We recently published a list of Jim Cramer’s Top 10 Hottest Stock Picks. In this article, we are going to take a look at where Eaton Corporation plc (NYSE:ETN) stands against Jim Cramer’s other hot stock picks.

In a recent post of Jim Cramer’s Morning Thoughts, he highlighted the impact of recent economic data on market sentiment. The S&P 500 is poised to fall for the fourth day in a row, following a weaker-than-expected August jobs report. The report revealed that the U.S. economy added 142,000 jobs last month, falling short of the Dow Jones estimate of 161,000.

“The S&P 500 is tracking for a fourth straight day of declines after the highly anticipated August jobs report came up short. Bond yields also moved lower on the report. The U.S. economy added 142,000 jobs in August, less than the Dow Jones estimate of 161,000, while the unemployment rate ticked down to 4.2% as expected.” Cramer said.

Despite this shortfall, the unemployment rate dropped to 4.2%, aligning with predictions. Additionally, the job gains for June and July were revised downwards. As a result, traders are now split between anticipating a standard 25 basis point interest rate cut and a more substantial 50 basis point reduction at the Federal Reserve’s upcoming meeting on September 18.

“Job gains in the June and July reports were also revised down Friday. Traders were split roughly evenly between a traditional 25 basis point interest rate cut and a larger 50 basis point reduction at the Federal Reserve’s policy meeting on Sept. 18.”

“We Got What We Wanted, But the Market Crashed”

In a recent episode of Mad Money, Jim Cramer discussed how September 6 turned out to be a disappointing trading day. Despite hopes from bullish investors for a weak non-farm payrolls report that would encourage the Federal Reserve to cut rates, the actual report met these expectations.

“What an ugly day. Just hideous. We came into today knowing we’d have a critical non-farm payrolls report. If you were a bull, you wanted to see weaker-than-expected hiring with wages pretty much in line, because that’s what the Fed needs to see before it can start cutting rates. Voila, we got exactly what we wished for. Maybe we should have been careful, though, because as soon as we got what we wanted, the bulls vanished and the sellers came out of the woodwork, crushing practically everything.” Said Cramer.

Jim Cramer pointed out that September is historically a weak month for the market due to significant profit-taking. Although it might seem circular to link September’s weakness to profit-taking, it’s more reasonable than attributing it solely to fears of a severe economic slowdown. Cramer emphasized that, despite the market’s dips, big tech companies, especially those involved in key trends like data centers and accelerated computing—should be considered as buying opportunities during these times.

“This market has a September problem. Come September, we’re always hit with a tremendous amount of profit-taking, which is why it’s the weakest month of the year. I know that’s somewhat circular reasoning—we sell because we’ve always sold—but it makes more sense than saying people sold tech because they fear a hard landing. Tech, especially big tech, is something you buy, not sell, into weakness if you’re worried about a more severe slowdown.

Why? Well, because big tech is all about powerful secular themes that can keep going even during a recession—and we’re not getting one. I’m talking about the data center, accelerated computing—they’re not going anywhere. Nevertheless, when anything jars the big tech themes of the moment, the market’s reaction is swift, harsh, and horrible.”

Jim Cramer Urges Investors: “Do Not Abandon Ship”

Jim Cramer discussed the upcoming release of the Consumer Price Index (CPI) on Wednesday, which will offer new insights into inflation. He noted that if inflation stays steady or falls, the Federal Reserve will have more room to cut interest rates, which could help prevent a recession and address concerns from many sellers. Cramer encouraged investors to remain confident and avoid abandoning their positions due to these uncertainties.

“Wednesday, we get another read on inflation—this time from the Consumer Price Index. What can I say? As long as inflation stays the same or goes lower, the Fed has plenty of leeway to cut interest rates and prevent a recession—the thing so many sellers are worried about. That’s why I keep telling you, please do not give up the ship here.”

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).

Eaton Corporation plc (NYSE:ETN)

Number of Hedge Fund Holders: 93

Morgan Stanley initiated coverage on Eaton Corporation plc (NYSE:ETN) with an “overweight” buy rating and set a price target of $370, while Wolfe Research upgraded the stock from a sell to a hold-equivalent. Jim Cramer believes Eaton Corporation plc (NYSE:ETN) is strongly positioned to benefit from major trends like the expansion of AI and data center infrastructure. He also mentioned that they are analyzing optimal buying points for Eaton Corporation plc (NYSE:ETN) and two other industrial stocks in his portfolio, similar to their recent analysis of four major tech companies.

“Morgan Stanley started Eaton with an overweight buy rating and a $370 price target. Wolfe Research upgraded the electrical components maker stock to a hold-equivalent from sell. I think this one is the most levered to megatrends such as AI data center buildouts. We look at key buy levels for Eaton and two other Club industrials. The exercise followed our look at what to pay for four tech megacaps.”

Eaton Corporation plc (NYSE:ETN) presents a strong investment opportunity due to its impressive performance and strategic focus on key trends like electrification, energy transition, and digitalization. In Q2 2024, Eaton Corporation plc (NYSE:ETN) achieved record earnings, with adjusted EPS rising 24% year-over-year and segment margins reaching 23.7%. Eaton Corporation plc (NYSE:ETN)’s success is fueled by increased demand for its electrical and aerospace solutions, setting the stage for continued growth.

Eaton Corporation plc (NYSE:ETN)’s large backlog and ongoing investments in expanding capacity are expected to boost its market share in important areas such as data centers and utilities. This blend of solid financial results, strategic investments, and favorable market conditions highlights Eaton Corporation plc (NYSE:ETN)’s potential for ongoing earnings growth, making it an attractive investment choice.

Ave Maria World Equity Fund stated the following regarding Eaton Corporation plc (NYSE:ETN)  in its first quarter 2024 investor letter:

“Eaton Corporation plc (NYSE:ETN) is an intelligent power management company. The company is a long-term beneficiary in the trend towards electrification, energy transition and digitalization. Eaton is also benefiting from unprecedented global stimuli such as the Inflation Reduction Act, Infrastructure Investment and Jobs Act, the Chips and Science Act and the EU recovery plan known as the NextGenerationEU.”

Overall ETN ranks 3rd on our list of Jim Cramer’s hottest stock picks. While we acknowledge the potential of ETN 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 ETN 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. This article is originally published at Insider Monkey.