In this piece, we will look at Jim Cramer’s bold predictions about these industrial stocks.
As 2024 comes to an end, the flagship S&P index is up by 25.9% year to date, driven primarily by technology stocks and investors rushing to pile into artificial intelligence. Additionally, as opposed to earlier worries of a recession, the US GDP has continued to grow as well. According to the Bureau of Economic Analysis (BEA), America’s economy grew by 3.1% in Q3. According to the IMF, the US GDP is projected to grow by 2.8% in 2024 and stand out from most of the developed world and China.
Yet, while technology stocks and the industry are eye-catching, they are not the only components of the economy. In 2024, while the overall economy has grown, some sectors haven’t done well. One sector that’s often perceived to be the pulse of the economy is the industrial sector. It measures output from large-scale plants, and in today’s era of high interest rates, industrial stocks haven’t done too well.
For instance, while the broader S&P is up 25.9%, its industrial component has managed to post 16.94% in gains this year. The sluggishness in the industrial sector hasn’t gone unnoticed by Jim Cramer either. On the day the Federal Reserve cut interest rates by 25 basis points but reduced 2025’s projected rate cuts to two from an earlier four, Cramer commented on the state of the American economy ahead of the Fed’s announcement.
He outlined the need to look at other sectors apart from technology. “Look at the material stocks, look at anything related to industrial export. Look at the housing stocks,” said Cramer, adding “There are cohorts that are indeed rolling over. It isn’t like everything is just super strong and everything is quantum computing and Rocket Lab!” Cramer wondered why the Fed was cutting rates at all since the economy appeared to be quite robust. He stressed the need to sift through the data to find out the real state of the economy. According to Cramer, “So I think that the talking heads, and boy are there ever a lot of talking heads, have decided that if you look at what we’re seeing in some retailers, things are strong. By the way in retail, it’s not strong either if you count colds.”
The CNBC host wasn’t convinced by the Atlanta Fed’s estimate of the US GDP growing by 3.2% in Q4. He stated that he was “trying to find why. I’m trying to find where that is. You know David that travel’s very strong yeah. Leisure’s very strong. Dining out’s very strong. These are strong and by the way, they’re very obvious, they look obvious to the Atlanta Fed. I don’t know what kind of weighting they have but wow.”
Another sector that’s representative of the broader economy and ties closely with industrial stocks is the automobile sector. Automotive firms often depend on the outputs of industrial firms, and if the industry is slow then industrial firms also face a demand slowdown. America’s two biggest auto manufacturers, the firms behind the F-150 truck and the company developing the Cruise autonomous driving system, have both struggled in the stock market in 2024. The former’s stock is down 17.5% year-to-date and the latter was up by a mere 10.5% by early August when investors were more uncertain about the economic outlook. Similarly, Elon Musk’s car company had gained just 1.22% ahead of the election as its EV business continued to struggle with competition overseas and slow sales in the US.
Cramer also commented on the trouble that the automotive sector is facing during the program. He was perplexed as to why “the problems with autos are not so visible among the cognoscenti.” It’s important to dig deeper into the automobile industry since it “is a huge industry. Employs a lot of people. And the layoffs and the ramifications of what could happen here and other mergers,” Cramer commented.
Our Methodology
To compile our list of Jim Cramer’s bold predictions about industrial stocks, we scanned the stocks he mentioned in Mad Money and Squawk on the Street as far back as in August. Then, we picked out industrial and materials stocks and ranked them by the number of hedge funds that had bought the shares in Q3 2024.
For these stocks, we also mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds invest in? 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. GE Aerospace (NYSE:GE)
Number of Hedge Fund Holders In Q3 2024: N/A
Date of Cramer’s Comments: 8-15-24
Performance Since Then: 0.08%
GE Aerospace (NYSE:GE) is the aerospace division of the former General Electric company. The firm completed its spin-off from GE earlier this year and inherited the former firm’s stock ticker. Its shares are up 69% year-to-date. GE Aerospace (NYSE:GE)’s stock has performed despite the fact that the firm has struggled with supply constraints for its jet engine delivery. Some of the gains are due to disruption in the aviation industry kicked off by Boeing’s production problems. Boeing’s delivery shortages have forced airlines to refurbish existing planes which has driven up the demand for GE Aerospace (NYSE:GE)’s aftermarket services. However, supply constraints have weighed on the shares with the stock tumbling 9% in October when the firm said its engine deliveries would drop by 10% in 2024. Cramer was optimistic about the company in August when he outlined:
“If there were five aircraft makers in this world, I can think of only two. These guys can afford to make fewer mistakes, and they’ve taken advantage of that. A company that can make it is GE, but it will take a lot of work and great execution. From what I can tell, the new CEO, Kelly Orberg should be up to the task. I would suggest moving the headquarters to Washington, where he makes the planes. He has already done this.”
9. Powell Industries, Inc. (NASDAQ:POWL)
Number of Hedge Fund Holders In Q3 2024: 26
Date of Cramer’s Comments: 8-19-24
Performance Since Then: 35.10%
Powell Industries, Inc. (NASDAQ:POWL) is an industrial equipment provider that primarily makes and sells electrical equipment. Its products are used across a wide range of industries such as utilities, energy exploration, and most important, data centers. Powell Industries, Inc. (NASDAQ:POWL)’s utility and data center businesses have catalyzed the shares this year which are up by 156% year-to-date. The growth has come on the back of the firm’s revenue growing by 45% in its fiscal year 2024. The stock soared by 26% after Trump’s victory in the November election as investors expected Powell Industries, Inc. (NASDAQ:POWL) to benefit from lower regulation in energy exploration and a broader economic recovery. Here’s what Cramer said in August:
“Lately, the market has fallen in love with a particular kind of industrial stock. These are still smokestack stocks, but they also have powerful secular growth drivers, meaning they can thrive even if the economy doesn’t accelerate. Tonight, I have a smaller company that falls into the same category: Powell Industries. This company has been around since 1947 and went public decades ago. However, the stock has caught my attention over the past couple of years, skyrocketing from $20 in late September 2022 to $171 today—a gain of more than 700%. So, what does this company do, and how did the stock manage to catch fire like this? More importantly, can it keep running once the Fed starts blessing us with rate hikes?
“Let’s start with the basics. Powell makes custom-engineered equipment that distributes, controls, and monitors the flow of electricity while also providing protection to all sorts of electrically powered hardware, like motors and transformers. If you want to know why the stock languished from 2014 through late 2022, it’s because of their exposure to the oil and gas industry. Even now, the fossil fuel industry accounts for 59% of Powell’s sales year-to-date. However, the stock’s spectacular breakout over the past couple of years has been driven by Powell’s success in new markets, namely utilities, transportation like light rail, metals and mining, pulp and paper, and of course, data centers. Everything really came together for Powell Industries last year, with these new businesses generating tremendous growth. After four years of being stuck in the $500 million revenue range, Powell posted 31% revenue growth in 2023, reaching total sales of just under $700 million.
“Meanwhile, their earnings per share nearly quadrupled—from $1.15 in 2022 to $4.50 last year. It’s like hitting the lottery. Essentially, if their equipment can handle the petrochemical business, it can handle utilities, especially those in the Gulf Coast, where many of their petrochemical customers are located. Cope also mentioned data centers, electric vehicles, and semiconductors. When you put it all together, it’s easy to see how Powell’s orders grew by 94% last year, with their backlog increasing by 118% to $1.293 billion—the first time their backlog ever crossed the $1 billion mark.
“These numbers are incredible, yet Wall Street continues to underestimate this company, allowing Powell to repeatedly blow away the estimates. It’s like the old days when companies were smaller, moving from midcap to large cap. When Powell reported at the end of January, they posted 53% revenue growth and earned $1.98 per share. Analysts were only expecting $0.84. Yes, that’s right—they more than doubled the analyst consensus, which is extraordinary.”
“When Powell reported again in early May, they delivered another monster revenue beat with a staggering $0.97 earnings beat, off a $1.78 estimate. That’s an upside surprise of almost comical proportions. Most recently, Powell delivered yet another stunning quarter at the end of July, with much higher-than-expected revenue, earning $3.79 per share. Wall Street had only expected $2.16. No wonder the stock has more than doubled in the past seven months—these beats are extraordinary.”
8. Nucor Corporation (NYSE:NUE)
Number of Hedge Fund Holders In Q3 2024: 32
Date of Cramer’s Comments: 8-16-24
Performance Since Then: 19.25%
Nucor Corporation (NYSE:NUE) is a classic industrial stock as the firm makes and sells iron and steel products. Its end markets make it unsurprising that the shares are down by 33% year-to-date. The stock has fallen since the US steel industry has struggled with low prices throughout 2024. Steel prices have remained low on the back of weakened industrial activity. Since Cramer talked about the stock in August, Nucor Corporation (NYSE:NUE)’s shares haven’t seen any love from investors. While they did soar by 16% after the election, the move was sentiment-driven instead of being based on fundamentals. The shares have lost 25% since the December start on the back of economic data suggesting that interest rate cuts might be slow and a fourth-quarter earnings miss. Here’s what Cramer said:
“Oh no don’t sell Nucor. We sometimes want these big steel companies to be something other than what they can be in the end. They are still tied into the earning cycle. they’re still tied into any downturn but when the FED starts cutting rates the first stock people going to reach for, including me, for my travel trust will be Nucor so please do not sell the stock.”
7. Fortune Brands Innovations, Inc. (NYSE:FBIN)
Number of Hedge Fund Holders In Q3 2024: 35
Date of Cramer’s Comments: 8-26-24
Performance Since Then: -14.46%
Fortune Brands Innovations, Inc. (NYSE:FBIN) is a residential home products company. It makes and sells items such as faucets, sinks, railings, and security devices. As a result, the stock depends on the health of the housing industry to generate tailwinds. Year-to-date, the shares have lost 8.32% as they have remained volatile along with investor perceptions of the housing market. One such dip was in November when the stock lost 7.6% in the days following Fortune Brands Innovations, Inc. (NYSE:FBIN)’s third-quarter earnings. The report saw the firm guide its full-year sales downward and miss analyst revenue and earnings estimates of $1.24 billion by posting $1.16 billion. Here’s what Cramer said:
“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.”
6. Southwest Airlines Co. (NYSE:LUV)
Number of Hedge Fund Holders In Q3 2024: 36
Date of Cramer’s Comments: 8-15-24
Performance Since Then: 28.26%
Southwest Airlines Co. (NYSE:LUV) is one of the biggest airlines in the US due to the 817 aircraft in its fleet. The firm’s narrative in 2024 has been driven by its strategy to grow revenue from existing passengers, increase fleet utilization through redeye flights, launch vacation packages, and develop partnerships with international airlines. Higher fleet utilization is essential for Southwest Airlines Co. (NYSE:LUV) to succeed since the firm has been hit heavily by Boeing’s delayed aircraft deliveries. However, the second half of the year has been kind to the stock. Southwest Airlines Co. (NYSE:LUV)’s shares with multiple catalysts such as the settlement of a lawsuit from an activist investor and the closure of an AA investigation driving the shares. Here’s what Cramer said about Southwest Airlines Co. (NYSE:LUV) in August:
“We saw the potential directors from the activist investor Elliott; they want to bring in people to replace ten on the board. Everything would change if they do that. Every one of Elliott’s nominees excels in the fields Southwest needs—technology, revenue management, safety, government. On the other hand, if left to its own devices, I bet Southwest would keep it lower. There’s still time for the board to accept their lack of diligence and move on with their heads high, but I am definitely betting on Elliott here because his people are better, and they will get a better CEO. Valuable franchises it is hard to destroy no matter how hard you try. You just need the right team, and it’s a winner. You need a change agent as CEO, not just as director. In the case of Southwest, maybe you do need to change up the whole board.”
5. Steel Dynamics, Inc. (NASDAQ:STLD)
Number of Hedge Fund Holders In Q3 2024: 38
Date of Cramer’s Comments: 8-19-24
Performance Since Then: -0.25%
Steel Dynamics, Inc. (NASDAQ:STLD) is a large American steel producer and recycling firm. As has been the case with its peers, the firm is ending 2024 on a difficult note. Its shares are down by 10.36% year-to-date as the broader industrial economy in the US continues to struggle. Benchmark steel prices in the US had dropped by 30% to $700 a ton by December and Steel Dynamics, Inc. (NASDAQ:STLD)’s peers continued to miss analyst EPS estimates for the third quarter. Since August, the only catalyst that the shares have seen is President-elect Trump’s election victory which sent the shares soaring by 13.8%. Here’s what Cramer had to say about the stock in August:
“Steel Dynamics is a really really good company but we’re dealing with, uh, a wave of dumping of Steel by China that’s coming through Mexico and we’re not enforcing it and that’s bringing down Steel Dynamics and Nucor. They are the two best in the industry so it’s tough to watch. I can’t endorse it here because of what’s happening even though it’s very cheap. I don’t like what’s happening below the Border.”
4. Crane Company (NYSE:CR)
Number of Hedge Fund Holders In Q3 2024: 39
Date of Cramer’s Comments: 8-22-24
Performance Since Then: 2.06%
Crane Company (NYSE:CR) is a Connecticut-based diversified industrial machinery manufacturer. The firm makes and sells products such as aircraft engine sensors, valves, coils, and panels. It caters to the needs of the aerospace, pharmaceutical, energy, and other industries. Therefore, Crane Company (NYSE:CR) requires a robust non-tech economic performance for the stock to perform. However, Crane Company (NYSE:CR)’s stock, which is up by 32% year-to-date to beat the S&P has benefited from the firm’s acquisitions that have allowed it to grow despite sluggish economic output. The firm’s core sales grew by 5% during Q1 and by 9% in Q2. For the nine months ending in September, Crane Company (NYSE:CR)’s sales grew by 12%. Here’s what Cramer said in August:
“Crane is a well-run company that has pivoted significantly and focuses less on traditional metal bending, now being more high-tech. We’re considering including Crane in our new industrial series managed by our Chief Scientist and Chief Research Director, Ben Stod. The company is strong, and we’re excited about its prospects in the HVAC sector.”
3. L3Harris Technologies, Inc. (NYSE:LHX)
Number of Hedge Fund Holders In Q3 2024: 40
Date of Cramer’s Comments: 8-22-24
Performance Since Then: 8.15%
L3Harris Technologies, Inc. (NYSE:LHX) is a defense contractor that makes and sells items such as sensors, satellite terminals, range finders, and other equipment. While the firm has maintained robust financial performance in 2024, as evident by its Q3 earnings that saw $5.3 billion in revenue beat consensus estimates of $5.28 billion, L3Harris Technologies, Inc. (NYSE:LHX), like other defense stocks, has struggled in the year’s tail end. Its shares sank by 5% in mid-November after investors worried about the incoming Trump administration’s plan to streamline defense procurement and spending. Here’s what Cramer said about L3Harris Technologies, Inc. (NYSE:LHX) in August:
“L3 Harris remains strong due to its combination of high-tech and defense, two robust long-term trends. The previous CEO was someone I knew, and while I don’t know the current CEO personally, the company is still solid.”
2. United Rentals, Inc. (NYSE:URI)
Number of Hedge Fund Holders In Q3 2024: 45
Date of Cramer’s Comments: 8-19-24
Performance Since Then: -0.47%
United Rentals, Inc. (NYSE:URI) is one of the biggest industrial and construction rental equipment providers in America. Even though its end markets have struggled in 2024, United Rentals, Inc. (NYSE:URI)’s shares are up by a modest 26% year-to-date. They have been buffered by strong quarterly earnings. The firm has grown revenue by 6% during the first nine months of 2024, with equipment rentals driving the growth. However, December hasn’t been kind to United Rentals, Inc. (NYSE:URI)’s shares as they have lost 15% in the month. The selloff accelerated after the Fed’s interest rate guidance as the shares closed the day 4.5% lower. Here’s what Cramer said in August:
“First of all, it’s significantly off its high, though it’s up 25% per year. The reason this company is performing well is because of all the infrastructure work happening in the country. Not everyone can go out and buy things; a lot of stuff is rented instead. This company is involved everywhere. I used to like the stock back in 2003; they used to come on air, and I thought they were brilliant. I haven’t seen them in a long time, but they’re still very impressive. You’ve got a winner there. “
1. RTX Corporation (NYSE:RTX)
Number of Hedge Fund Holders In Q3 2024: 72
Date of Cramer’s Comments: 8-20-24
Performance Since Then: -1.05%
RTX Corporation (NYSE:RTX) is a key American defense manufacturer that makes and sells critical equipment such as aircraft engines for fighter jets and missiles. The firm’s criticality appears to have served it well in 2024 as not only are the shares up by 37% year-to-date but they have also avoided the December sell-off kicked off by worries about the incoming Trump administration’s potential attempts to change the defense procurement status quo. RTX Corporation (NYSE:RTX) has also benefited from its robust backlog of $60 billion and $17 billion in bookings which provide investors with comfort about the firm’s future cash flows. Here’s what Cramer had to say about the stock in August:
“If you’re interested in aerospace, consider RTX, which provides engines that ideally stay attached to the plane—something crucial for safety.”
RTX was an industrial stock Cramer was waiting to come down in October. While we acknowledge the potential of RTX as an investment, our conviction lies in the belief that some 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 RTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure. None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
