) has established itself as a dominant player in the global technology industry, with a broad array of services that encompass e-commerce, advertising, and subscription-based offerings. Burke Wealth Management stated the following regarding the company in its Q4 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN): Whereas most of the discussion around Amazon focuses on trends in its AWS business, our focus has been on the progression of margins in its retail business. Happily, both units appear to be on the upswing which drove strong fourth quarter share price performance. In AWS, Q3 sales growth was a solid 19% and the run rate of the business is now $110B. Equally encouraging is that margins were 38%, marking the third consecutive quarter that AWS operating margins were in the 36%-38% range after spending the last two years in the 28% range. This margin gain is being driven by demand for higher value applications as well a benefit from extended life usage across its data center architecture. On the retail front, the margin story remained in full force with North American margins reaching 5.9% in the third quarter and International margins delivering positive results (+3.6%) for the third straight quarter after 10 straight quarters in negative territory. CEO Andy Jassey has pointed out that Amazon’s efforts to reconfigure its distribution network from a centralized to a regional network has yielded productivity gains and that he sees no reason why retail margins in North America can’t meet or exceed previous record levels. We think a consistent run towards the high-single-digit range is likely. International retail sustaining profitability would be an added bonus and this great white whale finally seems within our grasp as Amazon reaches critical mass across numerous large international markets.”
1. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 96
Discussing consumer-oriented stocks that can work in a slowdown, Cramer mentioned Costco Wholesale Corporation (NASDAQ:COST) and said:
“Once people get locked to a great service, they almost never cancel, whether it be Costco, Amazon Prime, Netflix.”
Costco (NASDAQ:COST) operates a membership-driven warehouse model, offering a variety of both branded and private-label products in bulk at lower prices, catering to customers looking for savings on bulk buys. On Thursday, appearing on Squawk on the Street, Cramer said:
“Costco, someone lowered their price tag. Costco’s the cheapest place on Earth to shop. And they had a good quarter. People just didn’t recognize it.”
While we acknowledge the potential of Costco Wholesale Corporation (NASDAQ:COST) 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 time frame. If you are looking for an AI stock that is more promising than COST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
