Jim Cramer, the host of Mad Money, recently discussed the current state of the market, touching on various factors including upcoming earnings reports and new inflation data. Reflecting on the November jobs report, which came in largely as expected, Cramer noted:
“After basically in line November jobs report, better than October, but with the unemployment rate still ticking up to 4.2%, I don’t think that does much to change the Federal Reserve’s rate cut calculus.”
On Friday, Cramer remarked that the market had a relatively calm session, with the Dow dipping by 123 points, the S&P gaining 0.25%, and the NASDAQ climbing 0.81%. He emphasized that nothing about Friday’s action surprised him, and he maintained his expectation for a 25-basis point rate cut later this month. Cramer added that he still anticipates the Fed will go ahead with this move despite the recent data.
READ ALSO Jim Cramer Discussed 10 Stocks That Can Do Well in December and Jim Cramer’s Lightning Round: 7 Stocks to Watch
Looking ahead, Cramer highlighted Wednesday’s upcoming release of the Consumer Price Index (CPI), which he noted could play a crucial role in the Fed’s decision-making. With the Federal Reserve meeting in just two weeks, he cautioned that there will be chatter about the Fed’s decision to cut rates.
“All of us still see high prices when we go to the supermarket, right? So we shouldn’t be surprised if the CPI comes in hot. At that point, why should the Fed really bother to cut? Be ready for that kind of chatter. Don’t worry, they’ll still cut.”
The following day, Thursday, will bring the release of the Producer Price Index (PPI), which Cramer pointed out is another important inflation measure. He again expressed concern that inflation needs to cool down in order to avoid complications. There has been ongoing speculation about whether the Fed could hesitate on rate cuts, which could derail the market’s expectations. Cramer remarked that if inflation remains elevated, the Fed might have no choice but to delay or even shelve rate cuts for next year.
“Bottom line: Look, I’m trying to get my arms around a market that takes up all sorts of crypto, lots of unprofitable companies, never too great a sign for those who want the Fed to cut repeatedly,” he said. “I want you to keep that in mind so you won’t be surprised if we get some overheated inflation numbers next week and the market gives up some of these extraordinary gains.”
Jim Cramer’s Game Plan This Week: 10 Stocks to Watch
Our Methodology
For this article, we compiled a list of 10 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 6. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in 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 Game Plan This Week: 10 Stocks to Watch
10. GameStop Corp. (NYSE:GME)
Number of Hedge Fund Holders: 16
Cramer referred to GameStop Corp. (NYSE:GME) as a “cult stock,” highlighting:
“After the close, boy here comes complications, Tuesday morning, GameStop, right? They report. Well, speak of the devil, GameStop will most likely deliver numbers that please those who want to be pleased. No, that is not circular reasoning, people… We have stocks like SoundHound AI and Hut 8 Corp. where there’s no real news, but they’re just real moves, okay? GameStop seems to have a similar percolation going… That’s right, all week, I’ve been talking about how I’m beginning to see some signs of excess that do make me uncomfortable. I think the reaction to GameStop, both before and after will tell us whether we need to know about how excessive things have really become. I can’t tell you to sell it. You’ll blame me if it soars on no earnings, but I can’t tell you to buy it either because I don’t have any legitimate reason whatsoever to do so. It’s a cult stock and this is a market where people seem eager to drink the Kool-Aid. Like I said, tough moment if you wanna be a rigorous buyer of inexpensive stocks that belong to great companies.”
GameStop (NYSE:GME) is a specialty retailer offering new and pre-owned gaming products, accessories, software, collectibles, and digital content, along with involvement in the digital asset wallet and NFT marketplace. It reported a 31% decline in revenue in the second quarter compared to the previous year, amounting to $798 million. Despite the drop in sales, the company posted an unexpected profit, with a net income of $14.8 million, a turnaround from a loss of $2.8 million in the same period the year before.
GameStop (NYSE:GME) continues to see its stock influenced by the meme-stock trading community, a phenomenon that has significantly impacted its market performance. Recently, its shares experienced a surge following a cryptic post by Keith Gill, a notable figure in the meme-stock community known as “Roaring Kitty” on YouTube and “DeepF***ingValue” on Reddit’s WallStreetBets. Gill was central to the dramatic rise of GameStop stock in January 2021, when it skyrocketed by 1,600% during the “Reddit rally.”
9. C3.ai, Inc. (NYSE:AI)
Number of Hedge Fund Holders: 27
Cramer expressed caution about endorsing C3.ai, Inc. (NYSE:AI), given its lack of profitability despite rising shares, but noted that in the current market, it’s risky to bet against any company associated with AI.
“Now you know I’ve become hesitant to endorse money-losing companies with stocks that are extremely overvalued. After the close we hear from a company called C3.ai, the profitless enterprise software company with a stock that’s shot up more than 50% in the last three weeks, including 8% just today. Can it keep roaring? In a rational market, no, but in this market, well, you can’t afford to bet against any company with AI in its name.”
C3.ai (NYSE:AI) is an enterprise AI software company offering solutions like the C3 AI platform, C3 AI CRM Suite, and C3 Generative AI. In the fiscal 2025 first quarter, it posted a 21% year-over-year increase in revenue. However, the company reported an adjusted loss per share of $0.05. Looking ahead, the company expects a wider adjusted operating loss for the second quarter of fiscal 2025, with a forecasted range of $26.7 million to $34.7 million, compared to a smaller loss in the first quarter.
It is noteworthy that the company has strategic partnerships with Google Cloud, AWS, Microsoft Azure, and others. These alliances have helped drive business growth, as evidenced by the 155% increase in customer agreements through these partners during the first quarter of fiscal 2025, with 51 deals closed. In November, C3.ai (NYSE:AI) and Microsoft announced a strategic alliance aimed at accelerating the adoption of C3.ai’s Enterprise AI platform on Microsoft’s Azure cloud infrastructure, further strengthening their collaboration.
8. Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI)
Number of Hedge Fund Holders: 32
Cramer stated that he remains optimistic about Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) despite a recent downgrade that the stock got.
“Now, earlier this week, Ollie’s Bargain Outlet caught a rare downgrade. It’s this purveyor of closeout merchandise [that] has been an outstanding performer for many years. It’s a highly promotional moment for retail. This kind of off-price chain tends to be a big winner. Ollie’s gets tractor trailer, if your tractor trailer’s full of unsold premium price merchandise, and they get it for next to nothing, and then they sell the stuff to you at bargain basement prices. I don’t want to get off this horse.”
Ollie’s Bargain Outlet (NASDAQ:OLLI) is a retailer that offers a wide range of brand-name merchandise, including housewares, food, health and beauty products, electronics, clothing, toys, and more. On December 3, Wells Fargo downgraded the stock from Overweight to Equal Weight, reducing its price target to $95 from $100.
The firm suggests that the optimal time to invest in Ollie’s may have passed, noting that while management has strengthened the foundation and benefited from cyclical tailwinds, the future outlook appears more challenging than previously recognized. The analyst also points to uncertainties for Q4 due to the holiday calendar and Big Lot liquidations, as well as the potential for a less favorable closeout buying environment in 2025 due to tight retail inventories. With gross margin growth limited and Ollie’s meeting its target, Wells Fargo views the stock’s risk/reward as balanced at its current price.
Ollie’s Bargain Outlet (NASDAQ:OLLI) has shown consistent growth, with management reporting nine consecutive quarters of comparable store sales growth as of the second quarter. Looking ahead, the company upgraded its outlook for fiscal 2024, with plans to open 50 new stores, return to a 40 percent annual gross margin, and achieve an adjusted EBITDA margin in the low teens.
7. Macy’s, Inc. (NYSE:M)
Number of Hedge Fund Holders: 38
Commenting on Macy’s, Inc. (NYSE:M), Cramer said:
“We also have some corporate news that could help explain something that’s been a real mystery, maybe to me, maybe to you. I’m talking about what happened, what went wrong at Macy’s where an employee apparently had millions in delivery expenses hidden. Now shareholders are entitled to know what really happened here. I don’t think the company’s fully explained them at all, and we wanna know exactly before we pay any attention to the forecast. We got to understand what went wrong. We need answers about how someone got away with this and more important, does the company now have the systems to try to catch anything like this malfeasance? I don’t know.”
Macy’s (NYSE:M) s is a well-established omnichannel retailer that offers a wide range of products, including apparel, accessories, cosmetics, home furnishings, and more, through its prominent brands: Macy’s, Bloomingdale’s, and bluemercury. While preparing its unaudited financial results, the company identified an issue related to delivery expenses within one of its accrual accounts.
An independent investigation revealed that a single employee responsible for accounting for small package delivery expenses had intentionally made incorrect accrual entries to conceal a significant portion of delivery expenses. These erroneous entries involved hiding approximately $132 million to $154 million in total delivery expenses from the fourth quarter of 2021 through the fiscal quarter ending on November 2, 2024.
Macy’s (NYSE:M) stated that there is “no indication” that these incorrect accounting entries had any effect on the company’s cash management or vendor payments, ensuring that no operational disruptions were caused by the issue. The company was scheduled to release its earnings report in November. The company announced that it will issue its fourth-quarter and full-year outlooks on December 11.
6. AutoZone, Inc. (NYSE:AZO)
Number of Hedge Fund Holders: 47
Cramer mentioned that there are concerns about high tariffs that could affect AutoZone, Inc. (NYSE:AZO), as the company imports products from China.
“Tuesday morning, we get results from AutoZone, AZO. Here we have a company that imports aftermarket auto parts, including some from China, and any company that imports anything from China is viewed with tremendous skepticism right now, right here. AutoZone, though, has a gigantic buyback that kicks in on any weakness, so can it sidestep tariff worries? I can tell you from the disappointing portion of my Charitable Trust that you simply can’t own stocks with China exposure here. That’s been the case ever since the election. I don’t think anything has changed, so I don’t know. I used to love it, I can’t load the boat up here.”
AutoZone (NYSE:AZO) sells and distributes automotive replacement parts and accessories, offering a wide range of products for vehicles, including hard parts, maintenance items, and non-automotive products. It used part of its capital to repurchase $711 million of its stock during the fourth quarter of fiscal 2024.
At the end of the period, the company had nearly $2.2 billion remaining on its share buyback authorization. Management noted that since the initiation of the stock buyback program in 1998, the company has repurchased more than 100% of the shares that were outstanding at the time, all while continuing to invest in its existing assets and expand its operations. Since the beginning of the fiscal year, the company repurchased 6% of its outstanding shares.
On the matter of potential tariffs, Philip Daniele, AutoZone (NYSE:AZO) CEO, addressed concerns on the earnings call, stating that consumers would ultimately bear the cost if tariffs were imposed. He mentioned that, in anticipation of the impact these policies could have on the company’s margins, the company expects to raise prices even before the tariffs come into effect.
5. MongoDB, Inc. (NASDAQ:MDB)
Number of Hedge Fund Holders: 49
Cramer stated that there is renewed enthusiasm for enterprise software companies such as MongoDB, Inc. (NASDAQ:MDB).
“The other standout should be this company called MongoDB, which is an enterprise data place play with tools that help other software developers create applications. For most of 2024, these kinds of stocks were in the doghouse, the market gravitated toward hardware, especially semiconductors, but then Salesforce reported excellent numbers this weekend, the stocks soared. While some of that’s because the quarter was truly excellent, much of it’s just a big change of sentiment toward these kinds of stocks.
These enterprise software stocks, which is what they’re called, were all doing okay during the low, but now they’re doing better than okay and the stocks are being greeted with extraordinary buying. Keep track of the enterprise software stocks.”
MongoDB (NASDAQ:MDB) offers a general-purpose database platform with solutions like MongoDB Atlas (a multi-cloud database service), MongoDB Enterprise Advanced (a commercial database for enterprises), and Community Server (a free version for developers). Management has expressed confidence in the company’s position to help customers adapt to the rapidly changing technological landscape.
The company remains a key partner for major hyperscalers globally, reflecting its integral role in supporting large-scale businesses. In November, the company announced an expanded collaboration with Microsoft, a move aimed at enhancing artificial intelligence application development, real-time data analytics, and improving deployment flexibility. This collaboration represents a significant step in the company’s efforts to provide robust solutions to its clients in the ever-growing AI sector.
Furthering its commitment to advancing AI initiatives, MongoDB (NASDAQ:MDB) revealed new additions to its MongoDB AI Applications Program (MAAP) in December. The program saw new partners such as Capgemini, Confluent, IBM, QuantumBlack, AI by McKinsey, and Unstructured join the initiative. These partnerships are expected to broaden the integration and solution options available to customers. Through MAAP, the company has already helped organizations like CentralReach to innovate with AI. The company’s AI experts continue to work closely with clients, addressing complex technical challenges.
4. Toll Brothers, Inc. (NYSE:TOL)
Number of Hedge Fund Holders: 54
Cramer highlighted that Toll Brothers, Inc. (NYSE:TOL) stock initially rose after the Fed’s rate cut, but stalled as bond yields increased. He noted that once yields fell, the stock regained strength.
“Toll Brothers, high-end housing, reports Monday evening. When the Fed cut was announced, the stock flew up, but then it stalled because bond yields actually and surprisingly went higher. Given that mortgage rates are priced off the long end of the bond market, you can see why the stock struggled and then bond yields came down again and Toll’s been as strong as ever. Can it deliver on these numbers? Is lumber price too high? Well, we won’t have to wait too long to find out.”
Toll Brothers (NYSE:TOL) designs and builds luxury homes, including condominiums and single-story homes, and develops communities with various amenities. With favorable market conditions, such as ongoing demographic trends and a supply-demand imbalance in the housing market, the company remains optimistic about solid demand through the end of fiscal 2024 and into 2025.
While lower mortgage rates could stimulate the resale market, CEO Douglas Yearley Jr. pointed out that the supply of homes will continue to be constrained due to nearly 15 years of underproduction.
As a result of strong earnings in the third quarter, Toll Brothers (NYSE:TOL) has raised its full-year guidance for the third consecutive quarter. The company now expects to deliver between 10,650 and 10,750 homes for the year, with an average price of $975,000, marking a $10,000 increase from its previous projections.
3. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 91
Cramer mentioned that he expects Oracle Corporation (NYSE:ORCL) to report strong earnings due to the virtually limitless demand for data centers.
“Now first, here’s Oracle, one of the major companies building out these data centers. I think they’ll show incredible strength, amazing, really fabulous sales because there’s practically an endless demand for data centers. Let’s see if they’re still planning to build those things like crazy…. We’ll learn more from Oracle Monday evening.”
Oracle (NYSE:ORCL) provides a wide range of enterprise IT solutions, including cloud software applications, industry-specific solutions, infrastructure technologies like databases and cloud services, and hardware products. It is known for being one of the most cost-effective data center operators in the industry, a factor that has helped attract high-profile AI start-ups, including OpenAI and Elon Musk’s xAI.
According to the company, the demand for its cloud infrastructure services is currently surpassing supply. As of the first quarter of fiscal 2025, the company had 162 data centers either operational or under construction, with plans to expand to between 1,000 and 2,000 data centers in the future. The company also secured $3 billion worth of AI-related cloud contracts during the same quarter, signaling strong future growth potential for its cloud business.
Oracle (NYSE:ORCL) has set an ambitious target for fiscal 2026, expecting revenue to reach $66 billion, a 13% increase from the projection for fiscal 2025. The company also anticipates non-GAAP EPS to grow between 6% and 10%, with the expected range in constant currency being between $1.42 and $1.46. Furthermore, it forecasts its revenue to exceed $104 billion by fiscal 2029, marking significant long-term growth.
2. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 123
Commenting on stocks like Adobe Inc. (NASDAQ:ADBE), Cramer said:
“As I mentioned earlier, the enterprise software stocks have been roaring, reacting very positively to pretty much everything these days. So maybe we should start thinking about buying the stock of Adobe, which has some of the very best software to help businesses with marketing and web design. I like this company very much, but it’s been stuck in enterprise software purgatory. Not anymore. Maybe it has a real run by just delivering good numbers.”
Adobe (NASDAQ:ADBE) is a well-established software company known for offering a broad range of products and services, particularly in the fields of digital media creation and document management. The company has focused on integrating AI into its document cloud offerings, with features like the AI Assistant aimed at enhancing productivity and improving user experience with digital documents.
In the graphic design space, its suite of tools remains a leader, and to stay ahead in the evolving market, the company developed its own generative AI model, Firefly. This model has gained significant traction, with over 12 billion images created using it, according to the company.
Adobe (NASDAQ:ADBE) also introduced its AI-first content creation application, Adobe Express, which is designed to assist individuals, students, teams, and enterprises with quick design tasks. The application has seen notable growth, with a 96% quarter-over-quarter increase in monthly active mobile users and an 86% year-over-year rise in the number of creations made using the app during the third quarter.
Looking ahead, the company projects total revenue for the fourth quarter to range between $5.50 billion and $5.55 billion. The company expects GAAP earnings per share of $3.58 to $3.63 and non-GAAP earnings per share of $4.63 to $4.68.
1. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Cramer pointed out that Broadcom Inc. (NASDAQ:AVGO) stock usually rises ahead of the quarter and then experiences a sell-off following the report.
“Finally, one of my favorite stocks reports, Broadcom, symbol AVGO by the way. It reports, and this tends to run up into the quarter and then sell off when we see the actual sales and earnings. I expect that to happen again as Broadcom makes equipment from networking and artificial intelligence as well as hardware, phones, and servers, and hardware’s a little out of fashion all of a sudden. Now, we own Broadcom for ages for the Charitable Trust and I’ve urged investing club members to buy Broadcom on these very dips I just mentioned. It’s been a terrific successful strategy. This time should be no different. So let’s understand, it goes down at the report and that’s your chance to pull the trigger.”
Broadcom (NASDAQ:AVGO) is a leading company in the design, development, and supply of semiconductor devices, with a long-established history in semiconductor design. According to the company’s management, demand for AI remains strong, and the company expects a 10% sequential growth in AI revenue for the fourth quarter of fiscal 2024, bringing the total AI revenue to over $3.5 billion.
This growth will push the company’s AI revenue for the fiscal year to approximately $12 billion, surpassing its previous guidance of over $11 billion. In addition to AI, the company expects semiconductor revenue in Q4 to reach around $8 billion, reflecting a 9% year-on-year increase.
For its infrastructure software segment, Broadcom (NASDAQ:AVGO) is forecasting Q4 revenue of about $6 billion. The company has guided for a consolidated revenue of approximately $14 billion for the quarter, marking a 51% increase compared to the previous year. This strong revenue performance is expected to result in Q4 consolidated adjusted EBITDA reaching about 64% of revenue.
Looking ahead to fiscal year 2024, the company’s outlook remains positive, taking into account the continued contribution from VMware. The company has provided a revenue guidance of approximately $51 billion for fiscal 2024, with an adjusted EBITDA guidance of approximately 61.5% of the projected revenue.
While we acknowledge the potential of Broadcom Inc. (NASDAQ:AVGO) as an investment, our conviction lies in the belief that 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 AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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