In this article, we’ll explore the 10 Stock Picks of Jim Cramer that You Shouldn’t Miss.
Jim Cramer reacted to Monday’s market by questioning if there’s any money left to invest and why mutual funds aren’t holding enough cash. The S&P 500 fell 17.77 points, or 0.3%, to 5,616.84. The Dow Jones Industrial Average rose 65.44 points, or 0.2% to 41,240.52. The Nasdaq composite fell 152.03 points, or 0.9%, to 17,725.76.
“What do we do if we’re out of money? Don’t mutual funds have enough cash? That’s my reaction to today’s market action. Right now, mutual funds know they have to pivot out of consistent growth stocks, especially tech stocks like software and semiconductors, which don’t benefit from rate cuts. They need to swap into companies that can supercharge their earnings as the Fed lowers rates. We all recognize that cyclical stocks, the ones that benefit from lower rates, can go higher, maybe much higher.”
Cramer pointed out that mutual funds now need to shift away from consistent growth stocks, particularly in tech sectors like software and semiconductors, which don’t benefit from interest rate cuts. Instead, they should move towards companies that can boost their earnings as the Federal Reserve reduces rates.
“What’s painful for many of you are the declines in stocks of companies with consistent earnings. These companies, especially tech firms, don’t really need lower rates, and they’re selling off as money managers raise capital to rotate into the rate-cut winners.
So, why don’t we go over the winners and talk about the losers? The rate-cut winners are divided into two camps: stocks with high dividend yields and cyclical companies with earnings that should go higher because lower rates will bolster various industries, especially housing.”
Cramer explained that cyclical stocks, which tend to perform better with lower rates, are likely to rise, possibly significantly. However, the decline in stocks of companies with stable earnings, especially in tech, is troubling for many investors. These stocks are being sold off as money managers raise capital to invest in those poised to benefit from rate cuts.
Cramer emphasized that it’s important to understand who the winners and losers are in this situation. The winners include two groups: high-dividend-yield stocks and cyclical companies expected to see earnings growth from lower rates, particularly in the housing sector.
Cramer noted that housing stocks, which had seen significant gains, were down on Monday because hedge funds and mutual funds had bought heavily before the Federal Reserve’s Jackson Hole meeting. While mutual funds are holding on, hedge funds are cashing in their profits, as these stocks had sharp increases before the event. For traders, taking profits after such a successful trade is standard practice.
“Let’s start with the most direct beneficiaries: housing. These stocks were all down today because hedge funds and mutual funds bought them aggressively ahead of Friday’s Jackson Hole verdict. Mutual funds are staying long, but hedge funds are ringing the register furiously because they’ve made so much money. Housing stocks had parabolic moves going into the Fed’s Jackson Hole conference, so now these portfolio managers are just taking profits. That’s what you’re supposed to do with a successful trade if you’re a trader.
Remember, these guys are traders, not investors. So, the housing trade is over, but what about the housing investment? I believe Toll Brothers, which just reported a stellar quarter last week, can go higher, maybe much higher. But this reversal is going to constrain the stock because people do not like the technical trends we just saw. We’ve seen multiple long-term reversals after these kinds of moves, and they rarely turn out to be buyable, even though in theory, this should be a great moment for the stock of all the homebuilders.”
Cramer believes that while the housing trade may be over for traders, the housing investment story isn’t finished. He also warned that the recent reversal in housing stocks could limit their potential, as investors are wary of the technical trends.
“It doesn’t matter, though. This kind of reversal I’m talking about can be hideous. Some of these stocks are very close to their highs, and I don’t like that.”
Cramer cautioned that these kinds of reversals can be severe and might discourage new buyers. He reminded everyone that by the time the Federal Reserve signals a clear path forward, it might be too late to buy the most obvious rate-cut winners. According to Cramer, it’s better to wait for these stocks to pull back and recharge before making a move.
“Those who have them can hold on, but they flew too close to the sun to attract new buyers. Remember, I’ve said all along that by the time the Fed gives the all-clear, it may be too late to buy the most obvious rate-cut winners. You have to let them recharge, let them come down, and then you can pull the trigger.”
Our Methodology
In this article, we analyzed a recent episode of Jim Cramer’s Mad Money and picked the ten notable stocks he mentioned. We also explore what hedge funds think about these stocks and rank them based on how many hedge funds 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).
10. The AZEK Company Inc. (NYSE:AZEK)
Number of Hedge Fund Investors: 35
Jim Cramer has a particular favorite among the stocks he’s discussed, which is The AZEK Company Inc. (NYSE:AZEK), a company specializing in faux wood products. Cramer finds The AZEK Company Inc. (NYSE:AZEK) impressive because its products are a great alternative to traditional wood decking and trim.
“But my favorite in this group may be AZEK, the faux wood products company. It’s fantastic as a replacement for wood decking and trim. I’d put AZEK in the moment I buy a house because I’m tired of having to fix a wooden deck two or three times. Real wood is a money pit in a few years—you just don’t even realize how much you can save. AZEK has leaned into recycling, and a big percentage of its materials are 90% recycled.”
The AZEK Company Inc. (NYSE:AZEK) achieved strong results in the fiscal third quarter of 2024, with net sales rising 12% compared to the previous year. Excluding the Vycom business, which was recently sold, net sales increased by 18%. This growth was driven by a robust performance in the residential segment, which also saw an 18% increase due to strong demand for decking, rails, and accessories. The AZEK Company Inc. (NYSE:AZEK)’s growth strategies and initiatives are proving effective, allowing the company to surpass the overall market growth and solidify its industry leadership.
The AZEK Company Inc. (NYSE:AZEK) is poised for strong long-term growth driven by trends such as an aging housing stock, more millennial homeowners, and increased demand for sustainable materials. The AZEK Company Inc. (NYSE:AZEK) is investing heavily in research, innovation, and brand awareness, with recent product launches like TimberTech composite and TimberTech Fulton Rail enhancing its market position.
The AZEK Company Inc. (NYSE:AZEK)’s TimberTech brand is highly recognized for quality and innovation. Strategic investments in consumer education, new distribution partnerships, and a new manufacturing facility are expected to further drive growth. The AZEK Company Inc. (NYSE:AZEK) maintains confidence in achieving double-digit growth, reaffirming its fiscal 2024 guidance with a projected 10% to 12% increase in net sales and significant EBITDA growth.
Aristotle Capital Small Cap Equity Strategy stated the following regarding The AZEK Company Inc. (NYSE:AZEK) in its first quarter 2024 investor letter:
“The AZEK Company Inc. (NYSE:AZEK), a leading manufacturer of residential building products, primarily focused on wood-alternative decking, railing and trim, benefited from strong fundamental performance revealed in the company’s latest earnings release after the company reported favorable broader business trends, expanding margins, and strong sales. We maintain our position, as we believe the strong secular demand backdrop for alternative, sustainably sourced building products along with company-specific margin improvements should benefit shareholders in periods to come.”
9. Fortune Brands Innovations (NYSE:FBIN)
Number of Hedge Fund Investors: 35
According to Jim Cramer, Fortune Brands Innovations (NYSE:FBIN), which produces premium faucets, housing materials, decking, and safety equipment, stands to gain from lower interest rates. Despite having done a lot to succeed even in a high-rate environment, Fortune Brands Innovations (NYSE:FBIN) has a product that Cramer particularly likes—a shut-off device designed to prevent flooding when homeowners are away.
“Please do not forget about a company we showed you last week: Fortune Brands Innovations. This maker of high-end faucets, housing materials, including decking and safety equipment, can really benefit from lower rates, even as it’s done a lot of self-help to thrive in a high-rate environment. I really like their shut-off device that can prevent flooding when you’re away—insurers are embracing the concept, giving you lower homeowner premiums if you buy these setups. They pay for themselves.”
Fortune Brands Innovations (NYSE:FBIN) is well-positioned for continued growth, driven by its strategic realignment and robust performance in Q2 2024. Fortune Brands Innovations (NYSE:FBIN)’s recent efforts have led to market-beating sales and margin improvements, reinforcing its growth-focused strategy.
For the second quarter, Fortune Brands Innovations (NYSE:FBIN) reported net sales of $1.2 billion, marking a 7% increase, with operating income rising by 9% and earnings per share improving by 8% year-over-year. Despite a slight decline in organic sales, mainly due to cautious consumer behavior in China, Fortune Brands Innovations (NYSE:FBIN) achieved significant growth in its core North American markets. Key drivers of this growth include a strong performance in the Moen North America and Outdoors segments, as well as an expanding digital portfolio.
Fortune Brands Innovations (NYSE:FBIN)’s digital business saw notable success, with 200,000 device activations and promising partnerships that are expected to boost organic sales growth by over 150 basis points in the latter half of 2024. Fortune Brands Innovations (NYSE:FBIN)’s deal with Farmers Insurance to provide Flo Smart Water Monitors and Shutoff devices shows its capability to scale up and innovate.
Diamond Hill Mid Cap Strategy stated the following regarding Fortune Brands Innovations, Inc. (NYSE:FBIN) in its fourth quarter 2023 investor letter:
“We initiated a position in Fortune Brands Innovations, Inc. (NYSE:FBIN), a leading manufacturer of decorative plumbing fixtures, exterior doors, composite decking and locks and safes. Shares have been pressured recently against a backdrop of declining existing home sales, which is generally considered the primary driver of repair and remodeling (R&R) spending. However, the long-term outlook for new construction and R&R spending is positive given historical underinvestment and favorable demographic trends. Further, history shows R&R spending can grow despite declining existing home sales as it did from 1978-1982. FBIN’s portfolio includes leading brands with attractive end markets and secular tailwinds, and we believe the outlook from here is positive.”
8. Evergy Inc. (NYSE:EVRG)
Number of Hedge Fund Investors: 36
Evergy Inc. (NYSE:EVRG) is a leading energy company committed to providing reliable and sustainable power solutions. The recent passage of House Bill 2527 in Kansas sets up a competitive framework for electric infrastructure, helping to address regulatory delays and promote economic development. This legislative support signals a positive environment for Evergy Inc. (NYSE:EVRG).
In Missouri, Evergy Inc. (NYSE:EVRG) will likely benefit from lower fuel and power costs, which should lower customer rates and strengthen its market position through favorable rate changes and regulatory collaboration. Additionally, Evergy Inc. (NYSE:EVRG)’s focus on affordability, reliability, and sustainability enhances its growth potential. Evergy Inc. (NYSE:EVRG)’s efforts to keep rates competitive and its significant reduction in carbon emissions by 53% since 2005 showcase its commitment to long-term value and environmental responsibility.
Jim Cramer suggests Evergy Inc. (NYSE:EVRG) as a top utility stock to consider. While Dominion Energy has the highest yield among S&P 500 utilities, Cramer has concerns about its dividend. Instead, Evergy Inc. (NYSE:EVRG), which has a 4.34% yield, is recommended due to its promising future.
“Let’s look at a utility stock that can serve as a safety net if the Fed’s rate cuts fail to boost the economy. Even if the economy improves, utilities are set to benefit from the insane demand for electricity driven by the construction of data centers for AI workloads. Many high-quality utilities have yields that aren’t quite high enough to make this list, but we want stocks with yields higher than the 10-year Treasury.
Dominion Energy (NYSE:D) has the highest yield among utilities in the S&P 500, but I’m not confident in their dividend due to some ongoing issues. Instead, I recommend Evergy, the second-highest yielding utility in the S&P 500, with a 4.34% yield. Evergy, based in Kansas City, was formed by the merger of Great Plains Energy and Westar Energy in 2018. Although the stock has mostly traded sideways since the merger, there’s a new angle to the story that hasn’t yet been reflected in the stock price.
Evergy’s service area has announced three major projects that will eventually consume massive amounts of electricity: a $4 billion electric vehicle battery plant from Panasonic, the largest in the world when fully operational in 2026; an $800 million data center from Meta, expected to be fully online by 2027; and a billion-dollar data center from Google, expected to be online by 2028. Combined, these projects represent a staggering 750 megawatts of load. This is exactly what you want to see in a utility stock—a solid yield and potential for load growth.”
Artisan Value Income Fund stated the following regarding Evergy, Inc. (NASDAQ:EVRG) in its first quarter 2024 investor letter:
“In Q1, we added two utilities to the portfolio: Alliant Energy and Evergy, Inc. (NASDAQ:EVRG). Evergy serves more than 1.7 million customers in Kansas and Missouri. In addition to the aforementioned dynamics weighing on utilities share prices, Evergy had two key rate cases in 2023, one in Kansas and the other in Missouri, that presented risk for investors. The Missouri case went better than expected, but the returns allowed by the Kansas regulator were punishingly low. Though Evergy operates in a subpar regulatory environment, the utility is a good operator, with strong customer satisfaction scores, below-average capex needs and a clean balance sheet. The regulatory environment may improve at some point, but even if it does not, Evergy trades for just 13X 2024 earnings, which is below average relative to its history and peers— and pays a dividend yielding 4.7%.”
7. Simon Property Group Inc. (NYSE:SPG)
Number of Hedge Fund Investors: 38
Simon Property Group, Inc. (NYSE:SPG) is a leading global retail real estate investment trust (REIT) known for its high-quality portfolio of shopping centers and premium outlets. Jim Cramer highlights Simon Property Group Inc. (NYSE:SPG) as a strong investment. Despite a period of flat performance, Simon Property Group, Inc. (NYSE:SPG) recently surged 13% after reporting strong earnings on August 5th.
“This mall owner and operator has been a consistent recommendation of mine for years. The stock is currently trading at its highest level since 2021. Despite the stock trading sideways from December until early this month, it recently broke out of that range, gaining 13% since reporting an excellent beat-and-raise quarter on August 5th.
The bull thesis for SPG is twofold: First, while many proclaim that malls are dead, the reality is that high-end malls like those owned by Simon Properties are doing just fine. Their latest quarter showed a 95.6% occupancy rate, up 90 basis points year-over-year, with domestic property net operating income increasing by 4.5%. In plain terms, Simon’s malls are full and growing earnings.
Second, during the pandemic, Simon partnered with Authentic Brands Group to buy struggling retailers, which kept those brands in business and preserved Simon’s rent base. Many of these investments turned out to be very profitable as they were bought at fire-sale prices and have since increased in value. Simon is starting to monetize these investments, boosting their numbers.
Additionally, Simon has a portfolio of outlet malls in Asia, which are performing well but are often overlooked. Simon’s dividend is almost back to pre-pandemic levels, and in many respects, the business is in the best position it has ever been. This makes it a great dividend stock to own in anticipation of lower interest rates.”
Simon Property Group Inc. (NYSE:SPG)’s recent performance underscores its promising growth potential, making it a strong investment candidate. Simon Property Group Inc. (NYSE:SPG)’s third Annual National Outlet Shopping Day was a major success, drawing over 3 million shoppers and featuring more than 475 retailers. This event’s growing popularity highlights Simon Property Group Inc. (NYSE:SPG)’s expanding influence in retail.
Looking ahead, Simon Property Group Inc. (NYSE:SPG) is poised for further growth with new ventures like the fully leased Tulsa Premium Outlets and the upcoming Busan Premium Outlets expansion in South Korea. Additionally, the development of luxury residences at Northgate Station and ongoing international projects bolster its market position.
On the financial front, Simon Property Group Inc. (NYSE:SPG) has demonstrated robust health, having refinanced $1.1 billion in property mortgages and maintaining $11.2 billion in liquidity. The 7.9% increase in the third-quarter dividend, along with an upward revision of its full-year earnings guidance, reflects its solid financial stability and dedication to shareholder returns.
Simon Property Group Inc. (NYSE:SPG)’s Chief Financial Officer, Brian McDade, has this to say in their latest earnings call:
Second quarter funds from operations were $1.09 billion or $2.90 per share compared to $1,800 million or $2.88 per share last year. FFO from our real-estate business was $2.93 per share in the second quarter compared to $2.81 in the prior year, a 4.3% growth. Domestic and international operations had a very good quarter and contributed $0.12 of growth. As a reminder, the prior year included a non-cash gain of $0.07 from investment activity related to ABG. Domestic NOI increased 5.2% year-over-year for the quarter. Continued leasing momentum, resilient consumer spending and operational excellence delivered results exceeding our plan for the quarter. Portfolio NOI, which includes our international properties at constant currency, grew 4.8% for the quarter.
Malls and outlet occupancy at the end of the second quarter was 95.6%, an increase of 90 basis points compared to the prior year. The mills occupancy was 98.2%. Average base minimum rent for malls and outlets increased 3% year-over-year and the mills increased 3.9%. As David mentioned, leasing momentum continued across the portfolio. We signed more than 1,400 leases for approximately 4.8 million square feet in the quarter. Approximately 30% of our leasing activity in the second quarter was new deal volume. Our traffic in the second quarter was up 5% compared to last year. And importantly, total sales volumes increased approximately 2% year-over-year. Reported retailer sales per square foot in the second-quarter was $741 for the mall and premium outlets combined.” (Click here to see more…)
6. Kinder Morgan Inc. (NYSE:KMI)
Number of Hedge Fund Investors: 41
Jim Cramer revisits Kinder Morgan Inc. (NYSE:KMI), a favorite of his from 2005 to 2010. Kinder Morgan Inc. (NYSE:KMI), a major energy pipeline company, operates similarly to a toll road, meaning it doesn’t rely heavily on fluctuating oil or gas prices. Instead, it benefits from steady growth in domestic energy production, which has been strong for years. Cramer notes that while Wall Street anticipates rate cuts, Kinder Morgan Inc. (NYSE:KMI)’s fundamentals remain solid. With a strong yield and a reliable track record, it is a strong long-term investment in the pipeline sector, especially as rates decrease.
“This energy pipeline play was a big favorite of mine from 2005 to 2010. Pipeline operators like Kinder Morgan operate like toll roads, meaning they aren’t heavily leveraged to the price of oil or gas. While KMI does have some exposure, it primarily benefits from domestic energy production growth, which has been strong for the past two decades.
While I like Enbridge with its 7.27% yield, it’s not part of the S&P 500. Instead, we’ll focus on Kinder Morgan, which offers the 10th highest yield in the S&P 500 at 5.37%. Despite oil and gas prices pulling back from their highs, Kinder Morgan’s stock has continued to perform well, up more than 21% this year with minimal drama.
Wall Street is anticipating rate cuts, but the fundamentals are solid—this is a great long-term operator in the pipeline space with a very attractive yield that will become even more appealing as rates decrease.”
Kinder Morgan Inc. (NYSE:KMI) is showing strong growth potential due to impressive performance and strategic initiatives. Kinder Morgan Inc. (NYSE:KMI)’s natural gas gathering volumes increased by 10% year-over-year, driven by higher production in the Haynesville and Eagle Ford regions. Although a minor decrease in volumes is expected for 2024, this is seen as temporary.
In the products pipeline segment, refined product volumes rose by 2%, while crude and condensate volumes remained stable. The $150 million upgrade of the Double H Pipeline system to handle natural gas liquids underscores Kinder Morgan Inc. (NYSE:KMI)’s focus on meeting market demands and seizing new opportunities. The terminals segment is thriving with high leased liquid capacity and strong utilization at key locations, and the CO2 segment has optimized its asset portfolio through strategic transactions, preparing for future CO2 flood projects and carbon capture initiatives.
Financially, Kinder Morgan Inc. (NYSE:KMI) is solid, as evidenced by a 2% increase in its dividend, reflecting strong performance and a commitment to returning value to shareholders. Kinder Morgan Inc. (NYSE:KMI) reported $3.57 billion in revenue for the quarter and saw a significant rise in gross margin.
5. DuPont de Nemours Inc. (NYSE:DD)
Number of Hedge Fund Investors: 58
DuPont de Nemours Inc. (NYSE:DD) is a global science and technology company known for its innovations in materials science, electronics, and specialty products. Jim Cramer highlights DuPont de Nemours Inc. (NYSE:DD) as one of his top picks. DuPont de Nemours Inc. (NYSE:DD) is in the process of splitting into three separate companies, with one of these—classic DuPont—holding Tyvek, a well-known product used in housing construction. Cramer believes this division, which is owned by the Trust, has significant potential for further gains.
“One of my favorites, though, is DuPont, which is splitting into three companies, one of which—classic DuPont—has Tyvek, the obvious housing play. The Trust owns it, and I think it could rally much further, especially if it gets bids for its water division, which is technically for sale.”
DuPont de Nemours Inc. (NYSE:DD)’s recent performance reveals strong growth prospects, driven by strategic actions and improved financial results. In the second quarter, DuPont de Nemours Inc. (NYSE:DD) achieved a 2% increase in net sales, reaching $3.2 billion. This growth was supported by the Spectrum acquisition, despite facing a 2% negative impact from currency fluctuations. DuPont de Nemours Inc. (NYSE:DD)’s emphasis on productivity, operational efficiency, and cost-saving measures from recent restructuring efforts is fueling growth in sales, margins, and cash flow.
Here’s what DuPont de Nemours Inc. (NYSE:DD)’s CFO, Antonella Franzen has to say in their latest earnings call:
Our second quarter results were clearly encouraging. Volume recovery is a key driver of our improved Q2 financial performance. Additionally, our ongoing commitment to drive productivity and operational excellence as well as continued savings from restructuring actions announced last November are also contributing to top line growth, margin expansion and cash flow improvement. Net sales of $3.2 billion increased 2% versus the year ago period, as a favorable portfolio benefit of 4%, reflecting the Spectrum acquisition was partially offset by a 2% currency headwind.
Organic sales were flat as a 2% increase in volume was offset by a 2% decrease in price. Higher volume was driven by broad-based growth in electronics markets within semi and interconnect solutions with year-over-year reported volumes up more than 20% and mid-teens, respectively. These gains were partially offset by year-over-year declines in China within Water Solutions as well as Tyvek Medical packaging. However, we did see sequential improvement in these areas, as Lori mentioned. On a segment view, E&I organic sales inflected to grow 8% while W&P organic sales decline moderated to 6%. Organic sales in corporate decreased 5% versus the year ago period. From a regional perspective, Asia Pacific delivered 3% organic sales growth versus the year ago period with growth driven by China, where organic sales were up 8%, led by strong growth in E&I.
In other regions, the North America was down 2% and Europe was down 7%. Second quarter operating EBITDA of $798 million increased 8% versus the year ago period as volume gains, lower product costs, Savings from restructuring actions and the earnings contribution from Spectrum were partially offset by higher variable compensation. Operating EBITDA margin during the quarter was 25.2%, up 130 basis points versus the year ago period and up 190 basis points sequentially from first quarter. Additionally, I am very pleased with our cash flow performance as we reported another quarter of strong cash generation and conversion. On a continuing operations basis, cash from operations of $527 million, less capital expenditures of $102 million, resulted in adjusted free cash flow of $425 million.” (Click here to see more…)
4. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 108
Jim Cramer views Advanced Micro Devices Inc. (NASDAQ:AMD) as a strong contender, second only to Nvidia in the semiconductor sector. However, he points out that Advanced Micro Devices Inc. (NASDAQ:AMD) is currently facing significant challenges, with its stock down considerably. Despite this, there is a high demand for high-bandwidth memory, which could benefit Advanced Micro Devices Inc. (NASDAQ:AMD) in the long run.
“I like AMD—it’s a worthy second to Nvidia, but it’s not going to be easy. The stock is facing really tough sledding here. AMD’s down a great deal, and there’s plenty of need for high-bandwidth memory.”
Advanced Micro Devices Inc. (NASDAQ:AMD)’s recent releases, such as the Ryzen 7000 series processors and Radeon RX 7000 series graphics cards, have been well-received and are expected to boost sales. Advanced Micro Devices Inc. (NASDAQ:AMD) is also gaining market share in both CPUs and GPUs, particularly in gaming and data centers, as noted by Jon Peddie Research. Advanced Micro Devices Inc. (NASDAQ:AMD)’s advancements, including 3D V-Cache technology and the use of cutting-edge 7nm and 5nm manufacturing processes, further enhance its competitive position.
Moreover, Advanced Micro Devices Inc. (NASDAQ:AMD)’s strategic partnerships with major tech firms like Microsoft and Sony, for products like the Xbox Series X and PlayStation 5, strengthen its market presence and revenue potential. Its data center solutions are also being increasingly adopted by leading cloud service providers, such as Amazon Web Services and Microsoft Azure. Financially, Advanced Micro Devices Inc. (NASDAQ:AMD) has shown significant progress, with Q2 2024 revenues reaching $5.8 billion, marking a 15% increase from the previous year.
3. Uber Technologies Inc. (NYSE:UBER)
Number of Hedge Fund Investors: 145
Jim Cramer advised a viewer that while Uber Technologies Inc. (NYSE:UBER) is performing exceptionally well, it might be wise to buy some shares now and wait for a potential pullback before buying more. He noted that Uber Technologies Inc. (NYSE:UBER) ‘s stock has risen significantly this month, so investors should be cautious and consider purchasing only a portion of their intended investment.
“I actually like buying some Uber here and then waiting for a little bit of a pullback. Uber is doing incredibly well, and you may not get that pullback, so I want you to get some on the sheets as we talk about it. It is up a lot this month, so let’s be careful and only buy some, not all.”
Uber Technologies Inc. (NYSE:UBER) presents a compelling investment opportunity due to its diverse business model and strong financial performance. Uber Technologies Inc. (NYSE:UBER) generates revenue from ride-hailing, food delivery through Uber Eats, and freight logistics via Uber Freight. This variety helps reduce reliance on any single area and captures revenue from multiple sources. Uber Technologies Inc. (NYSE:UBER)’s expansion into international markets, especially in Latin America and Asia, is tapping into growing demand for its services.
Uber Technologies Inc. (NYSE:UBER) is also making significant investments in technology, including autonomous driving and electric vehicles, which could boost its long-term profitability and market position. In Q2 2024, Uber Technologies Inc. (NYSE:UBER) reported revenue of $9.2 billion, a 20% increase from the previous year, reflecting its solid financial growth. Strategic partnerships and acquisitions are further enhancing its market presence and service capabilities.
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Investors: 179
NVIDIA Corporation (NASDAQ:NVDA) offers a compelling investment opportunity due to its leading role in the GPU market and its key position in artificial intelligence (AI) and machine learning. Jim Cramer shared a personal story about renaming his dog Everest after Nvidia in 2017 when the stock was just above $3. Over the next seven years, NVIDIA Corporation (NASDAQ:NVDA)’s stock surged by more than 3,000%.
“When I renamed my dog Everest after Nvidia back in 2017, at a time when the stock was $3 and change, who knew it would rally more than 3,000% over the next seven years? Many greeted my name change as a stunt, even as Everest, a rescue mutt who loved me dearly, beautifully answered to Nvidia whether I had a Blue Buffalo-filled steel cup or the more popular T-bone in my hand. That boy would eat anything, including Raisinets stolen from my backpack, which led to a midnight run to the vet…
No matter, my view is simple: Long-term, I believe in the use cases for Nvidia’s chips. I believe in the new industrial revolution as predicted by Jensen Huang, and that’s why I say, ‘Own it, don’t trade it.’ At the end of the day, I didn’t rename my pet after just any company.”
NVIDIA Corporation (NASDAQ:NVDA)’s GPUs, such as the A100 and H100 Tensor Core models, are critical for advancements in AI, high-performance computing, and data centers. This leadership is evident in NVIDIA’s strong financial performance, with Q2 2024 revenue reaching $10.3 billion—a 25% increase from the previous year—driven by high demand in data centers and gaming.
The increasing need for cloud computing and data centers boosts NVIDIA Corporation (NASDAQ:NVDA)’s business, as its GPUs are essential for AI training and inference, and the company continues to secure large contracts with cloud providers. NVIDIA Corporation (NASDAQ:NVDA)’s investments in AI research, including platforms like CUDA and NVIDIA AI Enterprise, are yielding cutting-edge solutions used across various industries.
Additionally, the planned acquisition of ARM Holdings (pending regulatory approval) is expected to strengthen NVIDIA Corporation (NASDAQ:NVDA)’s technology portfolio and industry impact. NVIDIA Corporation (NASDAQ:NVDA)’s gaming sector remains robust, supported by strong demand for its GeForce RTX graphics cards and ongoing advancements in gaming technology.
Aoris International Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“If Information Technology was the dominant sector for the quarter, NVIDIA Corporation (NASDAQ:NVDA), which is the largest supplier of microprocessors used for generative AI applications, was the dominant company. NVIDIA’s share price rose by a third in the quarter and has increased by 255% so far this year. Since the beginning of 2023, its market value has risen by 8.3x, or $4.3 trillion, making NVIDIA the third largest company in the world by this measure.
As a result of the unusually strong stock price performance from NVIDIA and a few other large companies, equity markets have become increasingly concentrated. You can see this in the chart below, which shows that on 30 June, 27% of the market value of the 500 largest US companies was attributable to just five companies, more than twice the average of the last 20 years.
The composition of the Aoris International Fund will always be very different to that of the broader equity market. There will be periods, such as the most recent quarter, where this contributes to our performance lagging that of our benchmark. When it comes to NVIDIA and other AI-centric companies, rapid growth is exciting, but it makes it difficult for us to judge what is normal. Our preference is to own established leading companies where we can make a more confident, evidence-based judgement about their growth and profitability.”
1. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Investors: 308
Jim Cramer expressed his enthusiasm for Amazon.com Inc. (NASDAQ:AMZN), highlighting its potential to revolutionize shopping by anticipating customers’ needs even before they realize them. He believes that if Amazon.com Inc. (NASDAQ:AMZN) can manage to group and process same-day purchases efficiently, it could lead to significant cost savings. Cramer sees this capability as a major step forward for the company.
“I like Amazon—the possibility of knowing exactly what you want before you even thought of it is the next frontier. If Amazon can find a way to batch every same-day purchase, I think it can save a fortune.”
Amazon.com Inc. (NASDAQ:AMZN) is an attractive investment due to its leading position in e-commerce and cloud computing, strong financial performance, and strategic growth initiatives. Amazon.com Inc. (NASDAQ:AMZN) excels in global e-commerce with its broad product range, competitive pricing, and efficient delivery network, which consistently drives revenue growth. Amazon Web Services (AWS) continues to be a major profit engine, benefiting from its ongoing innovation and expansion in the cloud market.
Additionally, Amazon.com Inc. (NASDAQ:AMZN)’s strategic investments and acquisitions enhance its market presence and foster growth across various sectors. The rapidly growing advertising segment provides high-margin revenue, boosting overall profitability. Amazon.com Inc. (NASDAQ:AMZN)’s focus on technological innovation and improving customer experience further strengthens its competitive advantage. Furthermore, Amazon.com Inc. (NASDAQ:AMZN)’s expansion into emerging markets supports long-term growth and revenue diversification.
While we acknowledge the potential of Amazon.com Inc. (NASDAQ:AMZN), 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 NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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