We recently compiled a list of the Jim Cramer Recommends These 10 Stocks. In this article, we are going to take a look at where Shake Shack Inc. (NYSE:SHAK) stands against the other stocks recommended by Jim Cramer.
In a recent episode of Squawk on the Street, Jim Cramer discussed how global markets have become more interconnected than ever. He compared this to 1987, when Japan’s influence on U.S. stocks was clear, with Japanese investors driving up prices in sectors like waste management and railroads. This connection between markets was strong then, and it’s even stronger now.
“Obviously, we went down on Japan, and we went up on Japan. This is somewhat reminiscent of 1987, when, if Japan was up, they’d come over and flood our markets. Sometimes they didn’t care; they’d just start buying stocks, often starting with waste management and Browning-Ferris. “
Cramer explained that the weakening dollar further enhances this global link, benefiting companies that sell internationally, such as Coca-Cola. He also observed a significant shift in investor behavior—where people once looked for reasons to stay out of the market, they now seem more inclined to stay in, finding optimism even in bad news. This change in attitude mirrors today’s market environment, where good news lifts stocks, and even bad news is met with hope for a recovery.
“Back in the day, you’d wonder why Browning-Ferris was up, and the answer would be, ‘Large buyer, large buyer, large buyer.’ Eventually, you’d go out for a beer, and it turns out it’s Tokyo. They loved the rails. There was such craziness back then, but now, we’re even more linked. And with the dollar continuing to weaken, it’s good that we’re linked for companies like that.”
Jim Cramer noted the irony of discussing September as a traditionally bad month for the market. He pointed out that when people focus too much on a specific month being negative, it often doesn’t turn out that way. Cramer also mentioned that despite this expectation, the market had been up significantly, making last week’s market behavior seem unusual.
“Well, it’s funny. You talked about September being a bad month last week, so maybe we get there in a roundabout way. I know that when you single out a month, that’s often when it doesn’t happen. But I also know that we’re up big, and last week seemed odd.”
Our Methodology
For this article, we reviewed a recent episode of Jim Cramer’s Squawk on the Street and his post on the key things to watch in the stock market for Monday. We selected ten stocks that he mentioned and included information on hedge fund sentiment for each. The stocks are ranked by the number of hedge funds that own them, from lowest to highest.
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 cook in a busy kitchen preparing a delicious cooking of burgers and fries.
Shake Shack Inc. (NYSE:SHAK)
Number of Hedge Fund Investors: 31
Jim Cramer reports that Piper Sandler has become more cautious about the fast-casual sector as a whole. This shift in outlook has led the firm to downgrade Shake Shack Inc. (NYSE:SHAK) as well, reflecting a more moderate view of the company’s prospects within the current market environment.
“Piper Sandler has taken a more moderate view toward the fast-casual sector overall and also downgraded Shake Shack.”
Shake Shack Inc. (NYSE:SHAK) is set for ongoing success in the fast-food market, thanks to its strong reputation for high-quality items like the ShackBurger and crinkle-cut fries, which have created a loyal following. Shake Shack Inc. (NYSE:SHAK)’s strategy to open new locations in busy areas and explore international markets shows its commitment to growth.
Shake Shack Inc. (NYSE:SHAK) is also enhancing its digital ordering and delivery systems, including updates to its mobile app and online platforms, which aligns with the increasing demand for convenience in food service. Its focus on adding new and seasonal menu items keeps the brand fresh and appealing to both new and returning customers. Recent financial reports indicate that Shake Shack Inc. (NYSE:SHAK) is performing well, with increases in same-store sales and overall revenue, pointing to a positive financial outlook.
Alger Small Cap Growth Fund stated the following regarding Shake Shack Inc. (NYSE:SHAK) in its first quarter 2024 investor letter:
“Shake Shack Inc. (NYSE:SHAK) is an elevated take on classic American cuisine. The company uses high-quality ingredients to craft Angus beef burgers, crinkle-cut fries, crispy chicken, and hot dogs. The company serves a full complement of beverages including house- made lemonade, hand-spun milkshakes, beer, wine, and soft drinks. During the quarter, shares contributed to performance after the company reported strong fiscal fourth quarter results, where earnings beat analyst estimates due to increasing restaurant level operating margins and strong same store sales above consensus, driven by better price mix and increased traffic. Moreover, management gave initial 2024 guidance with revenues in-line with consensus but higher-than-expected earnings, underscoring the company’s recent focus on streamlining operations by leveraging technology investment. Separately, following their fiscal fourth quarter earnings report, Shake Shack announced Rob Lynch as the incoming CEO. effective May 2024, succeeding Randy Garutti upon his retirement. Lynch, the former CEO of Papa John’s, is credited with revitalizing the brand post-2018 and has held senior marketing positions at several other top restaurant chains. With management executing well on its expansion plan to add 80 new restaurants in 2024, many of which with newly implemented drive-through windows, we believe the company remains well positioned for long-term growth potential.”
Overall SHAK ranks 8th on our list of the best stocks to buy according to Jim Cramer. While we acknowledge the potential of SHAK 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 SHAK 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.
