In this article, we’ll explore this week’s Top 10 Recommended Stocks of Jim Cramer.
In a recent episode of Squawk on the Street, Jim Cramer discussed how global markets have become more interconnected than ever. He compared this to 1987, when Japan’s influence on U.S. stocks was clear, with Japanese investors driving up prices in sectors like waste management and railroads. This connection between markets was strong then, and it’s even stronger now.
“Obviously, we went down on Japan, and we went up on Japan. This is somewhat reminiscent of 1987, when, if Japan was up, they’d come over and flood our markets. Sometimes they didn’t care; they’d just start buying stocks, often starting with waste management and Browning-Ferris. “
Cramer explained that the weakening dollar further enhances this global link, benefiting companies that sell internationally, such as Coca-Cola. He also observed a significant shift in investor behavior—where people once looked for reasons to stay out of the market, they now seem more inclined to stay in, finding optimism even in bad news. This change in attitude mirrors today’s market environment, where good news lifts stocks, and even bad news is met with hope for a recovery.
“Back in the day, you’d wonder why Browning-Ferris was up, and the answer would be, ‘Large buyer, large buyer, large buyer.’ Eventually, you’d go out for a beer, and it turns out it’s Tokyo. They loved the rails. There was such craziness back then, but now, we’re even more linked. And with the dollar continuing to weaken, it’s good that we’re linked for companies like that.”
Jim Cramer noted the irony of discussing September as a traditionally bad month for the market. He pointed out that when people focus too much on a specific month being negative, it often doesn’t turn out that way. Cramer also mentioned that despite this expectation, the market had been up significantly, making last week’s market behavior seem unusual.
“Well, it’s funny. You talked about September being a bad month last week, so maybe we get there in a roundabout way. I know that when you single out a month, that’s often when it doesn’t happen. But I also know that we’re up big, and last week seemed odd.”
Our Methodology
For this article, we reviewed a recent episode of Jim Cramer’s Squawk on the Street and his post on the key things to watch in the stock market for Monday. We selected ten stocks that he mentioned and included information on hedge fund sentiment for each. The stocks are ranked by the number of hedge funds that own them, from lowest to highest.
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).
Jim Cramer Recommends These 10 Stocks
10. Lineage Inc. (NYSE:LINE)
Number of Hedge Fund Investors: N/A
Jim Cramer highlights that Wall Street analysts are generally positive about Lineage Inc. (NYSE:LINE). According to Cramer, over a dozen firms have begun covering Lineage Inc. (NYSE:LINE), and more than half of these firms have rated the stock as a buy or a buy-equivalent.
“Wall Street analysts are largely upbeat on cold-storage logistics operator Lineage, which went public in late July with the biggest U.S. IPO of the year. By my count, more than a dozen firms have started coverage on Lineage, with more than half rating the stock a buy or buy-equivalent.”
Lineage Inc. (NYSE:LINE), a biotechnology firm focused on regenerative medicine, offers an appealing investment opportunity due to its innovative technologies and promising development pipeline. Lineage Inc. (NYSE:LINE) is advancing lead products like OPC1, a stem cell-based therapy designed for spinal cord injuries, which addresses major medical needs and holds significant market potential.
Its pipeline also features treatments for retinal degenerative diseases and spinal cord injuries, with ongoing and upcoming clinical trials that could attract investor interest if they show positive results. Strategic partnerships with major pharmaceutical companies and research institutions, such as the California Institute for Regenerative Medicine, provide essential funding, resources, and expertise for Lineage Inc. (NYSE:LINE).
Lineage Inc. (NYSE:LINE) has already reached key milestones, including successful clinical trials and progress in its therapeutic programs. Notably, the advancements in OPC1 trials underscore the potential for substantial therapeutic benefits, boosting Lineage Inc. (NYSE:LINE)’s investment appeal.
9. Sweetgreen Inc. (NYSE:SG)
Number of Hedge Fund Investors: 27
Jim Cramer reports that Piper Sandler has downgraded Sweetgreen Inc. (NYSE:SG)’s stock from an overweight rating to a hold-equivalent rating. Despite Sweetgreen Inc. (NYSE:SG) being a popular stock on Wall Street recently, analysts now see less favorable risk versus reward at the current price of around $37 per share.
“Piper Sandler downgraded Sweetgreen to a hold-equivalent rating from overweight. The salad chain’s stock has been a Wall Street darling recently, but analysts told clients they believe there’s less favorable risk/reward at current prices around $37 a share.”
Sweetgreen Inc. (NYSE:SG) is strategically positioned for significant growth in the fast-casual salad and healthy eating sector. Sweetgreen Inc. (NYSE:SG)’s focus on fresh, locally sourced ingredients and its strong brand appeal to health-conscious consumers set it apart. Sweetgreen Inc. (NYSE:SG)’s rapid expansion into urban areas with high demand for quick and healthy dining options highlights its effective growth strategy.
Additionally, Sweetgreen Inc. (NYSE:SG)’s investment in digital innovations, such as a user-friendly mobile app and efficient delivery services, aligns with the growing trend of online ordering and food delivery. This combination of nutritious, plant-based offerings and advanced technology enhances customer experience and positions Sweetgreen Inc. (NYSE:SG) to capitalize on the rising demand for health-focused food. Recent financial results, including increased revenue and robust performance metrics, underscore Sweetgreen Inc. (NYSE:SG)’s positive growth trajectory.
Meridian Small Cap Growth Fund stated the following regarding Sweetgreen, Inc. (NYSE:SG) in its first quarter 2024 investor letter:
“Sweetgreen, Inc. (NYSE:SG) operates restaurants serving fresh and healthy foods in the United States. The salad-focused restaurant concept has invested heavily to develop a captive network of growers that help ensure the freshness of its produce, a distinct competitive advantage. Additionally, management’s investment in automation technology, known as the “Infinite Kitchen,” has shown strong promise of significant labor cost savings, a reduction of order fulfillment errors, and increased restaurant throughput. While Infinite Kitchen has only been tested in a handful of stores to date, initial data supports the potential for automation technology to significantly improve both margins and average unit volumes. The stock rose in the quarter on accelerating same-store sales growth and better than expected guidance from management. In addition, investors took notice that material margin improvements could quickly reduce Sweetgreen’s cash burn, a prior source of concern. Sweetgreen was a new position for the Fund in the quarter.”
8. Shake Shack Inc. (NYSE:SHAK)
Number of Hedge Fund Investors: 31
Jim Cramer reports that Piper Sandler has become more cautious about the fast-casual sector as a whole. This shift in outlook has led the firm to downgrade Shake Shack Inc. (NYSE:SHAK) as well, reflecting a more moderate view of the company’s prospects within the current market environment.
“Piper Sandler has taken a more moderate view toward the fast-casual sector overall and also downgraded Shake Shack.”
Shake Shack Inc. (NYSE:SHAK) is set for ongoing success in the fast-food market, thanks to its strong reputation for high-quality items like the ShackBurger and crinkle-cut fries, which have created a loyal following. Shake Shack Inc. (NYSE:SHAK)’s strategy to open new locations in busy areas and explore international markets shows its commitment to growth.
Shake Shack Inc. (NYSE:SHAK) is also enhancing its digital ordering and delivery systems, including updates to its mobile app and online platforms, which aligns with the increasing demand for convenience in food service. Its focus on adding new and seasonal menu items keeps the brand fresh and appealing to both new and returning customers. Recent financial reports indicate that Shake Shack Inc. (NYSE:SHAK) is performing well, with increases in same-store sales and overall revenue, pointing to a positive financial outlook.
Alger Small Cap Growth Fund stated the following regarding Shake Shack Inc. (NYSE:SHAK) in its first quarter 2024 investor letter:
“Shake Shack Inc. (NYSE:SHAK) is an elevated take on classic American cuisine. The company uses high-quality ingredients to craft Angus beef burgers, crinkle-cut fries, crispy chicken, and hot dogs. The company serves a full complement of beverages including house- made lemonade, hand-spun milkshakes, beer, wine, and soft drinks. During the quarter, shares contributed to performance after the company reported strong fiscal fourth quarter results, where earnings beat analyst estimates due to increasing restaurant level operating margins and strong same store sales above consensus, driven by better price mix and increased traffic. Moreover, management gave initial 2024 guidance with revenues in-line with consensus but higher-than-expected earnings, underscoring the company’s recent focus on streamlining operations by leveraging technology investment. Separately, following their fiscal fourth quarter earnings report, Shake Shack announced Rob Lynch as the incoming CEO. effective May 2024, succeeding Randy Garutti upon his retirement. Lynch, the former CEO of Papa John’s, is credited with revitalizing the brand post-2018 and has held senior marketing positions at several other top restaurant chains. With management executing well on its expansion plan to add 80 new restaurants in 2024, many of which with newly implemented drive-through windows, we believe the company remains well positioned for long-term growth potential.”