We recently published a list of Jim Cramer’s Latest Calls: Top 10 Stocks. In this article, we are going to take a look at where AutoZone, Inc. (NYSE:AZO) stands against other stocks highlighted in Jim Cramer’s latest calls.
Jim Cramer in a recent program talked about Bitcoin and reminded investors that he has always believed in the cryptocurrency.
“I want to discuss Bitcoin, really. I do—not to the detriment of stocks but in addition to stocks. I come to praise Bitcoin, not buy it. First, let’s dispel the idea that I’ve never believed in Bitcoin. Now, if you search YouTube, you can see that I first bought Bitcoin on September 15, 2020, when it was at just over $10,000.”
Cramer said he likes the idea of Bitcoin being the store of value and said he always recommended investors to allocate 10% of their portfolio to the currency. However, he again urged investors to look to stocks for the rest of their portfolios.
“I heard Fed Chief J. Powell talk about how he believes people are buying Bitcoin as a store of value, like gold, because there’s not much transaction done in Bitcoin. I’ve always endorsed keeping up to 10% of your portfolio in gold as a kind of insurance against the world’s lunacy. But for years now, I’ve also been saying Bitcoin is a fine alternative to gold for that 10% position. Why not?
I think the federal budget deficit is at impossible levels…Sure, you might have been all in on Bitcoin. You know what? Terrific. Me too. But what if I told you there are indeed other ideas hidden in plain sight in the stock market? Ideas that you could have owned with the other 90% of your portfolio that wasn’t Bitcoin.”
Cramer then mentioned a few stocks that have posted dramatic gains since their IPOs to show investors the power of stock investing.
READ ALSO: Jim Cramer’s Latest Lightning Round: 11 Stocks to Watch and Jim Cramer on AMD and Other Stocks
For this article, we watched the latest programs of Jim Cramer and picked 10 stocks he recently talked about. With each stock we have mentioned the number of hedge fund investors. Why are we interested in 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 technician in a mechanic’s uniform replacing an A/C compressor, signifying the company’s automotive replacement parts business.
Autozone Inc (NYSE:AZO)
Number of Hedge Fund Investors: 47
Answering a question about Aptiv in a latest program on CNBC, Cramer said:
“I am concerned that many auto parts may be made in China. We don’t know. AutoZone had a very good quarter. I would go with Autozone Inc (NYSE:AZO).”
Autozone Inc (NYSE:AZO) is an American retailer of aftermarket automotive parts and accessories. Bears used to argue that the company would have a tough time amid the rise of EVs since the demand for traditional auto parts would decline. However, ever since the EV demand slowed down, that argument fell apart. The traditional gasoline-powered cars still dominate U.S. roads, accounting for over 98% of all registered vehicles as of May 2024. Even if EV sales were to match those of internal combustion engine (ICE) cars, it would take a considerable amount of time for EVs to make a noticeable impact on the overall vehicle landscape.
Appalaches Capital stated the following regarding AutoZone, Inc. (NYSE:AZO) in its Q3 2024 investor letter:
“Passing on cost structure benefits, sometimes called “Shared Economies of Scale,” is not the only form of these positive feedback loops. AutoZone, Inc.’s (NYSE:AZO) moat also deepens as it grows. While most would think of the company as a very good retailer, I would say that the business model is more nuanced than that. The automotive aftermarket is a highly fragmented and specialized industry. There are hundreds of companies producing automotive components, most of which are specific to one of thousands of vehicle models. In 2022, there were over 280 million registered vehicles in the U.S., further adding to the fragmented nature of the value chain.8 Outside of large metropolitan areas with public transportation, people rely heavily on their vehicles in all facets of their daily lives. Not having a working car poses significant problems. Whether it’s getting to work or shopping for groceries, if something breaks on your vehicle, you need it fixed immediately.
The combination of all of these factors leads AutoZone to maintain a large and diverse inventory that is ready on a moment’s notice. Manufacturers and vendors cannot sell directly to consumers because it would take too long for the product to arrive, and it would not be economical to build out their own distribution network given the low turnover of the inventory. AutoZone is heavily relied upon by their suppliers, and as a result, their suppliers give them very favorable payment terms allowing them to stock more inventory while tying up less working capital. The creditors of these suppliers additionally acknowledge the prowess of AutoZone, providing more flexible credit to suppliers if their inventory is sent to AutoZone. With more inventory, they can better meet the needs of their customers, resulting in higher sales and a more efficient network of stores, which in turn leads to a more effective service for suppliers. This is a very effective flywheel. AutoZone is not new to the portfolio, but I do enjoy writing about it.”
Overall, AZO ranks 5th on our list of stocks highlighted in Jim Cramer’s latest calls. While we acknowledge the potential of AZO, 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 time frame. If you are looking for an AI stock that is more promising than AZO 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.