We recently compiled a list of the Jim Cramer Wants You to Check These 10 Stocks. In this article, we are going to take a look at where Liquidia Corporation (NASDAQ:LQDA) stands against the Jim Cramer-approved stocks.
Jim Cramer noticed a strange pattern during the recent winning streak last week. According to Cramer, when a company reported earnings that were better than expected, its stock price would rise significantly. Even if the results were just a bit better than feared, the stock still went up. Conversely, if a company posted disappointing earnings, the market largely ignored it, believing it was just a temporary setback because the Fed might soon cut interest rates. This led to continued buying. However, this trend changed today as reality began to take hold.
“You see, we had a very odd pattern during the winning streak. It was a bit of Pangloss and a nip of Camelot. When a company reported a better-than-expected quarter, it was great. When a company reported a quarter that was just better than feared, the stock still rose. And when a company reported a bad quarter, we decided that it was the last bad quarter because the Fed was about to cut rates, so it was no big deal—buy anyway. In other words, companies could do no wrong, but not today. Today, we had a bit of a reckoning, a dose of reality.”
Jim Cramer pointed out that Tuesday’s market drop was anticipated because the S&P had been rising for eight straight days, and a ninth day would have been unusual, something not seen since 2004. The day was challenging, with the Dow falling 62 points and the S&P dropping 2%, which felt like a bigger loss. This raises concerns about whether the market can continue to rise, especially since negative news finally led to a decline after a strong eight-day rally.
“We were due for today’s modest pullback—the S&P had been up for eight straight days, and nine straight would have put us in rarefied territory. We haven’t seen that kind of winning streak since 2004. Today’s session was rough, with the Dow off by 62 points and the S&P dipping 2%, like losing 33%. We have to wonder if the market still has the momentum to go higher because today we got bad news, and guess what—stocks actually went down. That didn’t happen much during the 8-day gain.”
Jim Cramer observed that the market had been in a phase where strong performance drove stock prices up, and even poor results were overlooked because of the belief that the Fed would intervene. However, after seven days of gains, he suggested that this optimistic trend might be ending. The market has now reached a point where stocks no longer automatically benefit from positive bias.
“People had been reporting a perfect market scenario where good performance led to stock gains, and poor performance was cushioned by expectations that the Fed would step in to save the day. But after seven relentlessly positive days, we have to accept that stocks may no longer get the benefit of the doubt. We’ve reached a point where the market is sufficiently elevated, and we’re back to business as usual—where the good stocks rise, and the bad ones fall. At these high levels, we can’t just dismiss the bears with “heads I win, tails you lose.” There’s a return to rationality, and rationality is the enemy of a market where everything rallies indiscriminately.”
Cramer also mentioned that many investors are hoping for the Fed to step in during their meeting at Jackson Hole on Friday. If those expectations aren’t met, there could be significant selling pressure, particularly on a summer Friday. He noted that Lowe’s recently suffered because the market might be entering a phase where multiple rate cuts are necessary, but there’s no clear indication that such cuts are on the way. Without them, the company may struggle to turn its business around quickly.
“It doesn’t help that many expect the Fed cavalry to show up on Friday when they head to Jackson Hole. If things don’t go as expected, there could be a lot of selling, especially since it’s a summer Friday.”
Our Methodology
In this article, we analyzed a recent episode of Jim Cramer’s Mad Money and selected ten stocks he talked about. We also included information on how hedge funds feel about each stock and ranked them based on the number of hedge funds that own them, from the fewest to the most.
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).
An aerial view of a biopharmaceutical manufacturing plant, signifying the company’s expansive operations.
Liquidia Corporation (NASDAQ:LQDA)
Number of Hegde Fund Investors: 21
Jim Cramer expressed caution regarding Liquidia Corporation (NASDAQ:LQDA), stating that the stock is highly speculative and has been on a downward trend. He noted that HC Wainwright is one of the few firms that cover Liquidia Corporation (NASDAQ:LQDA). Cramer described Liquidia Corporation (NASDAQ:LQDA) as a “black box,” indicating that it’s difficult to assess its future prospects.
“Man, I’ll tell you, that is just such a dice roll. It’s been going down, down, down. The only outfit that really covers it is HC Wainwright. It’s a lot like, well, I’m not sure. This one is just too much of what I would call a black box. But I will check in the 2002 Cramer Burket’s return, because maybe that’s the kind of thing that could make it so I can retire—though it’s highly unlikely.”
For Q2 2024, Liquidia Corporation (NASDAQ:LQDA) reported revenue of $3.7 million, compared to $4.8 million the previous year, and achieved an improved earnings per share (EPS) of -$0.25, beating the expected -$0.30. Liquidia’s lead drug candidate, LIQ861, a formulation for treating pulmonary arterial hypertension (PAH), has shown strong results in clinical trials, making it a promising contender in the PAH treatment market. Additionally, a recent $50 million funding agreement will support the development of LIQ861 and other projects, strengthening Liquidia’s financial position and research capabilities.
Strategic partnerships with key industry players also enhance Liquidia Corporation (NASDAQ:LQDA)’s growth prospects by providing vital support and expertise. With its strong drug pipeline, solid financial backing, and strategic collaborations, Liquidia Corporation (NASDAQ:LQDA) is set to capitalize on its innovations and expand its market presence, making it an attractive investment with significant growth potential.
Liquidia Corporation (NASDAQ:LQDA)’ CFO, Michael Kaseta, had this to say in their latest earnings call:
“I will briefly address our second quarter financial results found in today’s press release. As you will see, revenue was $3.7 million for the second quarter of 2024, compared with $4.8 million in the same quarter 2023. Revenue was tied to our promotional agreement with Sandoz to commercialize treprostinil injection. The decrease was primarily due to lower sales quantities in the current year as compared to the same period in the prior year. Cost of revenue increased to $1.5 million for the second quarter 2024, compared to $0.7 million in the same quarter for 2023, with the increase being primarily due to our sales force expansion during the fourth quarter of 2023.
Research and development expenses were $9.4 million in the second quarter of 2024, compared with $17.7 million in 2Q 2023 which included a $10 million upfront license fee to Pharmosa for the exclusive license to L606 in North America. We saw a $1.4 million decrease in expenses related to our YUTREPIA program driven by expensing prelaunch inventory costs in the prior year. These decreases were offset by a $1.7 million increase in clinical expenses related to our L606 program and a $1.5 million increase in personnel expenses related to increased head count. General and administrative expenses were $20 million in the second quarter of 2024, compared to $9.2 million in the same quarter for 2023. The increase of $10.8 million was primarily due to a $6.3 million increase in personnel expenses, which includes stock-based compensation, a $2.2 million increase in commercial and consulting expenses, and a $0.9 million increase in legal fees related to our ongoing YUTREPIA-related litigation.
In summary, we incurred a net loss for the three months ended June 30, 2024 of $27.9 million, or $0.37 per basic and diluted share, compared to a net loss of $23.5 million, or $0.36 per basic and diluted share, for the three months ended March 31, 2023. We ended the second quarter of 2024 with $133 million cash on hand, and remain well positioned financially to achieve our corporate objectives this year. With that, I’d like to now turn the call back over to Roger.”
Overall LQDA ranks 10th on our list of the stocks Jim Cramer wants you to check out. While we acknowledge the potential of LQDA 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 LQDA 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.