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 Rivian Automotive Inc. (NASDAQ:RIVN) 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 state-of-the-art electric vehicle charging at a station at a suburban mall.
Rivian Automotive Inc. (NASDAQ:RIVN)
Number of Hedge Fund Investors: 37
Jim Cramer believes Rivian Automotive Inc. (NASDAQ:RIVN) is a strong long-term investment because its products are impressive. While having a well-funded partner is a positive sign for Rivian Automotive Inc. (NASDAQ:RIVN)’s stability, Cramer advises that this doesn’t automatically mean you should buy the company right now. Instead, he suggests holding onto it rather than selling, as Rivian Automotive Inc. (NASDAQ:RIVN)’s continued presence in the market is a key factor to consider.
” I think Rivian is a great long-term stock. Why? Because the actual product is so fabulous that the last thing I want to do is write these guys off. Now that they have a deep-pocketed partner, does that mean you should own the stock? No. It means that you shouldn’t sell the stock necessarily, but it means the company’s sticking around, and that’s what really matters.”
Rivian Automotive Inc. (NASDAQ:RIVN) is a promising investment due to its successful launch of the R1T electric pickup truck and R1S electric SUV, which have been well-received for their performance and unique features. These vehicles, designed for adventure and outdoor use, give Rivian Automotive Inc. (NASDAQ:RIVN) a strong position in the EV market. Rivian Automotive Inc. (NASDAQ:RIVN) benefits from strategic partnerships, including a significant deal with Amazon.com, Inc. (NASDAQ:AMZN) for 100,000 electric delivery vans and an investment from Ford Motor Company (NYSE:F). These partnerships strengthen Rivian Automotive Inc. (NASDAQ:RIVN)’s market position and financial stability.
Additionally, Rivian Automotive Inc. (NASDAQ:RIVN) is expanding production with its facility in Normal, Illinois, and plans to build a second U.S. factory to meet high demand and boost revenue. Rivian Automotive Inc. (NASDAQ:RIVN)’s early entry into the electric pickup and SUV markets provides a competitive advantage as the global shift toward electric vehicles grows.
Meridian Hedged Equity Fund stated the following regarding Rivian Automotive, Inc. (NASDAQ:RIVN) in its first quarter 2024 investor letter:
“Rivian Automotive, Inc. (NASDAQ:RIVN) is a US-based manufacturer of electric vehicles, namely the R1T pickup truck and R1S SUV. They also have exposure to the commercial vehicle market with their electric delivery vans (EDVs) that are sold to companies like Amazon. The company has faced challenges amid the broader slowdown in electric vehicle demand and rising interest rates.
This has contributed to Rivian underperforming expectations over the past few quarters. Rivian has also incurred losses as it continues to invest in the development of its products and manufacturing capabilities. We own Rivian in a hedged structure, which provides a significant margin of safety. Despite the near[1]term challenges, several factors provide optimism that Rivian can emerge as a long-term winner in the EV market. Rivian’s balance sheet is strong, with a substantial cash position that enables the company to continue investing in its growth and navigate through the current economic headwinds.
Rivian is also unveiling the R2, which is a smaller and more affordable EV platform that will open the company’s products to a wider customer base. Lastly, Rivian’s investment in the enhancement of its production capabilities should improve the company’s manufacturing efficiency and drive a path to profitability. We continue to hold the company in a hedged structure.”
Overall RIVN ranks 8th on our list of stocks on Jim Cramer’s radar. While we acknowledge the potential of RIVN 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 RIVN 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.
