In this article, we’ll explore Jim Cramer’s Exclusive List: 10 Stocks You Should Keep an Eye On.
In a recent episode of Mad Money, Jim Cramer expressed frustration with analysts who attempt to explain stock movements during each trading session without acknowledging the unpredictable nature of the market and those who trade stocks for a living. He noted that while the Dow rose by 125 points, the S&P increased by 1.07%, and the NASDAQ jumped 2.17%, these gains resulted from conflicting market perceptions. Only one view can hold up in the end, and the process restarts the next day.
“Okay, look, it keeps happening, and it’s beginning to drive me even crazier than I already am. I’m talking about analysts attempting to explain why stocks do what they do in any given session without taking into account the capriciousness, if not the lunacy, of those who trade stocks for a living.
Sure, the averages appear to tell a decent story. The Dow inching up 125 points, the S&P climbing 1.07%, and the NASDAQ vaulting 2.17%, but those percentages are the product of a furious battle between competing visions of reality. And only one vision can survive.
Cramer explained that the day saw the release of an important, though not game-changing, Consumer Price Index (CPI) report, just days before an anticipated Federal Reserve rate cut. With market tensions high, the inline CPI data didn’t surprise anyone. However, Cramer pointed out that despite the CPI meeting expectations, stock futures remained down early in the day. When the market opened, stocks continued to drop, confusing commentators. Some analysts attributed the selloff to disappointment over the possibility of only a quarter-point rate cut rather than a half-point cut. Cramer was shocked by this explanation, calling it inaccurate.
“Only one vision can hold up under close scrutiny before it all starts over again the next morning. Today, like many days, we got a somewhat crucial set of figures from the government. This time it was for the Consumer Price Index. Notice I said “somewhat” crucial because we’re now just days away from the Federal Open Market Committee meeting, where we’re likely to get a rate cut. Any session between now and then could be an outlier that might alter the Fed’s core mindset.
When you’re in Fed mode, as we are, you know that tensions are heightened, which is why it was good to see a basically in-line CPI reading— nothing important, nothing shocking, just a number we all expected. So, we’ll probably get the quarter-point rate cut that we’re looking for. But next, you know, various speakers and interviews started ginning up reasons to explain why the Dow had dropped more than 700 points in the first hour of trading, and the NASDAQ was off 1.5%.
The pontificators were frantic. After a few tries, they settled on a new narrative that we had to listen to for a couple of hours. Many people were banking on a half-point rate cut, they said, and this 2.5% inflation number made a double rate cut very unlikely. We were told that led to disappointment and then furious selling of stocks.”
Jim Cramer mentioned an earlier interview with Doug Yearley, CEO of Toll Brothers, who had a positive outlook on the housing market, expecting it to strengthen further if rates were cut. Cramer believed the upcoming rate cuts could spark a housing boom, which would benefit the broader economy. Confident in this view, Cramer and his colleague Jeff Marks, during their CNBC Investing Club show, expressed confusion over the market’s decline, with Cramer even predicting that the averages could end the day higher, though that didn’t materialize.
“Now, I was aghast. Can I just say? I was aghast at this wholesale license of the truth. I had just come from an interview with Doug Yearley on Squawk on the Street. He told me the business had gotten very strong in August and September and could only get stronger as rates fell. Doug is a straight shooter, not a lot of fluff, but he basically said, “Look out if rates go down from here.”
He was effusively, empirically positive on the coming rate cuts. He and I are both students of financial history, and these rate cuts, 25 basis points at a time, could ignite housing sales. That’s huge for the business of our country, even though housing is only 10% of the economy. It’s connected to so many other areas that I always like to say it punches above its weight. So I figured it was time to commit heresy.”
Cramer criticized the notion that the market’s decline was due to disappointment over the CPI reading, calling it “nonsense.” He argued that sellers were misjudging the situation and misunderstanding the potential power of rate cuts. For him, there’s no harm in calling out irrational behavior in the market and stating that sellers were clueless in this instance. He dismissed the idea of inventing justifications for market actions, especially when they clearly didn’t make sense.
“I predicted that the average could actually finish up but it didn’t happen. I refused to dignify the musings of commentators who clung to the fiction that bulls were disappointed by the CPI reading. I knew the early action was just nonsense. Furthermore, I knew the sellers were wrong.
What’s wrong with honestly stating the sellers are clueless and don’t understand the power of rate cuts? Why can’t I do that? Where does it say we always have to be descriptive and can’t be judgmental? I don’t feel like making things up to ratify, if not justify, the action in a given day, especially not when the action is so clearly wrong and nonsensical.”
Our Methodology
This article talks about a recent episode of Jim Cramer’s Mad Money, where he highlighted several stocks. We selected ten of those companies and analyzed hedge fund investments in each. Finally, we ranked the companies based on hedge fund ownership, from least to 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 You Should Keep an Eye On
10. GameStop Corp. (NYSE:GME)
Number of Hedge Fund Investors: 12
Jim Cramer expressed strong skepticism about GameStop Corp. (NYSE:GME)’s future, stating it’s time to stop pretending the company has real momentum. He pointed out that GameStop Corp. (NYSE:GME)’s latest quarterly results were disappointing, causing a 12% drop in its stock price. According to Cramer, GameStop Corp. (NYSE:GME) has been sustained mainly due to CEO Ryan Cohen’s popularity with the WallStreetBets community, which led the original short squeeze in 2021.
“Can we finally stop pretending that there’s anything real going on at GameStop Corp.? Last night, the video game retailer and OG meme stock reported yet another unimpressive quarter, and the stock lost 12% of its value today. For years now, GameStop Corp.’s been hanging in there in the teens to 20s, largely because CEO Ryan Cohen has a cult following among the WallStreetBets crowd that orchestrated the original short-busting campaign in 2021.
Don’t forget, money managers were shorting the stock so aggressively back then because there doesn’t seem to be much future in a brick-and-mortar video game store nowadays. Everybody just downloads stuff directly from the web. You can actually do that through GameStop now too, but you don’t need to, and we haven’t heard a particularly compelling reason why you’d want to.”
GameStop Corp. (NYSE:GME) presents a promising investment opportunity despite recent difficulties and mixed earnings. In Q2 2024, GameStop Corp. (NYSE:GME) reported a surprising profit of $0.01 per share, beating expectations of a loss, even though revenue was $798.3 million, falling short of the anticipated $896 million. This unexpected profit highlights GameStop Corp. (NYSE:GME)’s successful cost-cutting efforts, including a 16% reduction in selling, general, and administrative expenses.
GameStop Corp. (NYSE:GME)’s shift towards vintage games and consoles is generating positive market interest, aiming to tap into retro gaming nostalgia and diversify its revenue. GameStop Corp. (NYSE:GME)’s strong cash position of $4.2 billion offers flexibility for future investments and strategic changes. Under Ryan Cohen’s leadership, GameStop Corp. (NYSE:GME) is optimizing store performance and closing underperforming locations, which has improved investor sentiment.
9. JetBlue Airways Corporation (NASDAQ:JBLU)
Number of Hedge Fund Investors: 19
When a viewer asked Jim Cramer about JetBlue Airways Corporation (NASDAQ:JBLU), he shared his long-standing opinion on airline stocks. Cramer explained that he hasn’t invested in an airline stock—aside from one purchase for his father—since 1984, and he quickly realized it was a mistake. He emphasized that his experience taught him to avoid airline stocks altogether. Cramer’s advice was clear: he believes there are more promising investment opportunities outside the airline industry.
“Here’s my feeling on JetBlue Airways Corporation and on airlines. I haven’t bought an airline stock, other than for my father, since 1984, and it was an immediate mistake. I learned my lesson: don’t touch the airlines. There are a lot of better stocks out there; you don’t need to be in airlines.”
JetBlue Airways (NASDAQ:JBLU) offers an appealing investment opportunity despite recent financial difficulties. In Q2 2024, the airline reported a net income of $25 million, which, while lower than last year, still exceeded earnings expectations. Revenue fell by 7% to $2.43 billion, but the earnings per share (EPS) of $0.08 was better than analysts had predicted.
Looking ahead, JetBlue Airways Corporation (NASDAQ:JBLU)’s future looks promising due to expected reductions in operating costs from lower fuel prices, which should improve profit margins. Although demand for air travel has softened a bit, JetBlue Airways Corporation (NASDAQ:JBLU)’s broad network benefits from strong overall travel interest. JetBlue Airways Corporation (NASDAQ:JBLU) is expected to grow its revenue at an average annual rate of 5.4% over the next three years, slightly below the industry average but still positive.
