We recently published an article titled, 11 Stocks on Jim Cramer’s Radar Right Now. In this article, we are going to take a look at where Hewlett Packard Enterprise Company (NYSE:HPE) stands against other stocks on Jim Cramer’s radar right now.
In his recent episode of Mad Money, host Jim Cramer focused on the upcoming market events, emphasizing the importance of new consumer price index data alongside a series of reports as the earnings season kicks off.
Cramer pointed out that the Labor Department’s nonfarm payroll report revealed significant job growth in September, surpassing expectations. He highlighted the significant rally in stocks on Friday, a response to better-than-expected job creation figures. The U.S. economy added 254,000 jobs in September, significantly exceeding Wall Street’s estimate of 150,000. Additionally, there were upward revisions for the previous two months, with 72,000 more jobs reported for July and August combined.
Despite his initial expectation that stocks would decline as bond yields surged, Cramer noted the resilience in the market. He observed that people seemed to feel relief, thinking that a major economic downturn was not on the horizon, which prompted a flurry of buying activity in the stock market. He added, “Maybe we aren’t headed toward a landing at all.” He described the situation as quite unusual and, in his view, “quite exciting”.
He mentioned that on Wednesday, the Federal Open Market Committee will publish notes from its last month’s meeting, which could clarify the central bank’s bold choice to cut interest rates by 50 basis points. According to Cramer, Wall Street is rife with speculation about the Federal Reserve’s future actions, especially following strong labor statistics released last Friday. As speculation swirls around whether the next cut will be 25 or 50 basis points, Cramer leaned towards the belief that it would likely be 25 or nothing at all. He added:
“Then again, what really matters is the overall direction for rates, and that direction is most definitely lower, which is bullish for stocks.”
He also mentioned that Friday would bring the producer price index report, which, like the consumer price index, will serve as a critical indicator for the Fed’s upcoming decisions. Cramer commented:
“Here’s the bottom line: a market that appreciates good news, like a robust job creation number, is a market that can handle, well, let’s just say, the historically tough month of October. After today’s performance, all I can say is so far so good.”
Our Methodology
For this article, we compiled a list of 11 stocks that were mentioned by Jim Cramer during his episode of Mad Money on October 4. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
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).
Jim Cramer Thinks Hewlett Packard Enterprise Company (NYSE:HPE) Will Be A ‘Needle Mover’
Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 58
Hewlett Packard Enterprise Company (NYSE:HPE) is a provider of solutions that allow customers to capture, analyze, and act on data effectively. The company operates through various segments, offering a variety of products, including general-purpose and specialized servers, advanced computing systems, and storage solutions. Talking about the company, Cramer said that it will hold an analyst day in the week, which will be “dedicated to its AI efforts, which are substantial and underestimated” and he also thinks it will be a “needle mover”.
Hewlett Packard (NYSE:HPE) reported a 3% year-over-year increase in revenue in the second quarter, reaching $7.2 billion, which surpassed analyst expectations. The adjusted EPS stood at $0.42, also exceeding consensus forecasts.
On September 25, Barclays upgraded Hewlett Packard (NYSE:HPE) stock to Overweight from Equal Weight with a price target of $24, up from $20. The firm believes that the company will benefit from growth in artificial intelligence server revenues and improvements in its storage segment.
Additionally, the recent acquisition of Juniper Networks is expected to contribute positively to the company’s overall performance. Barclays sees early signs of recovery in enterprise spending, suggesting that investing in the company presents a compelling opportunity, particularly given that its stock has not yet fully reflected the potential benefits of AI advancements compared to other hardware competitors.
Recently, Bernstein analysts, led by Toni Sacconaghi, highlighted that the AI prospects for the company will continue to be closely linked to training and Tier 2 hyperscalers in the near term, which typically offer low profits, rather than on-premise inferencing, where profit margins are expected to be significantly higher.
Overall, HPE ranks 8th on our list of stocks on Jim Cramer’s radar right now. While we acknowledge the potential of HPE as an investment, our conviction lies in the belief that 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 HPE 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.