In this article, we’ll explore Jim Cramer’s Exclusive List: 10 Stocks to Monitor Closely.
On a recent episode of Mad Money, Jim Cramer emphasized the risks of straying too far from technology stocks, particularly the dominant tech companies, in today’s market. He pointed out how JP Morgan, despite being one of the best-performing banks, caused a stir by cutting its forecast, warning that estimates might be overly optimistic. This news hurt the broader market, dropping it by 93 points, although the S&P 500 saw a slight rise of 0.54%, and the tech-driven NASDAQ gained 0.84%.
“In this market, every time you stray too far from technology, especially the tech titans, you ultimately get slapped in the face by reality. That’s what happened today when the largest, and arguably best-performing, bank in the world, laid a huge egg with its forecast. They told us the estimates are too high, maybe way too high. That spoiled a big chunk of the market, ultimately dipping 93 points. The S&P inched up 0.54%, but the tech-heavy NASDAQ still gained 0.84%.”
Cramer explained that since the Federal Reserve gave positive signals, investors had shifted away from tech into other areas of the market. This shift was part of the “broadening out” that many investors had been waiting for, as it was believed to signal a healthier market. Financial stocks, which make up around 13.3% of the S&P 500, had been a source of excitement for those tired of relying on the leading tech stocks.
“For the past couple of months, ever since the Fed gave us the all-clear signal, we’ve seen money flow out of tech into long-neglected regions of the stock market. This is the fabled “broadening out” that people spent all year clamoring for. When we bring in more groups of winners, we’re supposed to have a much healthier market, at least that’s what they say. There are tons of financials in the S&P 500, about 13.3% of the index and the strength in those stocks was a source of much joy for everyone who had gotten sick of The Magnificent Seven.”
However, as Cramer noted, economic uncertainty and disappointing forecasts from bank companies disrupted this broader market strength. Daniel Pinto, the bank company’s COO, dashed hopes by signaling that the outlook for the bank wasn’t as strong as expected. The key issue was that net interest income, a critical measure for banks, was projected to miss expectations due to reduced capital market activity. For Cramer, this underperformance highlighted the danger of moving away from tech stocks too soon.
“But a funny thing happened on the way to that broadened-out market: we got economic choppiness. Or to use a more accurate phrase, we got guide-downs that were intolerable to any of the leaders, and the kiss of death to the stock of the bank. You can’t be a leader when you’re slashing your forecast for H2. That’s when the shareholders kick you to the curb and find someone new to follow.
But today, Daniel Pinto, the bank’s President and Chief Operating Officer, lowered the boom on the optimists who desperately wanted to buy something other than tech. The big bank told us that things are less bullish than we thought. There isn’t as much capital markets activity as we’d hoped this quarter, and most importantly, the estimates for next year are too high because of a likely miss on net interest income.”
Our Methodology
This article talks about a recent episode of Jim Cramer’s Mad Money, where he discussed several stocks. From that discussion, ten companies were selected, and their hedge fund investments were analyzed. The companies are then ranked 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 Exclusive List: 10 Stocks to Monitor Closely
10. Campbell Soup Company (NYSE:CPB)
Number of Hedge Fund Investors: 27
Jim Cramer discussed the performance of Campbell Soup Company (NYSE:CPB)’s stock. While it has done well in the past, he’s unsure if it can continue this trend. Campbell Soup Company (NYSE:CPB) recently announced its financial goals, which include steady growth in sales and earnings. Cramer points out that these numbers might not be as exciting as those from tech companies, but they’re still strong for a packaged food business. Campbell Soup Company (NYSE:CPB) is also changing its name to “The Campbell Company.”
“Over the past year, the stock of Campbell Soup Company had a great run, but can it keep running? Today, Campbell Soup Company (NYSE:CPB) hosted a huge investor day in New York City. Management introduced some long-term financial targets: 2 to 3% organic sales growth, 7-9% earnings per share growth. Well, these aren’t exactly blowout numbers if you’re in a tech stock, but they’re pretty darn good for a packaged food play. Oh, and guess what? They’re changing the name. No more ‘Soup,’ it’s just ‘The Campbell Company” starting later this year. My one worry here is this kind of stock tends to go out of style when the Fed starts cutting interest rates.”
The positive outlook for Campbell Soup Company (NYSE:CPB) is based on its strong financial results, growth potential, and strategic plans. Campbell Soup Company (NYSE:CPB)’s snacks division, which includes popular brands like Goldfish, Snyder’s of Hanover, and Pepperidge Farm, is driving much of its growth, with annual expansion expected at 3-4%, surpassing the broader food industry. Campbell Soup Company (NYSE:CPB) is also making strategic moves in its Meals & Beverages division, including the acquisition of Sovos Brands and Rao’s sauces, enhancing its premium offerings and paving the way for more profitable growth.
Financially, Campbell Soup Company (NYSE:CPB) beat expectations in Q4 FY2024, posting an EPS of $0.63 and a 10.9% revenue increase. Campbell Soup Company (NYSE:CPB) aims for 7-9% EPS growth through fiscal 2027, supported by a $250 million cost-saving plan. Consumer demand for Campbell Soup Company (NYSE:CPB)’s affordable and well-loved brands further strengthens its revenue stability despite market fluctuations.
9. Wingstop Inc. (NASDAQ:WING)
Number of Hedge Fund Investors: 31
Jim Cramer is discussing Wingstop Inc. (NASDAQ:WING), a popular fast-casual chicken wing restaurant chain. Despite strong financial results, including a significant increase in sales, the stock price hasn’t risen much. Cramer believes that Wingstop Inc. (NASDAQ:WING) is undervalued and has the potential to continue growing. While it has seen a slight increase since the recent earnings report, it’s still down from its highest point. Cramer recommends paying attention to Wingstop Inc. (NASDAQ:WING) as it could be a good investment opportunity.
“What do we do with one of my favorite stocks, the stock Wingstop Inc., the largest fast-casual chicken wing chain on Earth? This longtime Cramer fave reported a strong quarter at the end of July, clean top and bottom line beat with a spectacular 28% – I’m going to say it again, 28% – domestic same-store sales growth. Yet the stock barely budged in response. Stock’s wrong, of course. It’s rallied a bit since then, but let’s not forget Wingstop Inc.’s up more than 130% over the past 12 months. That said, the stock’s almost – it’s down almost 12% from its all-time highs in June, so pay attention.”
The optimistic outlook for Wingstop Inc. (NASDAQ:WING) is based on its strong financial performance and aggressive growth plans. Wingstop Inc. (NASDAQ:WING) saw a 28.7% increase in same-store sales, largely due to higher transaction volumes, and added a record 73 new restaurants in the latest quarter, resulting in a 45.2% year-over-year growth in system-wide sales. Wingstop Inc. (NASDAQ:WING)’s adjusted EBITDA grew by an impressive 50.7%, demonstrating its ability to scale effectively. A key driver of this success is Wingstop Inc. (NASDAQ:WING)’s focus on digital innovation, with 68.3% of sales coming through digital channels.
Wingstop Inc. (NASDAQ:WING) also raised its Average Unit Volume (AUV) target to $3 million, reflecting confidence in its operational efficiency. Looking forward, Wingstop Inc. (NASDAQ:WING) plans to open 285 to 300 new restaurants globally in 2024 and expects domestic same-store sales to grow by around 20%. Its international expansion into markets like Canada and the UK, combined with its focus on AI-powered digital ordering, boosts its growth prospects.
Additionally, Wingstop Inc. (NASDAQ:WING)’s strong balance sheet allows for share buybacks and dividend increases, adding further value for shareholders. For long-term investors, Wingstop Inc. (NASDAQ:WING)’s steady expansion, strong digital sales, and solid cost management make it a promising opportunity for continued success.
Alger Small Cap Growth Fund stated the following regarding Wingstop Inc. (NASDAQ:WING) in its Q2 2024 investor letter:
“Wingstop Inc. (NASDAQ:WING) is a high-growth franchisor and operator of cooked-to-order fried chicken wings with over 20 different sauces that consumers have grown to love. The company operates just over 2,000 of its namesake stores around the globe, with the majority of those in the U.S. Shares contributed to performance during the quarter after the company reported strong fiscal first quarter operating results. The company reported better-than-expected revenues which were driven by several factors, including increased brand awareness through effective digital advertising, menu innovation such as its new chicken sandwich launch, and strong delivery service partnerships.”