In this article, we’ll explore Jim Cramer’s List of the Top 10 Stocks to Watch.
In a recent episode of Mad Money, Jim Cramer highlighted a striking development in the stock market:
Warren Buffett, a legendary investor, has been selling off large amounts of stock, including big holdings in Bank of America and Apple. This move is surprising, especially since Buffett had recently shown confidence in the iPhone-maker.
“Buffet’s the best there is. So he’s the best. People looking at his moves end up extrapolating to the point of absurdity and that’s why they dumped the bags. “
Cramer pointed out that Buffett’s decision to sell, particularly as the market averages are falling, causes concern for everyday investors. It raises doubts about whether they should follow suit, even though the bank he sold just reported a strong quarter. Cramer’s commentary highlights how significant investment moves by top investors can influence market perceptions and make investors question their own decisions.
“On Thursday morning, we were misled into thinking the economy was heading for a recession, potentially even a global one, just because of Japan’s situation. The safest move seemed to be selling, even though Japan’s market had bounced back by 10% the next day. What mattered was that the smart money was exiting the asset class, making us feel foolish for holding on. In reality, it was the uninformed money that was selling, driven by nervousness about Buffett or his assistants. We had no insight into the reasons behind his decisions.”
Jim Cramer also discussed the recent market swings, focusing on the surprising rally that began just ten days ago. He highlighted the significant gains, noting that the Dow had surged by 555 points, the S&P had climbed 1.61%, and the NASDAQ had jumped 2.34%. Cramer stressed the importance of understanding the sharp decline two weeks earlier when the Dow dropped 2.6% and the NASDAQ fell 3.43%.
Cramer explained that while the market’s meltdown on that Monday seemed confusing, it created a valuable chance to buy high-quality stocks at low prices. He pointed out that even during market downturns, there can be hidden opportunities.
“I want to talk to you about the obstacles to catching a tradable bottom because they are incredibly powerful at the lows. Two weeks ago everybody wanted to not buy even though in retrospect, it was a tremendous opportunity to purchase some high-quality stocks at bargain basement prices.” Cramer said.
Cramer also referred to a Wall Street Journal summary, which described the market turbulence caused by the collapse of popular trades and the Yen carry trade issue. This turmoil echoed the severe market crash of 1987 and raised concerns about major technology stocks. Cramer’s insights remind investors of the challenges in navigating market lows and the potential opportunities that can emerge from them.
“We were told that the Yen carry trade broke up and apparently that’s a massive and lasting problem. Sometimes just to see how bad it is, it pays to look at the next day summary in the Wall Street Journal because it’s the most authoritative real-time account of all the pure, the pain, and fear people experience under the headline.”
Jim Cramer also addressed the confusing reasons behind stock sell-offs and how they can often be misleading. He stressed that while selling stocks during a market downturn might seem like a wise move, it’s important to carefully evaluate these reasons to avoid making poor investment choices.
Cramer then explained the concept of the carry trade, where investors borrow money in a currency with low interest rates, like the Japanese Yen, and invest it elsewhere. When the Bank of Japan unexpectedly raised interest rates, the cost of borrowing jumped. This sudden increase forced institutions that had borrowed in Yen to sell off their stocks quickly to raise cash. As a result, even strong stocks were sold off.
Cramer pointed out that while this sell-off seemed severe, it was mainly due to a short-term issue rather than a fundamental problem with the market. He criticized the media for exaggerating the situation as a long-term crisis, reminding investors to look past dramatic headlines and understand the real reasons behind market movements.
Our Methodology
For this article, we reviewed a recent episode of Jim Cramer’s Mad Money and selected ten stocks that he discussed. We’ve also included the hedge fund sentiment for each stock, and ranked the stocks in ascending order of the number of hedge funds that own them.
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 Reveals Top 10 Stocks to Watch
10. CAVA Group, Inc. (NYSE:CAVA)
Number of Hedge Fund Investors: 33
Jim Cramer expressed strong enthusiasm when asked about his thoughts on CAVA Group, Inc. (NYSE:CAVA), calling it “the best new concept” and emphasizing his positive view of the company. He noted that although CAVA Group, Inc. (NYSE:CAVA) had experienced a 10-point drop the previous week, it had since rebounded.
“I love Cava. Cava’s real. It’s the best new concept. I like it. It was down 10 points last week, and we recommended it. So now that it’s all the way back up, why don’t you give it a rest before jumping in, alright?”
CAVA Group, Inc. (NYSE:CAVA) has demonstrated strong revenue growth by expanding its number of stores and achieving impressive sales at existing locations. Its focus on Mediterranean cuisine within the fast-casual dining sector helps distinguish it from competitors, potentially leading to sustained long-term growth and a larger market share.
Analysts are confident in CAVA Group, Inc. (NYSE:CAVA)’s future, as evidenced by their increased price targets for the stock. CAVA Group, Inc. (NYSE:CAVA)’s recent earnings report surpassed expectations, boosting forecasts and increasing optimism about its potential.
9. Nucor Corporation (NYSE:NUE)
Number of Hedge Fund Investors: 40
Nucor Corporation (NYSE:NUE), one of North America’s largest steel producers, is well-positioned for future growth due to its diverse range of products that include steel mills, steel products, and raw materials. When a viewer asked Jim Cramer whether it was time to cut losses or hold on to Nucor Corporation (NYSE:NUE), Cramer advised against selling. He explained that while we might expect big steel companies to perform differently, they are still tied to the economic cycle and any downturns.
“Oh no! Don’t sell Nucor. We sometimes want these big steel companies to be something other than what they are, but in the end, they’re still tied to the earnings cycle and any economic downturn. However, when the Fed starts cutting rates, Nucor will be the first stock people reach for—including me, for my charitable trust. So please, do not sell the stock.”
Nucor Corporation (NYSE:NUE) is strategically boosting its production of high-margin steel products, particularly those used in the automotive and construction industries, which should enhance profitability. Nucor Corporation (NYSE:NUE) is also investing heavily in sustainable steel production technologies like electric arc furnace (EAF) technology, aligning with the increasing demand for environmentally friendly materials. This investment could position Nucor Corporation (NYSE:NUE) as a leader in the industry.
Furthermore, Nucor Corporation (NYSE:NUE)’s strong financial health and efficient operations offer resilience during economic downturns, enabling the company to consistently return capital to shareholders through dividends and share buybacks. With potential government infrastructure spending likely to increase demand for steel products, Nucor Corporation (NYSE:NUE)’s growth prospects remain strong.
8. Royal Caribbean Cruises Ltd. (NYSE:RCL)
Number of Hedge Fund Investors: 48
Royal Caribbean Cruises Ltd. (NYSE:RCL) has shown impressive recovery from the pandemic, driven by a surge in travel demand, especially for cruises. This strong demand has led to excellent financial results, with Royal Caribbean Cruises Ltd. (NYSE:RCL) surpassing earnings expectations and increasing its annual forecast. Jim Cramer praised Royal Caribbean Cruises Ltd. (NYSE:RCL), pointing out that the stock demonstrates strong resilience. He observed that each time Royal Caribbean Cruises Ltd. (NYSE:RCL) experiences a decline, it quickly draws in many buyers, reflecting robust investor confidence and consistent demand.
“I like Royal Caribbean because every time the stock comes down, there’s like thousands of buyers coming in every time.”
Royal Caribbean Cruises Ltd. (NYSE:RCL)’s success is also evident in its strategic achievements. Royal Caribbean Cruises Ltd. (NYSE:RCL) reached its Trifecta goals—focused on improving profitability, return on invested capital, and earnings per share—18 months ahead of schedule. The expansion of its fleet with new ships like the Icon of the Seas and the upcoming Star of the Seas caters to varied traveler preferences and boosts booking interest.
Although Royal Caribbean Cruises Ltd. (NYSE:RCL) recently experienced a decline due to broader market trends, analysts remain positive about the company. Royal Caribbean Cruises Ltd. (NYSE:RCL) is rated a “Strong Buy” by analysts, who foresee substantial growth potential.
Ariel Fund stated the following regarding Royal Caribbean Cruises Ltd. (NYSE:RCL) in its Q2 2024 investor letter:
“Global cruise vacation company, Royal Caribbean Cruises Ltd. (NYSE:RCL), advanced on another quarterly earnings beat and subsequent raise in full-year guidance. Stronger than anticipated consumer demand, healthy onboard spend, robust pricing and solid cost containment lifted recent results. Additionally, RCL is benefitting from several new megaships, more island destinations and re-entry into the China market. The resiliency of the core cruise consumer, in combination with management’s superior operational expertise and revised earnings outlook, lays the foundation for RCL to exceed its three-year strategic imperative, the Trifecta Program, a year earlier than expected.”