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.”
7. The Estee Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Investors: 47
The Estee Lauder Companies Inc. (NYSE:EL) is well-positioned for ongoing success thanks to its strong lineup of established brands like Estée Lauder, Clinique, MAC, La Mer, and Bobbi Brown, and its presence in over 150 countries. The Estee Lauder Companies Inc. (NYSE:EL)’s focus on expanding into emerging markets, where rising middle-class incomes and growing demand for premium beauty products offer substantial growth opportunities, supports its positive outlook.
Jim Cramer reports that The Estee Lauder Companies Inc. (NYSE:EL)’s longtime CEO, Fabrizio Freda, will retire next year. This announcement came on the same day The Estee Lauder Companies Inc. (NYSE:EL) released disappointing guidance for fiscal 2025. Cramer noted that the leadership change is timely, considering The Estee Lauder Companies Inc. (NYSE:EL)’s ongoing struggles.
“Estee Lauder ’s longtime CEO, Fabrizio Freda, is set to retire next year. The cosmetics maker announced the move on the same day it issued disappointing fiscal 2025 guidance. In my Sunday column for Investing Club members, I wrote that it was time for a change at the top given Estee Lauder’s prolonged struggles.”
The Estee Lauder Companies Inc. (NYSE:EL)’s solid financial performance, marked by steady revenue growth, profitability, and strong cash flow, demonstrates effective management and operational efficiency. The Estee Lauder Companies Inc. (NYSE:EL)’s strategic investments in digital and e-commerce capabilities have also boosted its ability to tap into the online beauty market.
Baron Durable Advantage Fund stated the following regarding The Estée Lauder Companies Inc. (NYSE:EL) in its fourth quarter 2023 investor letter:
“The Estée Lauder Companies Inc. (NYSE:EL) is a leading manufacturer, marketer, and retailer of prestige beauty products globally. Shares continued underperforming in the fourth quarter after management cut the company’s outlook for the fiscal year ending 6/30/2024. This downward revision was mainly driven by a worsening outlook in China, business disruptions in Israel and other parts of the Middle East, and worsening F/X headwinds. Estee Lauder’s disproportionate exposure to the Chinese consumer and the travel retail channel in Asia relative to peers continues to place pressure on both growth and margins. We decided to exit our position and reallocate to ideas in which we have greater conviction.”
6. Palo Alto Networks Inc. (NYSE:PANW)
Number of Hedge Fund Investors: 66
Jim Cramer has identified Palo Alto Networks Inc. (NYSE:PANW) as his preferred choice among cybersecurity stocks. He highlights that Palo Alto Networks Inc. (NYSE:PANW), known for its leading position in the industry, has reported its earnings after the market closed on Monday. Cramer suggests that investors should pay attention to this earnings report as it could provide valuable insights into Palo Alto Networks Inc. (NYSE:PANW)’s performance and future prospects.
“My preferred cyber stock is Palo Alto Networks, which reports earnings after the bell Monday.”
Palo Alto Networks Inc. (NYSE:PANW) is well-positioned for ongoing success in the cybersecurity field due to its wide range of products, including firewalls, threat intelligence, and endpoint protection. Palo Alto Networks Inc. (NYSE:PANW) has shown impressive growth in recurring revenue and subscription services over the years. Its focus on advanced security solutions, such as cloud security, AI-driven threat detection, and automation, keeps it at the forefront of the industry. Recent strategic acquisitions, like Demisto and Cortex XSOAR, have enhanced its capabilities and market reach.
Serving a diverse client base, from large enterprises and government agencies to small businesses, Palo Alto Networks Inc. (NYSE:PANW) has demonstrated its reliability and effectiveness through strong customer retention and long-term contracts. Its growing global presence and increased market penetration further underscore its positive growth outlook.
5. CrowdStrike Holdings Inc. (NASDAQ:CRWD)
Number of Hedge Fund Investors: 69
CrowdStrike Holdings Inc. (NASDAQ:CRWD) is a leading player in the cloud-native endpoint security space, known for its Falcon platform that offers extensive protection against various cyber threats, including malware, ransomware, and advanced persistent threats. CrowdStrike Holdings Inc. (NASDAQ:CRWD)’s strong financial performance is highlighted by significant revenue growth, high profitability, and increasing subscription revenue. Its subscription-based model provides reliable, recurring income, bolstered by a growing customer base and expanded product offerings.
Jim Cramer reports that Bernstein has reduced its price target for CrowdStrike Holdings Inc. (NASDAQ:CRWD) ahead of the company’s earnings report scheduled for August 28. Analysts believe that the recent global IT outage is not expected to significantly impact CrowdStrike Holdings Inc. (NASDAQ:CRWD)’s customer retention.
“Bernstein lowered its price target on Crowdstrike to $315 a share from $381 ahead of the cybersecurity company’s earnings report Aug. 28. Analysts argued that elevated churn tied to the global IT outage last month seems unlikely. While margins may take a near-term hit, analysts expect a rebound over the longer term.”
CrowdStrike Holdings Inc. (NASDAQ:CRWD)’s robust customer acquisition and retention, including major enterprises and government agencies, further solidify its growth prospects and stability, making it a compelling investment opportunity.
Carillon Eagle Mid Cap Growth Fund stated the following regarding CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q2 2024 investor letter:
“CrowdStrike Holdings, Inc. (NASDAQ:CRWD), a security software provider, reported strong earnings results, which stood in contrast to some competitors. Strength in endpoint security, cloud security, vulnerability management, and identity protection drove revenue growth and profitability ahead of expectations for the quarter and outlook. The cyber threat environment remains elevated, and it is likely that the rise of artificial intelligence (AI) will make it easier for criminals and threat actors to design and launch sophisticated attacks, increasing the need for CrowdStrike.”
4. Tesla Inc. (NASDAQ:TSLA)
Number of Hedge Fund Investors: 85
Jim Cramer notes that analysts at Piper Sandler recommend buying Tesla Inc. (NASDAQ:TSLA) shares ahead of the company’s robitaxi event, which is now scheduled for October 10. Despite the setback, Piper Sandler has kept its buy-equivalent rating and $300 price target for Tesla Inc. (NASDAQ:TSLA). Currently, Tesla Inc. (NASDAQ:TSLA)’s shares are down approximately 13% year-to-date.
“Investors should own shares of Tesla ahead of the electric vehicle maker’s robitaxi event set for October 10, according to analysts at Piper Sandler. The unveiling was originally slated for August 8, but CEO Elon Musk requested design changes, which led to the delay. Piper Sandler has maintained its buy-equivalent rating and $300 price target on the stock. Shares of Tesla are down about 13% year-to-date.”
Tesla Inc. (NASDAQ:TSLA) is a top player in the electric vehicle (EV) market, known for its cutting-edge technology and strong brand. Its EV lineup, including the Model S, Model 3, Model X, and Model Y, is praised for high performance, long-range, and advanced features. Tesla Inc. (NASDAQ:TSLA) is actively expanding with new manufacturing plants, such as the Gigafactories in Berlin and Texas, which will increase production and reduce costs.
Additionally, Tesla Inc. (NASDAQ:TSLA)’s expansion into emerging markets like China and India offers significant growth potential. Tesla Inc. (NASDAQ:TSLA)’s focus on innovation is clear with advancements in battery technology, autonomous driving, and energy solutions. Investments in Full Self-Driving (FSD) technology and battery improvements keep Tesla Inc. (NASDAQ:TSLA) at the leading edge of both the EV and tech sectors.
Beyond cars, Tesla Inc. (NASDAQ:TSLA) is growing its energy business with products like the Powerwall and Powerpack to meet the rising demand for renewable energy. High customer demand and strong brand loyalty further boost Tesla Inc. (NASDAQ:TSLA)’s growth prospects and make it an attractive investment.
3. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Investors: 91
Jim Cramer reports that Susquehanna has reduced its price target for Alibaba Group Holding Limited (NYSE:BABA) but still holds a positive outlook on the stock. Even with a sluggish Chinese economy, analysts highlighted Alibaba Group Holding Limited (NYSE:BABA)’s advancements in artificial intelligence and pointed out that the company’s latest earnings report showed profits exceeding expectations.
“Susquehanna lowered its price target on Alibaba to $130 a share from $135, but maintained its positive rating on the Chinese e-commerce and cloud giant’s stock. Despite a sluggish Chinese economy, analysts touted Alibaba’s progress on AI initiatives and noted its most recent earnings report showed better-than-expect profits.”
Alibaba Group Holding Limited (NYSE:BABA) is set for substantial growth in the future, thanks to its strong position in China’s e-commerce sector with platforms like Taobao and Tmall, which are expanding rapidly. Alibaba Group Holding Limited (NYSE:BABA)’s cloud computing division, Alibaba Cloud, is a major player in Asia and is quickly increasing its global market share due to rising demand for cloud services. Alibaba Group Holding Limited (NYSE:BABA)’s significant investments in technology and innovation—such as artificial intelligence, big data, and logistics—enhance its competitive advantage.
Alibaba Group Holding Limited (NYSE:BABA)’s efforts to enter new markets and diversify into areas like digital media, entertainment, and international e-commerce provide additional revenue opportunities and growth potential. With a large consumer base in China and a growing international presence, Alibaba Group Holding Limited (NYSE:BABA)’s broad range of services and platforms sets the stage for ongoing growth.
O’keefe Stevens Advisory stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its Q2 2024 investor letter:
“We initiated two new positions during the quarter: Alibaba Group Holding Limited (NYSE:BABA) and Perrigo (PRGO). Both have seen their stocks decline over 70%+ from their all-time highs.
Alibaba is the largest e-commerce player in China, with 40% gross merchandise volume (GMV) market share through its Taobao and T-mall businesses. While the cloud computing business is relatively small, its 37% market share in China positions it well to capitalize on the increasing demand for AI-related products. In the most recent quarter, AI-related cloud revenue recorded triple-digit growth y/y, with the expectation that total cloud revenue will accelerate to double-digit growth in 2H 2025.
It’s rare to find a dominant market share business with significant tailwinds trading for ~10x adj. EPS. After accounting for their ~$60B net cash balance sheet, the stock is trading at 6-7x, which, we believe, is far too cheap. We understand this business would not trade at this price if it were a U.S. business. However, the valuation gap at a high single-digit P/E is pricing in a combination of the following risks – 1. China invading Taiwan. 2. Cash can never leave mainland China (disproven). 3. Increasing competition from Pinduoduo and Shien resulting in market share loss 4. China’s geopolitical tensions worsen. 5. Economic slowdown stemming from the recent housing market downturn. 6. VIE structure creates doubt over the actual ownership of the business. All risks have merit, with cash distribution restrictions at the lower end due to the recently announced dividend and special dividend. Cash returned to shareholders totaled $16.5B in FY24, up from $13.4B in FY23…” (Click here to read the full text)
2. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 108
Jim Cramer notes that Advanced Micro Devices Inc. (NASDAQ:AMD) is acquiring server maker ZT Systems for $4.9 billion in cash and stock. This deal will boost Advanced Micro Devices Inc. (NASDAQ:AMD)’s capabilities in server-scale solutions, which are vital for AI computing, helping it compete better against NVIDIA Corporation (NASDAQ:NVDA). (see 33 Most Important AI Companies You Should Pay Attention To).
“Advanced Micro Devices announced a $4.9 billion cash-and-stock acquisition of server maker ZT Systems. The deal should help the chipmaker in its battle with fellow Club holding Nvidia because server-scale solutions are increasingly important in the age of AI computing.”
Advanced Micro Devices Inc. (NASDAQ:AMD) is set for significant growth due to its strong range of products, including Ryzen CPUs, Radeon GPUs, and EPYC server processors. Advanced Micro Devices Inc. (NASDAQ:AMD) has gained substantial market share in both consumer and enterprise sectors by delivering competitive performance, energy efficiency, and innovative technology. Advanced Micro Devices Inc. (NASDAQ:AMD)’s EPYC processors are particularly notable for making strides in the data center and server markets, challenging Intel’s long-time dominance and winning major clients like Google and Microsoft.
Advanced Micro Devices Inc. (NASDAQ:AMD)’s focus on next-generation technologies, such as its Zen microarchitecture and RDNA graphics architecture, keeps it at the cutting edge. With the semiconductor industry booming due to increased demand for high-performance computing, gaming, and artificial intelligence, Advanced Micro Devices Inc. (NASDAQ:AMD)’s advanced products and technological leadership further boost its growth potential.
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Investors: 184
Jim Cramer reports that MoffettNathanson has begun coverage of Apple Inc. (NASDAQ:AAPL) with a hold-equivalent rating and a price target of $211 per share. Cramer believes that Apple Inc. (NASDAQ:AAPL)’s AI initiatives will lead to a significant iPhone upgrade cycle. In his view, Apple Inc. (NASDAQ:AAPL) has always been a stock to own for the long term rather than trade frequently.
“MoffettNathanson started coverage of Apple with a hold-equivalent rating and price target of $211 a share. Analysts deep-dived the iPhone maker’s AI strategy and said they are largely positive on it, but believe the stock’s current valuation is factoring that in already. I’m a believer that Apple’s AI initiatives will spark a significant iPhone upgrade cycle. Apple has long been an “own it, don’t trade it” stock in my eyes.”
Apple Inc. (NASDAQ:AAPL) is on track for ongoing growth due to its globally recognized brand and valuable ecosystem, which includes iOS, macOS, watchOS, and a range of services. This ecosystem creates a smooth user experience that strengthens customer loyalty. The services segment, featuring the App Store, iCloud, Apple Music, and Apple TV+, has become a major revenue driver for Apple Inc. (NASDAQ:AAPL).
Apple Inc. (NASDAQ:AAPL) leads in product innovation with updates to the iPhone, iPad, Mac, and wearables. Its strong global presence and ability to adapt to different markets ensure continued growth, with expanding opportunities in regions like China and India adding to its positive outlook. Additionally, the wearables segment, particularly the Apple Watch, has seen significant growth thanks to its popularity in health and fitness, boosting sales and revenue.
While we acknowledge the potential of Apple Inc. (NASDAQ:AAPL), 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 NVDA 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’.
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.
