In this article, we will take a detailed look at Jim Cramer’s Latest Calls:10 Stocks.
Jim Cramer in a latest program said that if companies would “own up” to the changing circumstances, things would be “so much easier” for them as well as investors.
“There is so much information and misinformation flying around at this point in the earnings season that it’s very easy to be led astray,” Cramer said.
Cramer thinks companies are “leaving out” important information which can cause investors to make “faulty decisions.”
As an example, Cramer talked about how food and beverage companies are not talking about the impact of weight loss drugs on their financials
Cramer said that GLP-1 drugs are extremely “powerful” and they cause a decline in cravings for snacks and liquor. This, according to Cramer, directly affects beverage and snack companies. However, Cramer said these companies are intentionally not mentioning the impact of these drugs.
“I wonder how long they can maintain this fiction, it’ll be better if they just own that it’s a problem rather than just ignoring it.”
Cramer was also furious that consumer companies are not admitting that high prices are impacting their financials. He said hotels and entertainment companies raised prices in the past but now they are not willing to bring them down despite facing pricing headwinds.
Cramer also called the claims that huge AI investments are not bringing any solid results for companies “absurd.”
We watched several latest programs of Jim Cramer on CNBC and picked 10 important stocks he’s talking about. With each stock we have mentioned the number of hedge fund investors. 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).
10. Bentley Systems Inc (NASDAQ:BSY)
Number of Hedge Fund Investors: 17
Jim Cramer is staying away from BSY because of the broader headwinds in the enterprise software industry.
When asked about the company in a latest program, here is what he said:
“This is enterprise software and you know there is more money being lost in enterprise software in 2024 than in any other sector so I can’t play I’m sorry.”
Bentley Systems Inc (NASDAQ:BSY) makes software solutions for infrastructure projects, civil engineering, architecture, and construction. The company has strong strong secular growth catalysts. As companies look to cut costs, the demand for Bentley’s software systems is increasing. The global engineering software market was valued at $33 billion in 2022 and is projected to reach nearly $131 billion by 2030, reflecting a robust 18.8% CAGR.
Bentley Systems Inc (NASDAQ:BSY) second quarter was strong. It had $51.3 million in cash and equivalents and $1.34 billion in long-term debt. Over the past twelve months, free cash flow totaled $407 million, with capital expenditures at $20.4 million.
Despite this, the stock’s valuation has been a concern for investors. It’s trading at a forward P/E of about 45 compared with the industry median of 23. The stock has a forward EV/Sales multiple of approximately 12.1x, with an estimated next twelve months (NTM) revenue growth rate of 11.2%. This contrasts with the median implied annual recurring revenue (ARR) growth rate of about 18% from the Meritech SaaS Index. As of June 21, 2024, the median forward EV/Revenue multiple for publicly held SaaS application software companies, according to the Meritech Capital Index, was around 5.4x. This means the stock is currently overvalued based on its growth projections.
Artisan Small Cap Fund stated the following regarding Bentley Systems, Incorporated (NASDAQ:BSY) in its Q2 2024 investor letter:
“We ended our investment campaigns in Bentley Systems, Incorporated (NASDAQ:BSY) and Etsy during the quarter. Bentley Systems is the leading provider of engineering software used to design roads, bridges, tunnels, rail systems and other public works. Construction is one of the economy’s least digitized verticals, and our thesis was based on the view that there are significant opportunities for software to increase productivity within civil engineering projects. We also viewed the company as well positioned to support the infrastructure spending encouraged by the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. After a successful multiyear investment campaign, we decided to exit the position due to the market cap outgrowing our small-cap mandate.”
9. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Investors: 51
Jim Cramer was asked about Delta Airlines in a latest program. Here is what he said:
“I’m troubled by Delta even though it sells six times earnings… I’m going to take a real pass on Delta and look at other airlines.”
Cramer said he does not like the spat between Delta and Crowdstrike.
All everyone could talk about these days when it comes to Delta Air Lines, Inc. (NYSE:DAL) is the company’s upcoming legal battle and public spat with Crowdstrike following the July tech outage. But what’s the basic story behind this stock?
Delta Air Lines, Inc. (NYSE:DAL) recently reported weak quarterly results. While the management kept talking about strong summer demand during the earnings call, analysts are noticing an oversupply of seats that could weigh on the company’s near-term results. Delta Air Lines, Inc. (NYSE:DAL) anticipates that seat oversupply will stabilize by August, which is perhaps why it reaffirmed its full-year EPS outlook of $6-$7. However, if low-cost air carriers do not slash their supply, Delta could see headwinds.
Despite these challenges, the company’s PEG ratio of 0.83 suggests a conservative earnings growth estimate of 7.8%. With a projected FY25 EPS of $6.47 and a forward P/E multiple of 6.5x, stock stock’s average price target comes out to be around $42, which is not much higher than the current price of $39. That means there is not any juice left in the stock for now.
Oakmark Fund stated the following regarding Delta Air Lines, Inc. (NYSE:DAL) in its first quarter 2024 investor letter:
“Delta Air Lines, Inc. (NYSE:DAL) is a leading global airline. Of the big three U.S.-based airlines (Delta, United and American), we see Delta as the most competitively advantaged. We believe the company’s years of industry-leading operational performance and investments in the customer experience have established Delta as the premium brand in the industry. We also think its geographically optimal hubs, high local market share, robust loyalty program and unique corporate culture all support healthy returns on capital. Delta currently trades at 6x our estimate of normalized earnings per share. We believe this is an attractive valuation for a competitively advantaged and growing business in an out-of-favor industry.”
8. Boeing Co (NYSE:BA)
Number of Hedge Fund Investors: 54
Jim Cramer in a latest program said Boeing has “long-term staying powder” but the company is facing a free cash flow problem in the short term. Cramer recommended investors to “wait” until the problem is “clarified.”
“Let’s be careful,” Cramer said.
Cramer has been bullish on Boeing Co (NYSE:BA) despite the disastrous effects of several incidents involving Boeing planes including Boeing 737 MAX-9. Boeing recently reported quarterly results and as expected the company’s losses deepened. The internet is full of the details of those horrible results. But we want to focus on why the stock could be a buy for the long term and the reasons why Jim Cramer or other Boeing bulls are still hopeful about the stock.
The biggest reason behind this optimism is the new CEO. Kelly Ortberg has a degree in Mechanical Engineering, and brings a technical background to the role, a shift from the accounting-focused leadership that investors have found concerning.
Boeing Co (NYSE:BA) is also increasing production rates, having already increased output and reactivated its third 737 MAX assembly line. The company has submitted a comprehensive plan to the FAA, aiming to surpass the current cap of 38 MAX airplanes per month. While these measures will not immediately impact earnings, they signal Boeing’s commitment to sustainable growth.
On the certification front, Boeing is progressing with solutions for the 737 MAX 7 and MAX 10, and has entered a new phase in the 777X certification campaign. These developments are seen as positive.
Boeing has made progress with the 737 MAX program. Boeing Co (NYSE:BA) has reduced traveled work, leading to cleaner fuselages and improved quality and reliability. Boeing’s submission of a comprehensive safety and quality plan to the FAA marks an important milestone. Production has increased from a low single-digit rate in the first quarter to 25 airplanes per month in June and July, though still short of the target of 38 airplanes per month by year-end. This increase suggests progress in managing manufacturing quality.
7. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Investors: 60
Jim Cramer reiterated his bullish view on CMG in a latest program, saying:
“This stock sells at 50 times earnings which is high but I’ve been backing Chipotle since it was down 85% (because of the E. coli outbreak).”
Chipotle is one of the stocks Barclays analyst Venu Krishna believes could offset the tech concentration risks.
Chipotle Mexican Grill Inc (NYSE:CMG) has been steadily increasing its footprint over the past several years. Back in 2007, the company had just 704 stores. This figure now stands at 3437. One of the biggest signs of Chipotle Mexican Grill Inc’s (NYSE:CMG) strengths is its rising margins, even when the restaurant industry is reeling from high labor costs and squeezing margins. Chipotle Mexican Grill Inc’s (NYSE:CMG) current net margin of 12.45% is the highest it has been in the past decade.
Chipotle Mexican Grill Inc (NYSE:CMG) trades at 47X 2025 EPS estimate of $66.92 set by Wall Street analysts. This P/E is much higher than the industry of 16. Chipotle Mexican Grill Inc (NYSE:CMG) is expected to see revenue growth of just 13-15% per year over the next 3 years, while its EPS growth is expected to come in between 3% to 20%. Analysts expect the American consumer to remain prudent in spending amid higher for longer interest rate scenario and dwindling savings. Therefore, for investors looking for high-growth stock appreciation names, Chipotle Mexican Grill Inc (NYSE:CMG) might not be the ideal choice.
Ensemble Capital Management stated the following regarding Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q2 2024 investor letter:
“Finally, we’d like to discuss Chipotle Mexican Grill, Inc. (NYSE:CMG), a nice long term success story in our client portfolios that we recently sold out of due to its high valuation after holding for over 4 years. This was an exit that was driven by the strong performance of the stock, increasing about 370% over the past 4 years from March 2020 to June 2024.
Chipotle has been a very successful stock as a result of the strong business performance of the company. Under Brian Niccol, its CEO since 2018, it has accelerated its growth, improved operations and efficiency, and set its sights on higher goals in bringing its casual healthy Mexican cuisine to all of North America and increasingly, the world.
We first bought the stock in client portfolios in March 2020 on the thesis that there was substantial growth runway and margin leverage in the business as it scaled. The initial reaction of the COVID pandemic shutdowns on the stock was severe, with a nearly 50% drawdown, which provided the opportunity to start buying at prices that we believed offered good future returns. As it turned out, underlying acceleration in demand for Chipotle and its pricing power proved the strengths of its offering and business model shortly after…” (Click here to read the full text)
6. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Investors: 64
Jim Cramer in a latest program affirmed his view on tobacco stocks when he was asked about PM.
“I never recommend tobacco stocks, never have, never will.”
Cramer’s thesis on PM and other tobacco stocks might be because of health issues stemming from tobacco use. But is the stock a good long-term investment?
Goldman Sachs recently added Philip Morris International Inc. (NYSE:PM) to its US Conviction stocks list, saying the stock’s potential in smoke-free products is underappreciated by the market.
Philip Morris International Inc. (NYSE:PM) second-quarter results showed the promising potential of its smoke-free products. Philip Morris International (PM) has gained a significant lead over its competitors, largely due to its successful smoke-free business segment, which generated $3.6 billion in net revenues for the second fiscal quarter of 2024, up 18.3% year-over-year. This segment now represents 38.1% of total sales, up 2.7 percentage points from the previous year. Philip Morris International Inc. (NYSE:PM) efforts in oral nicotine segment are also working. It bought nicotine pouches company Swedish Match in 2022 for a whopping $16 billion. During the second quarter, nicotine pouch sales volume surged by 50.6% year-over-year, with a new guidance of 580 million cans for FY2024, up 11.5% from previous estimates.
The US alternative tobacco market is projected to grow from $23.49 billion in 2022 to $32.05 billion by 2027, at a CAGR of 6.4%, presenting a significant growth opportunity for Philip Morris International Inc. (NYSE:PM).
Andvari Associates stated the following regarding Philip Morris International Inc. (NYSE:PM) in its Q2 2024 investor letter:
“Andvari invested in Philip Morris International Inc. (NYSE:PM) a few months after initiating a position in fellow tobacco company Altria. The tobacco industry is one that has consolidated to only a handful of players. For decades, the industry has more than offset the continual decline in cigarette volumes with price increases. More recently, both Altria and Philip Morris have introduced several new product categories that deliver nicotine in much safer ways: vaping, nicotine pouches, and heat-not-burn products. Nicotine pouches in particular continue to have an extraordinary growth trajectory. In the most recent quarter, the volumes of Altria’s On! pouches and Philip Morris’ Zyn pouches continued their torrid growth rates at 30%+ and 70%+ year over year, respectively.
For Philip Morris and Altria, their margins are high, returns on equity and capital are high, and both trade at what Andvari views as cheap or very cheap multiples. Given the non-zero chance of a “nicotine renaissance” aided by less harmful products, we do not think the future for these companies is as dim as the market seems to think.”
