We recently compiled a list of the Top 10 Stocks on Jim Cramer’s Radar. In this article, we are going to take a look at where Amazon.com Inc. (NASDAQ:AMZN) stands against the other stocks on Jim Cramer’s radar.
Jim Cramer often reflects on how he would reform the American education system if it were up to him. According to him, one major change would be to incorporate personal finance education into high school curriculums. He compares this to mandatory health classes that teach practical skills, like dissection, which he finds less relevant compared to financial literacy.
In a recent episode of Mad Money, Cramer emphasizes that understanding money is crucial, and not caring about it doesn’t make someone virtuous; rather, it can lead to real-life problems like poor credit affecting personal and financial decisions, such as buying a car or a house. He notes that while conventional wisdom says money can’t buy happiness, being financially broke is undeniably challenging.
“If everyone in this country lost their minds and decided to turn America into Cramerica, you better believe I would make some changes. So, what would the 18th premiere of Jim Cramer look like? Hey, for those of you who didn’t get that reference, Google is your best friend. But because this is a show about money, let’s stick to the more mainstream elements of the Cramerican regime. For starters, it drives me nuts that we don’t really teach our young people how to handle their money. Would it be so crazy if you had to take a class on personal finance before you could graduate from high school? I mean, like those awkward health classes where they show you how to dissect a frog. I mean, come on!
So, can I just take a moment to speak some words that we all believe but very rarely get to say in polite conversation? Look, money’s important. It’s really important. And caring about the state of your finances does not make you seem like some sort of superficial bourgeois monster. Say you’ve got a lousy credit score and you want to get married—congratulations, you’ve just inflicted your horrible credit on your new spouse. Now neither you nor your partner will be able to qualify to buy a car or a home or perhaps even just get a darn credit card.”
Reflecting on his own experiences, Cramer recalls living in a car while still managing to save for retirement, which he views as a significant accomplishment. He encourages young people to invest early to achieve financial freedom and avoid dependency on their next paycheck. Through the CNBC Investing Club, he aims to guide young investors in managing their finances effectively.
“These things matter in life. They say money can’t buy happiness, but I’ve always found that piece of cliche conventional wisdom to be dubious at best. Because, hey, listen, being broke is a major buzzkill, as I know firsthand from the time I spent living in my ’78 Ford Fairmont for six months in California. I wish I had an expert to guide me through all this stuff back then. Although I still put money away for retirement while living in my car, I took it out of my homeowner’s budget.
So let me answer one of the most important questions out there: What the heck should young people do with their money? First, foremost, and always, you need to invest. That’s the only way you’re going to be able to achieve financial freedom. And by freedom, I mean living a life where you’re not totally dependent on the next paycheck. Teaching you how to do this is one of the reasons I actually put so much time and energy into creating the CNBC Investing Club. I’m always thrilled when I see younger members taking an active hand in managing their own money.”
Jim Cramer observes that many people begin saving and investing too late, complicating their financial lives more than necessary as they age. He also notes that younger individuals often feel they have plenty of time, sometimes starting to invest before they’re truly prepared. Cramer believes there are more prudent uses for their money at that stage.
“Too many people start saving and investing too late, making their lives a lot more difficult than they need to be as they get older. But I also know many young people feel that they have all the time in the world. Some start investing before they’re truly ready when there are, in fact, better things for them to do with their money.”
Cramer then offers three key lessons for young investors, especially recent college graduates. First, he stresses the importance of saving money, even if it’s not intuitive. He suggests investing in the stock market as a way to save, which can be more engaging than just keeping money in a savings account or CD. Investing helps keep your money from being spent impulsively because accessing it requires selling stocks.
Second, Cramer advises young investors to embrace higher risk in their portfolios. In their 20s, they can afford to take risks with speculative stocks or options because they have many years to recover from mistakes. In contrast, older investors should adopt more conservative strategies, focusing on safer investments like bonds and utilities. Cramer criticizes the idea of young investors holding a significant percentage of bonds, emphasizing that they should be more aggressive in their investments.
Lastly, Cramer challenges the notion that student loan debt should prevent young people from investing. He notes that student loan interest rates are generally lower than credit card debt and advises starting investments even while managing student loans. He also suggests that delaying student loan payments could be advantageous due to potential future loan forgiveness programs.
“Here’s the bottom line for young people just out of college: investing is a great way to trick yourself into saving money you might otherwise spend. Beyond that, remember when you’re young, you can afford to take a lot more risk with your portfolio. It’s never too soon to start contributing to your 401k or IRA, especially an IRA.”
Our Methodology
This article reviews a recent edition of Jim Cramer’s Morning Thoughts, where he covered various stocks. We highlight ten prominent companies he mentioned and analyze how hedge funds view these stocks. The article ranks these companies based on their level of hedge fund ownership, from the least to the most owned.
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).
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Investors: 308
JMP Securities has raised its price target for Amazon.com Inc. (NASDAQ:AMZN), thanks to positive expectations about its advertising business. Analysts believe that Amazon.com Inc. (NASDAQ:AMZN)’s ad platform, combined with its extensive customer data, makes it a compelling choice for advertisers, potentially drawing more marketing dollars compared to its competitors. Jim Cramer points out that this boost in the price target reflects confidence in Amazon.com Inc. (NASDAQ:AMZN)’s ability to leverage its advertising strengths effectively.
“Amazon landed a price-target bump at JMP Securities, rooted in analysts’ optimism about its advertising business. Amazon’s integrated ad platform combined with its trove of customer data is an attractive pairing that should attract more marketing dollars relative to peers, analysts argued.”
Amazon.com Inc. (NASDAQ:AMZN) has shown a strong recovery in its Q2 2024 earnings report. Revenue reached $134 billion, marking an 11% increase from the previous year, while net income surged to $6.7 billion, a turnaround from a $2 billion loss in the same quarter of 2022. This improvement is largely attributed to a 19% rise in revenue from Amazon Web Services (AWS), highlighting Amazon.com Inc. (NASDAQ:AMZN)’s leading role in the cloud and AI markets.
Amazon.com Inc. (NASDAQ:AMZN)’s investments in generative AI and warehouse automation are expected to support long-term growth, particularly in high-margin sectors. Despite some challenges in retail due to cautious consumer spending, Amazon.com Inc. (NASDAQ:AMZN) is making strategic enhancements to its delivery network and shopping experience. These efforts are likely to improve profit margins and boost market share. Analysts are optimistic about Amazon.com Inc. (NASDAQ:AMZN)’s future, anticipating continued growth in AWS and favorable outlooks from major financial institutions like JPMorgan and Wedbush.
Overall AMZN ranks 1st on our list of stocks on Jim Cramer’s radar. While we acknowledge the potential of AMZN as an investment, 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 AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
