In this article, we’ll explore Jim Cramer’s 10 Stock Picks You Need to Know.
In a recent episode of Mad Money, Jim Cramer views the current market as highly unpredictable and easily swayed by even the slightest news. He acknowledges that while some sectors are thriving, others are struggling, making it a mix of the best and worst of times depending on the industry.
“Look, this market is so ridiculous that you could knock it over with a feather or take it up with a breeze. I wanted to borrow from Charles Dickens: “It was the best of times, it was the worst of times.” But the simple fact is that this isn’t the worst of times—just the worst of times for stocks in certain industries, and the best of times for others. Or within the confines of some hideous action for the average, with the Dow sinking 626 points, the S&P plunging 2.12%, and the Nasdaq plummeting 3.26%. It was a nasty day, right into the close.”
Cramer explains that a seemingly minor purchasing management report caused a widespread sell-off, particularly hitting cyclical stocks, homebuilders, and tech companies connected to AI. Despite the panic, Cramer emphasizes that these sectors, especially semiconductors, oil, and housing, are actually performing well. The sell-off, in his view, was driven by irrational fears that these strong performances won’t last.
“Now, what makes this market so ridiculous in my eyes? We had some obscure purchasing management report that threw everything off this morning, causing a wholesale collapse of the cyclicals, along with the homebuilders and anything connected to technology, particularly the once-beloved data center plays with big AI exposure. Given the chaos after that manufacturing PMI number, you’d think the semiconductor, oil, and housing worlds were in free fall. But in reality, these companies are doing incredibly well. The sellers are just worried they won’t stay good for long.”
Pure Stupidity
He attributes the market’s reaction to what he calls “pure stupidity,” combined with the typical challenges the market faces in September. This seasonal weakness can become a self-fulfilling prophecy, leading to exaggerated reactions. Cramer believes that while the economy is slowing, the Federal Reserve is likely to cut interest rates in the coming weeks, which could benefit sectors like homebuilding.
“Frankly, I think this action represents pure stupidity, combined with the fact that the market is typically challenged in September. That’s what’s going on here, something that’s true empirically—to the point where it can become self-fulfilling. That’s how it felt today. Sure, the economy is slowing, but in a few weeks, the Fed’s going to cut interest rates, and you’ll wish you’d stuck with a lot of what was on sale today, like the homebuilders. They are the real winners in any move that would take down mortgage rates, which is what would happen if the Fed cuts.”
A Repeat of the 1999 Dot-Com Bubble?
Jim Cramer acknowledges that if a scenario like 1999 were to repeat, it could be disastrous for chipmakers and the tech industry surrounding AI. He respects Cembalest as one of Wall Street’s top strategists but feels his comparison to the 1990s might be too harsh. Back then, many companies were spending recklessly, but today, the company and its clients are among the most financially stable companies in history. The company faces little real competition, with no other companies close to matching its capabilities.
“A repeat of 1999 would indeed be devastating for the company and all the tech that surrounds it. As much as I think Cembalest is the best pure strategist on Wall Street—the best I’ve found—I found this piece a little harsh because we had many fly-by-night outfits spending like drunken sailors back in the 1990s. Now, though, the firm and its clients are some of the most well-endowed companies ever. The company doesn’t have any real competition, and no one is near them by their own proclamations.”
Nvidia CEO Jensen Huang has repeatedly emphasized that if tech giants don’t invest now, they’ll miss out on future opportunities when they lack the necessary infrastructure. He’s proven that the company’s platform pays for itself quickly, which was not the case in 1999.
“As the company’s CEO Jensen Huang has pointed out many times, if the tech titans don’t spend, they’re out of luck when some great use cases come along, and they don’t have the infrastructure for it. Remember, Jensen has proved that the platform pays for itself very quickly. That sure wasn’t the case back in 1999, was it? Of course, the company’s stock has become a total pariah right now after this amazing quarter because the world suddenly seems convinced that AI spending will peak soon, at which point it’s all over but the shouting. “
Despite the firm’s impressive recent quarter, its stock has become unpopular, with many believing that AI spending will soon peak and that the stock’s rise was overblown. Investors seem eager to push the stock back to its early August lows, around $90 after the company only delivered a major upside surprise, not the massive one they had expected.
“Stocks are getting slammed because most investors think the company’s run-up was too extreme, given that the company only reported a major upside surprise—not the kind of insanely huge upside surprise they’d come to expect. The sellers are eager to take the company back to where it was trading during the last visit to the penalty box in the first week of August, with the stock ticking as low as $90 and change.”
Cramer anticipates that sellers will return in force following news that the Justice Department has subpoenaed the company in an antitrust probe. However, he downplays this development, noting that such subpoenas are standard practice, questioning why the Justice Department didn’t simply ask the company some questions instead.
“I’m sure the sellers will be right back tomorrow morning after we learned tonight that the Justice Department has hit the company with a subpoena over an antitrust probe. Now, who cares? That’s standard practice. It’s shot first, second, and third. Though with the company right now, no one’s thinking, “Well, wait a second, why didn’t the Justice Department just ask them some questions?”
Our Methodology
This article covers a recent episode of Jim Cramer’s Mad Money, where he reviewed several stocks. It highlights ten companies that he recommended and looks at how hedge funds view these stocks. The article also ranks these companies based on the level of hedge fund ownership, from the least owned 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).
Jim Cramer’s 10 Stock Picks You Need to Know
10. Sphere Entertainment Co. (NYSE:SPHR)
Number of Hedge Fund Investors: N/A
Jim Cramer has expressed some skepticism about Sphere Entertainment Co. (NYSE:SPHR)’s potential for long-term growth, despite acknowledging its current success in Las Vegas. He recognizes that Sphere Entertainment Co. (NYSE:SPHR)’s flagship venue, the Sphere, has been impressive, but he is concerned about the company’s ability to expand into other cities. According to Cramer, the key issue is whether Sphere Entertainment Co. (NYSE:SPHR) can secure agreements for new locations.
“I never had much doubt about the strength of the Sphere in Las Vegas. What worried me was whether the company could expand to additional cities. That’s the fly in the ointment here. As of right now, there’s still no agreement for any new Sphere locations, despite the promise of updates coming soon from management on the last three conference calls. But that’s the whole ballgame here. Without new locations, they don’t really have a long-term growth story. The analysts are split on this issue.
Last month, JP Morgan upgraded Sphere, saying international expansion is “a matter of when, not if.” On the other hand, Benchmark downgraded the stock today because they’re feeling more dubious about the idea. Putting it all together, Sphere Entertainment has done an incredible job with what they’ve got, which is one insane venue in Las Vegas. The company has certainly done better than I expected, which is why the stock’s had such a big run.”
Sphere Entertainment Co. (NYSE:SPHR) is a promising investment due to its recent developments and financial progress. Sphere Entertainment Co. (NYSE:SPHR)’s standout asset, the Sphere in Las Vegas, which opened in September 2023, showcases state-of-the-art technology and immersive experiences. This new venue enhances Sphere Entertainment Co. (NYSE:SPHR)’s role as a leader in live entertainment, attracting considerable attention from investors.
Investor confidence in Sphere Entertainment Co. (NYSE:SPHR) is further boosted by billionaire Steve Cohen’s recent purchase of a 5.5% stake through his firm, Point72 Asset Management. Cohen’s $50 million investment underscores a strong belief in Sphere Entertainment Co. (NYSE:SPHR)’s future growth, which positively impacts the stock’s market sentiment and volatility, often signaling the potential for expansion. Moreover, Sphere Entertainment Co. (NYSE:SPHR) has shown strong financial performance, with a 33% increase in operating income for fiscal Q4 2024 compared to the previous year.
Sphere Entertainment Co. (NYSE:SPHR)’s strategic focus on reducing administrative expenses has improved its financial health. Together with its innovative entertainment offerings and significant institutional support, these factors make Sphere Entertainment Co. (NYSE:SPHR) a compelling investment with substantial growth prospects.
Ariel Fund stated the following regarding Sphere Entertainment Co. (NYSE:SPHR) in its Q2 2024 investor letter:
“By comparison, shares of live entertainment, media and technology company, Sphere Entertainment Co. (NYSE:SPHR) traded down on mixed earnings results, giving back some of its strong first quarter gains. Although residency demand is robust and the venues’ original content experience and Exosphere remain popular, some investors expect near-term utilization will slow due to Las Vegas seasonality.
Meanwhile, international expansion remains the company’s priority, with management suggesting a major announcement soon. Although we believe it will take time for Sphere to reach its full potential, the company is well on its way to having events 365 days a year. It is ramping up the scale of its concert residencies, securing marquee sporting and corporate events, and creating more original content for The Sphere Experience.
In our view, the new experiential immersive venue in Las Vegas and its potential franchise opportunities alongside the company’s two regional sports and entertainment networks present a long-term opportunity that remains meaningfully underappreciated at current trading levels.”
9. Consolidated Edison Inc. (NYSE:ED)
Number of Hedge Fund Investors: 32
Jim Cramer has expressed a positive outlook on Consolidated Edison Inc. (NYSE:ED), suggesting it has strong potential for growth. He believes Consolidated Edison Inc. (NYSE:ED) could increase by about 70 points. Cramer is particularly impressed with Consolidated Edison Inc. (NYSE:ED)’s attractive yield and notes that as long as the yield remains above 3%, the stock is likely to continue rising. He sees this as a favorable sign for Consolidated Edison Inc. (NYSE:ED)’s future performance.
“I like Con Ed for maybe 70 points. It’s got a great yield, and I think at this point, as long as it’s above 3%, the stock can still project itself even higher.”
Consolidated Edison Inc. (NYSE:ED) is a strong investment choice due to its stable demand and solid financial performance. As a major utility provider in New York City and Westchester County, Consolidated Edison Inc.(NYSE:ED) benefits from a steady need for its electricity, gas, and steam services. Consolidated Edison Inc.(NYSE:ED) recently exceeded expectations with quarterly earnings of $0.59 per share, reflecting its consistent profitability, with a 12.03% net margin and an 8.67% return on equity.
Consolidated Edison Inc. (NYSE:ED)’s annual revenue of $14.81 billion and a low beta of 0.34 show that its stock is less volatile, making it appealing to risk-averse investors. Consolidated Edison Inc. (NYSE:ED) also offers a reliable 3.2% dividend yield, supported by a long history of steady payouts, providing a stable income source. Consolidated Edison Inc. (NYSE:ED) has appreciated 14.6% year-to-date, indicating positive investor sentiment. With a strong balance sheet and a manageable debt-to-equity ratio of 1.08, Consolidated Edison Inc. (NYSE:ED) demonstrates financial stability and potential for growth. These factors make it a compelling investment, promising steady returns and low risk.
8. Walgreens Boots Alliance Inc. (NASDAQ:WBA)
Number of Hedge Fund Investors: 35
Jim Cramer has expressed concern about Walgreens Boots Alliance Inc. (NASDAQ:WBA), noting that its stock has been consistently declining, partly due to its significant debt. He highlights that while Walgreens Boots Alliance Inc. (NASDAQ:WBA) has valuable assets it could sell to address this issue, there is a pressing need for these sales to happen quickly. Otherwise, the situation might worsen before it improves.
“This giant pharmacy chain has seen its stock go down and down and down, somewhat because of its debt burden. Fortunately, Walgreens has some assets it can sell. Unfortunately, if it doesn’t sell them quickly, I fear things will get worse before they get better. The situation is so murky because Walgreens needs to refinance billions of dollars at rather high rates, and all of the sale-leaseback deals these guys did in order to raise money will only complicate things further. They sold the land on many of their stores, and now they’re renters. The simple truth is that Walgreens must raise capital, or stock buyers will remain on strike.”
Walgreens Boots Alliance Inc. (NASDAQ:WBA) is a strong investment opportunity due to its strategic moves in healthcare and its attractive dividend yield. Walgreens Boots Alliance Inc. (NASDAQ:WBA) is enhancing its role in the healthcare sector by expanding its U.S. Healthcare segment with VillageMD and CareCentrix. This expansion targets the rising demand for value-based, primary, and specialty care, promising long-term growth.
Walgreens Boots Alliance Inc. (NASDAQ:WBA)’s investments and partnerships are transforming its traditional pharmacy business into a more comprehensive healthcare provider, potentially increasing revenue and driving future growth. Walgreens Boots Alliance Inc. (NASDAQ:WBA)’s extensive retail footprint across the U.S. and internationally supports its steady demand for pharmaceuticals and healthcare products. Despite facing some market challenges and stock volatility, Walgreens Boots Alliance Inc. (NASDAQ:WBA)’s large-scale and ongoing investments in healthcare and digital capabilities make it a solid long-term investment.
Its impressive dividend yield of around 8% is particularly appealing to income-focused investors, adding value amid market uncertainties. Analysts view Walgreens Boots Alliance Inc. (NASDAQ:WBA) as a potential value play, with its discounted valuation and transformation efforts enhancing its investment attractiveness.
Ariel Appreciation Fund stated the following regarding Walgreens Boots Alliance, Inc. (NASDAQ:WBA) in its Q2 2024 investor letter:
“Alternatively, shares of retail drugstore operator, Walgreens Boots Alliance, Inc. (NASDAQ:WBA), underperformed following an earnings miss and significant reduction to full year guidance, largely due to continued weakness in its U.S. retail business. In response, management announced a multi-year plan for the U.S. business to reduce the retail footprint, invest in the customer experience, align the retail and healthcare businesses for enhanced go-to-market capabilities and simplify the healthcare portfolio.
Meanwhile, the company continues to execute on its cost savings initiatives to optimize profitability and is using excess capital to prioritize the sustainability of its operations and balance sheet. Over the medium-term, we expect a re-rating in shares as WBA’s new CEO rebuilds the leadership team and earns credibility by executing on previously articulated strategic imperatives as well as margin.”
7. Zoetis Inc. (NYSE:ZTS)
Number of Hedge Fund Investors: 61
Jim Cramer has expressed a strong positive opinion about Zoetis Inc. (NYSE:ZTS). He recently had Kristin Peck on Mad Money, and he praised her as an excellent spokesperson for the company. Cramer’s admiration for Zoetis Inc. (NYSE:ZTS) is evident from his comments and the successful presentation by Peck.
“I like Zoetis very much. We recently had Kristin Peck on, and she did a great job—great spokesperson for it.”
Zoetis Inc. (NYSE:ZTS) presents a compelling investment opportunity due to its impressive financial results, innovation, and commitment to shareholders. Zoetis Inc. (NYSE:ZTS) reported strong Q2 2024 earnings with an EPS of $1.56, surpassing expectations by $0.07, and achieved an 8.3% revenue increase year-over-year. These results underscore Zoetis Inc. (NYSE:ZTS)’s robust growth and effective management, as evidenced by its high return on equity of over 50% and a net margin of approximately 26%.
With a market cap of $83.87 billion, Zoetis Inc. (NYSE:ZTS) is a leading force in the global animal health sector. Zoetis Inc. (NYSE:ZTS)’s dedication to innovation is highlighted by recent developments, such as the FDA approval of Librela™ for managing osteoarthritis pain in dogs. Additionally, Zoetis Inc. (NYSE:ZTS) has a reliable history of dividend growth and a beta of 0.86, indicating lower stock volatility relative to the market.
Polen Global Growth Strategy stated the following regarding Zoetis Inc. (NYSE:ZTS) in its Q2 2024 investor letter:
“We re-established a position in Zoetis Inc. (NYSE:ZTS) after holding a position from late 2017 to late 2021. Our sale came after a successful holding period and was solely driven by valuation, which we felt was stretched at the time. We had an opportunity to re-establish a position at a lower price than we sold in September 2021 despite Zoetis having a roughly 25% higher earnings base. In short, we’ve taken advantage of the recent dip in valuation to buy back what we think is an attractive safety business capable of sustaining durable low double-digit earnings growth.”
6. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Investors: 64
Jim Cramer has shared his experiences with The Procter & Gamble Company (NYSE:PG), which is part of the travel trust portfolio. He admits that investing in The Procter & Gamble Company (NYSE:PG) has been challenging, noting that the stock frequently fluctuates.
“We own Procter & Gamble for the travel trust. It’s been a real pain in the butt, frankly. It creeps up the ladder of the rotation and then slides down the chute of earnings over and over again. It fell apart after the last quarter, plummeting from $169 to $160 in a couple of sessions. The issue was China, which took everyone by surprise. But ever since we got clarity on the Fed’s next move, Procter has been rallying like crazy, and today it jumped to a new high of $175. Did Procter’s China problem get cured? I sure hope so, or the moment we get some strong data, perhaps from this Friday’s employment report, the chute will be back, the ladder will be pulled, and Procter’s stock will be headed lower again.”
For fiscal 2024, The Procter & Gamble Company (NYSE:PG) saw a 4% rise in organic sales, marking six years of continuous growth. This is supported by its diverse range of household and personal care products, which help the company stay resilient in tough economic times. Even though The Procter & Gamble Company (NYSE:PG) recently missed quarterly revenue targets, it surpassed earnings expectations with net sales of $84 billion, showing its efficiency and ability to handle inflation through effective pricing.
The Procter & Gamble Company (NYSE:PG)’s forward price-to-earnings (P/E) ratio of 24.7, while higher than the sector average, indicates that investors are confident in its future earnings potential. The Procter & Gamble Company (NYSE:PG)’s strong free cash flow of $13.6 billion supports a 2.4% dividend yield, which is attractive to investors looking for steady income. With its strategic management and operational strengths, The Procter & Gamble Company (NYSE:PG) is well-positioned to continue providing value to shareholders, making it a reliable choice in the consumer staples sector.
5. Intuitive Surgical Inc. (NASDAQ:ISRG)
Number of Hedge Fund Investors: 67
Jim Cramer believes that if someone is investing in robotics, Intuitive Surgical Inc. (NASDAQ:ISRG) is the best choice. He considers it the safer option in this sector. Cramer has featured Intuitive Surgical Inc. (NASDAQ:ISRG) on his show and expresses a strong positive view of the company.
“I think if you’re going to be in robotics, you have to be in ISRG. That’s the safer play. We have ISRG on the show, and I really like them.”
Baron Health Care Fund stated the following regarding Intuitive Surgical, Inc. (NASDAQ:ISRG) in its Q2 2024 investor letter:
“Intuitive Surgical, Inc. (NASDAQ:ISRG) manufactures the da Vinci Surgical System, a robotic surgical system used for minimally invasive procedures. The stock performed well due to excitement about the company’s new robotic surgical system, the da Vinci 5, which offers enhanced imaging, force feedback, and other improvements. We continue to believe Intuitive has durable competitive advantages and will remain the market leader in robotic surgery. We think the company has a long runway for growth as more procedures are performed with the company’s equipment.”
Intuitive Surgical Inc. (NASDAQ:ISRG) is an attractive investment due to its dominant role in the robotic surgery market and its strong financial results. Intuitive Surgical Inc. (NASDAQ:ISRG)’s primary product, the da Vinci Surgical System, is widely used in hospitals globally, driving steady revenue through sales of instruments, accessories, and services. In Q2 2024, Intuitive Surgical Inc. (NASDAQ:ISRG) reported earnings per share of $1.78, up from $1.18 the previous year, and revenue of $2.01 billion, marking a 14.5% increase from the same period last year.
This performance highlights Intuitive Surgical Inc. (NASDAQ:ISRG)’s ability to generate impressive returns and maintain healthy profit margins, driven by a 20% increase in surgical procedures. With analysts issuing “buy” ratings and raising price targets—such as Citigroup’s increased target of $560—there is strong confidence in Intuitive Surgical Inc. (NASDAQ:ISRG)’s future growth. The expanding use of robotic surgery in healthcare supports Intuitive Surgical Inc. (NASDAQ:ISRG)’s promising outlook. Given its leading position and strong financials, Intuitive Surgical Inc. (NASDAQ:ISRG) represents a solid long-term investment opportunity.
4. Dell Technologies Inc.(NYSE:DELL)
Number of Hedge Fund Investors: 88
Jim Cramer highlights Dell Technologies Inc.(NYSE:DELL) as a strong investment due to its significant role in providing servers for data centers and developing AI-integrated PCs. Although there was some confusion about the recent numbers, Cramer believes Wall Street’s initial positive reaction was justified. Dell Technologies Inc.(NYSE:DELL)’s stock initially rose over 4% last Friday but later lost those gains. Despite this, Cramer sees value in owning Dell Technologies Inc.(NYSE:DELL) shares.
“This story is all about Dell making servers for the data centers that power artificial intelligence, along with new lines of AI-infused PCs. Unfortunately, the numbers were somewhat confusing, but I think that Wall Street got this one right—at least initially—as the stock timely rallied more than 4% last Friday before giving back all those gains today. Yep, Dell’s still worth owning here, and I’m going to tell you why. Let’s start with the numbers: Dell delivered a meaningful revenue beat driven by 38% growth from its Infrastructure Solutions division. Much better than expected, mostly thanks to heavy investment in AI infrastructure by corporate clients. In fact, their server and networking sales were up 80% year-over-year.
Dell’s other business, the Client Solutions Group, which includes the PC business, came in a little light, but not light enough to offset the strength in the infrastructure side. In the earnings release, Dell Vice Chairman and COO Jeff Clarke, an old hand, explained that “our AI momentum accelerated in Q2, and we’ve seen an increase in the number of enterprise customers buying AI solutions each quarter.” Notice the word “solutions”—I think that’s really important. It’s more than just a box. He added that AI-optimized server demand jumped by 23% compared to the previous quarter.
Now, last time Dell reported, some investors didn’t like the margins from Dell’s infrastructure business. Long story short, their earlier AI hardware sales mainly came from selling servers to large hyperscalers—here we’re thinking about Alphabet, Amazon, Meta—and those companies can drive a hard bargain. Dell was confident that the margins would improve later on as they sold more networking and storage equipment along with services, but hardly anyone was willing to give them the benefit of the doubt. Except me, maybe. That’s because I saw that Jeff was with Jensen—of course, Jensen Huang, CEO of Nvidia—at the GTC conference I attended.”
In fiscal year 2024, Dell Technologies Inc. (NYSE:DELL) achieved a 5% revenue increase, reaching $105 billion, showcasing its solid market position and operational efficiency. Dell Technologies Inc. (NYSE:DELL) is well-positioned to benefit from the rising demand for enterprise solutions, such as hybrid cloud environments and edge computing, which aligns with the growing trend of digital transformation.
Dell Technologies Inc. (NYSE:DELL)’s strategic acquisitions and investments, including its purchase of VMware and its focus on AI and cybersecurity, are set to boost its competitive advantage and drive future growth. These initiatives demonstrate Dell Technologies Inc. (NYSE:DELL)’s commitment to expanding its product offerings and staying ahead in the evolving technology sector. Additionally, Dell Technologies Inc. (NYSE:DELL)’s diverse range of products, from servers and storage solutions to PCs, enables it to cater to various customer needs effectively.
Carillon Scout Mid Cap Fund stated the following regarding Dell Technologies Inc. (NYSE:DELL) in its first quarter 2024 investor letter:
“Dell Technologies Inc. (NYSE:DELL) reported results that exceeded earnings expectations and announced a better than expected AI-optimized server order pipeline. We expect Dell to participate in the growth of artificial intelligence hardware in its server, storage and personal computing franchises. Long-term, we like the company’s depth and breadth of products and services, as well as its focus on keeping costs low.”
3. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Investors: 92
Jim Cramer has some reservations about The Walt Disney Company (NYSE:DIS), focusing on the company’s content and its stock value. He emphasizes that the issue is not with Disney’s content quality or its stock price but with how the market perceives them. Cramer points out that The Walt Disney Company (NYSE:DIS)’s content largely targets female audiences with movies featuring female protagonists, leaving a gap for young boys. Over the past decade, only a few films, like “Luca,” “Coco,” and “Onward”—the latter of which wasn’t very successful—address this demographic.
“Okay, so my problem is with Disney, and this is important—it’s the company and the content, not the stock. Someone at Disney right now is probably saying, “This guy doesn’t fully recognize the value of our content,” so please let me explain.
There have been only two and a half movies in the last ten years that fit a very significant but widely underserved demographic—young boys. My boys watch Moana, Inside Out, Encanto, Raya and the Last Dragon, Fancy Nancy, Frozen, Frozen 2, Encanto again—you know, all of this is great content, but, and it’s a big but—all of this content has female protagonists and coming-of-age stories, which are not highly relatable for young boys. There’s been two and a half—Luca, Coco, and Onward. Onward wasn’t even a big hit.
Again, I’m not going to disagree or agree on content. What I would tell you is that I think the Street does not recognize the value of the whole library. They don’t recognize the value that ESPN actually has. They don’t recognize that the theme parks are just magnificent gems. They’re focused on the labor problems, they’re focused on some of the issues you just mentioned, and they’re focused on what I think are important zeitgeist issues but are missing the point of the premium property that is Disney.
That’s why, as you know, we own it for the Trust, and why Jeff Marks and I are discussing buying more here because it is so low. That said, Disney has to find the right CEO, and once they do and the vision is really cleared up, people are going to say, “Why didn’t I buy Disney in the 80s? What was I thinking?”
The Walt Disney Company (NYSE:DIS) is a strong investment choice, supported by its diverse content library, impressive streaming growth, and recovery in its theme parks. The Walt Disney Company (NYSE:DIS)’s extensive collection, including beloved franchises like Marvel, Star Wars, Pixar, and Disney Animation, enhances its competitive edge in both streaming and traditional media. The Walt Disney Company (NYSE:DIS)’s streaming platforms—Disney+, Hulu, and ESPN+—have shown remarkable growth, with Disney+ alone surpassing 230 million global subscribers, reflecting the increasing shift towards digital content.
Moreover, The Walt Disney Company (NYSE:DIS)’s theme parks are recovering well from the pandemic, with higher attendance and guest spending driving revenue up. Ongoing investments in new attractions and park infrastructure are set to fuel further growth. The Walt Disney Company (NYSE:DIS)’s strong financial performance is evident in its Q3 2024 revenue of $24.5 billion, marking a 7% increase from the previous year and demonstrating solid profitability and cash flow. Under CEO Bob Chapek’s leadership, The Walt Disney Company (NYSE:DIS)’s focus on innovation and global expansion positions it for continued success and long-term growth.
Mar Vista Focus strategy stated the following regarding The Walt Disney Company (NYSE:DIS) in its Q2 2024 investor letter:
“The Walt Disney Company’s (NYSE:DIS) shares declined after its earnings release, even though the company exceeded recently upgraded financial forecasts. While Disney+ and Hulu reached a milestone by turning their first quarterly profit, the company cautioned about theme park attendance returning to pre-pandemic norms. This signals a deceleration following a period of exceptional growth, impacting the stock as theme parks and experiences account for roughly 60% of Disney’s earnings. Despite broader consumer worries, Disney’s stock is still trading with a significant discount to fair value. We expect the gap between Disney’s market price and its intrinsic value to shrink as its streaming division evolves and increases profitability over time.”
2. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 108
Jim Cramer holds Lisa Su of Advanced Micro Devices Inc. (NASDAQ:AMD) in high regard and points out that the charitable trust owns shares in both AMD and another major company, suggesting there’s no need to choose between them. He acknowledges the unpredictable nature of the market, noting that significant changes can occur in just a couple of days.
“I think Lisa Su from AMD is just terrific too. It doesn’t have to be either/or because the charitable trust owns both. But, you know what? In two days, anything can happen—that’s how crazy this market is.”
Advanced Micro Devices Inc. (NASDAQ:AMD) presents a strong investment opportunity due to its leadership in advanced technology and impressive financial performance. Advanced Micro Devices Inc. (NASDAQ:AMD) has significantly increased its market share with its Ryzen and EPYC processors, which offer exceptional performance and value. Recent innovations, such as the Ryzen 7000 series and EPYC Genoa processors, highlight Advanced Micro Devices Inc. (NASDAQ:AMD)’s commitment to pushing the boundaries of high-performance computing. This has allowed Advanced Micro Devices Inc.(NASDAQ:AMD) to gain traction in both consumer and data center markets, challenging established competitors and attracting major tech companies and cloud providers.
The rising demand for data center solutions and AI applications further boosts Advanced Micro Devices Inc. (NASDAQ:AMD)’s prospects. Its EPYC processors are particularly well-suited for these high-growth areas, offering superior performance and efficiency. Strategic partnerships with prominent companies like Microsoft and Sony, along with contracts with various cloud service providers, expand Advanced Micro Devices Inc. (NASDAQ:AMD)’s market reach and drive demand for its products.
Strong financial results, with Q2 2024 revenue reaching $6.8 billion—up 12% from the previous year—demonstrate the company’s solid financial health and support for continued investment in research, development, and growth. These factors collectively make Advanced Micro Devices Inc. (NASDAQ:AMD) a compelling investment with significant potential for ongoing success and market leadership.
Alger Spectra Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2024 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a major global supplier of PC microprocessors and graphics processors to computing original equipment manufacturers (OEMs). The company’s product range spans desktops, notebooks, servers, graphics, and embedded/semi-custom chips. AMD operates in a large addressable market, covering areas such as PCs, servers, high-end gaming, and deep learning. Additionally, AMD has introduced competitive AI technologies, including powerful accelerators poised to capture a share in a market worth several hundred billion dollars.
During the quarter, the company reported fiscal first-quarter operating results that met analyst estimates, with strengths in data center GPUs and server CPUs offsetting weaknesses in their gaming and embedded businesses. Moreover, management raised their fiscal second-quarter revenue guidance, albeit slightly below consensus estimates, where they expected double digit growth in data center revenues, while projecting a decline in their gaming segment, driven by weaknesses in both desktop GPUs and Semi-Custom Systems-on-a-Chip (SoC).
While weaker-than-expected near-term results weighed on shares during the quarter, we believe the company is positioning itself to potentially benefit from long-term growth in AI infrastructure spending. Specifically, the company continues to gain server CPU market share, which could potentially accelerate as traditional compute deployments begin to recover.”
1. Meta Platforms Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 219
Jim Cramer advises holding onto Meta Platforms Inc. (NASDAQ:META), noting that it remains relatively inexpensive compared to other major tech stocks, especially after recent developments with Alphabet Inc. (NASDAQ:GOOG). He suggests that if Meta Platforms Inc. (NASDAQ:META)’s stock price were to drop significantly, say by 100 points, it would be a good opportunity to buy more shares.
“You’re going to hold Meta because it’s not expensive, believe it or not. It’s probably the least expensive of the mega caps, especially after what happened with Alphabet. Here’s what I would say: if it went down, let’s say 100 points, you should buy another 25 shares. I’m not advocating selling it right here because there’s too much in the pipeline that could be very good. We’re on a down day, and a lot of people freak out on down days. So, stay the course.”
Meta Platforms Inc. (NASDAQ:META) presents a strong investment opportunity due to its leadership in social media, solid advertising revenue, and strategic focus on virtual and augmented reality. With popular platforms like Facebook, Instagram, and WhatsApp, Meta Platforms Inc. (NASDAQ:META) has a vast and engaged user base, which drives significant ad revenue. In Q2 2024, Meta Platforms Inc. (NASDAQ:META)’s advertising revenue reached $32 billion, demonstrating its effective ad targeting and the strength of its core business.
Meta Platforms Inc. (NASDAQ:META)’s investment in virtual and augmented reality, particularly through its Reality Labs division, is a major growth driver. Projects like Horizon Workrooms aim to open new revenue streams and support long-term growth. Meta Platforms Inc. (NASDAQ:META)’s continuous innovation in its product offerings ensures high user engagement and helps it stay competitive in the fast-changing tech world. Financially, Meta Platforms Inc. (NASDAQ:META) is robust, with Q2 2024 revenues of $35 billion and net income of $10 billion, reflecting its strong profitability and ability to invest in future opportunities.
Mar Vista Focus strategy stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q2 2024 investor letter:
“During the quarter, we established new investments in Broadcom and Meta Platforms, Inc. (NASDAQ:META). We previously divested from Meta during a period of stagnant advertising growth and the company’s initial, significant investment in the metaverse project. At that time, investors appeared complacent to the risks associated to an increasingly competitive landscape, and the Street’s robust financial expectations as the company transitioned towards monetizing short-format video (Reels). The subsequent decline in Meta’s stock price during 2022 reflected these concerns.
Since then, Meta has demonstrably shifted its strategic focus. The company has prioritized operational efficiency, implemented strategies to monetize Reels effectively, and initiated a robust artificial intelligence (AI) development program. We believe the focus on AI represents a more prudent capital allocation strategy compared to the earlier metaverse initiative. Meta AI holds significant potential to unlock substantial monetization opportunities and enhance user engagement, while maintaining tight controls on operating costs…” (Click here to read the full text)
While we acknowledge the potential of Meta Platforms, Inc. (NASDAQ:META), 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 the ones on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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