Jim Cramer, the host of Mad Money, expressed strong views regarding day trading on Friday, urging novice investors to avoid the temptation of risky market practices. His warning followed an article from The Wall Street Journal, titled “More Men Are Addicted to the ‘Crack Cocaine’ of the Stock Market,” which discussed how an increasing number of investors are developing serious gambling addictions through speculative trading. Cramer emphasized:
“Unless you’re a professional, I’m dead set against day trading, particularly the kind that is based on zero-days-to-expire or zero DTE options. These are options that expire the same day.”
He compared these trades to gambling, urging that they be stopped, as they serve no purpose other than to hook people on the addictive nature of the stock market. Cramer, who highlighted that he has moved away from day trading since retiring, stressed the importance of a more cautious and informed approach. He now advocates for “buy and homework,” his version of buy-and-hold investing, which reflects his belief that things can change with a company and require continuous evaluation.
READ ALSO Jim Cramer Discussed These 11 Restaurants and Retail Stocks and Jim Cramer Recently Discussed These 7 Stocks
Cramer called for self-regulation within the industry and said:
“There’s no reason to push people into zero day options other than pure greed. The industry’s encouraging bad behavior, that’s just plain wrong.”
Cramer further pointed out that day trading is not limited to options but extends to other high-risk investments, such as cryptocurrencies, uranium stocks, and emerging technologies like quantum computing, commercial space, and future mobility stocks. While he expressed confusion over who creates these stocks, he noted that their volatility and high trading volumes indicate they are often used as vehicles for speculative trading rather than sound investments.
Cramer questioned whether the markets could eliminate this behavior, but he firmly believes that a collective value judgment can be made. He particularly criticized the brokerage houses that profit from encouraging risky behavior, stating that these firms must be held accountable for promoting an environment that feeds into people’s gambling instincts.
“After all the markets were created for investing, not day trading on the direction of stocks. There’s a big difference between making an informed investment and pure gambling.”
He called for stronger measures to protect individuals from the dangers of day trading, suggesting that, while it may be impossible to completely eliminate high-risk trades, at the very least, these products should come with warning labels. He condemned those who continue to push these high-risk options, asking whether they truly need the money so badly, and saying, “Shame on you.”
Jim Cramer’s Latest Lightning Round: 8 Stocks in Focus
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 20. 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 Latest Lightning Round: 8 Stocks in Focus
8. Texas Pacific Land Corporation (NYSE:TPL)
Number of Hedge Fund Holders: 20
Cramer mentioned that he previously liked Texas Pacific Land Corporation (NYSE:TPL) but also cautioned to “hold off”.
“Alright, this stock has been just a horse, but all really it is just royalties off of oil. We have liked it, but it’s now gone up so much. I’ve gotta tell you, I want to hold off.”
Texas Pacific Land (NYSE:TPL) is a company focused on land and resource management, water services, land leasing, and the sale of materials. According to management, the company is able to take a more proactive approach with its surface assets, allowing greater control over how and when these assets are developed. Although revenue from non-oil and gas sources is currently minimal, it has signed numerous contracts over the past few years to diversify its portfolio.
Over the past 24 months, the company has contracted over 700 megawatts of solar energy projects that are currently in development. Additionally, as per the management, the company is actively involved in several other projects, including seven utility-scale battery projects, four Bitcoin mining operations, and 78 megawatts of active power generation, with another 50 megawatts in development.
Texas Pacific Land (NYSE:TPL) management has expressed confidence in the opportunities emerging outside of the traditional oil and gas sector. They noted a growing interest in wind power and mentioned ongoing work in the data center space, a sector the company has been exploring for some time. Furthermore, management emphasized that the company is well-positioned to provide both land and water solutions as these new opportunities continue to unfold in West Texas, an area where the company has a significant presence.
7. Under Armour, Inc. (NYSE:UAA)
Number of Hedge Fund Holders: 28
Cramer called Under Armour, Inc. (NYSE:UAA) a “great spec” and remarked:
“Okay, here’s the way I look at it. I think it’s a great spec. We have to have a couple quarters that are good. Remember, Nike just had a real hard time. Hard to imagine everybody doing well if Nike’s coming back with a vengeance. So let’s be careful, but it is a spec and a good one.”
Under Armour (NYSE:UAA) designs, markets, and distributes performance apparel, footwear, and accessories, offering products for various sports and activities. A significant part of the company’s business model has been its loyalty program, which plays a crucial role in fostering repeat business and attracting new customers. October marked the first anniversary of the U.S.-based UA Rewards program, which has grown significantly over the past year.
Early in the second quarter, the company upgraded existing accounts, bringing an additional 6 million ua.com members into the program, increasing the total number of members to nearly 13 million. As of now, active members contribute to roughly half of the company’s direct-to-consumer revenue in the U.S.
The benefits of the loyalty program are evident, with members showing nearly double the 90-day repurchase rate compared to non-members, resulting in approximately 50% higher revenue per consumer. Across the U.S. and Asia-Pacific regions, Under Armour (NYSE:UAA) now has over 28 million members, a number that continues to grow. Despite the success of this program, management has provided guidance for the third quarter of Fiscal 2025, anticipating a revenue decrease of around 10%.
This projection reflects ongoing challenges in North America and a deliberate reduction in promotional activities within the company’s DTC operations. Additionally, revenue pressure is expected to intensify in the fourth quarter due to timing differences in the flow of business between Q3 and Q4.
6. CSX Corporation (NASDAQ:CSX)
Number of Hedge Fund Holders: 51
Cramer likes CSX Corporation (NASDAQ:CSX) and mentioned that stocks like it should be bought when it is low.
“Oh, I couldn’t believe that CSX fell this well. And by the way, I’m gonna give you a twofer, I think that Union Pacific is great right here too. These are all worried about tariffs. I’m not worried. These are really good companies. You have to buy them when they’re low.”
CSX (NASDAQ:CSX) provides rail-based freight transportation services through a network of terminals. When President-elect Donald Trump takes office, there is a possibility that there is an increase in tariffs, potentially altering trade patterns. In its annual 10-K regulatory filing, the company acknowledged that the anticipated increase in tariffs could potentially reduce import and export volumes.
Despite these concerns, CEO Joe Hinrichs has expressed confidence in the company’s ability to adapt. During an interview with Cramer in November, Hinrichs noted that regardless of changes to tariffs or trade dynamics, the company’s diverse operations position it to remain successful. He emphasized that as long as goods are entering the U.S., it will continue to play a vital role in transporting them to various destinations across its network.
Hinrichs also pointed to the potential benefits of increased domestic manufacturing, which could be influenced by the Trump administration’s tariff policies. He highlighted that many companies are considering large projects in the southeastern U.S., an area where CSX (NASDAQ:CSX) holds a dominant position. The company is currently involved in 500 industrial development projects and has identified over a thousand additional potential sites. As Hinrichs put it, if products are made in America, the company will ensure they are moved by rail.
5. Cheniere Energy, Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 62
Calling Cheniere Energy, Inc. (NYSE:LNG) terrific, Cramer expressed bullish sentiment toward the LNG market as the time nears for the new administration.
“Okay, I like the LNG market now that we have President-elect Trump coming in because he’s pro-LNG and Cheniere is a terrific stock. It’s up 22% for the year, I think you’d still do well.”
Cheniere Energy (NYSE:LNG), a significant player in the liquefied natural gas (LNG) sector, focuses primarily on the ownership and operation of LNG terminals in the United States. It expects to produce around 47 million to 48 million tons of LNG across its two operational sites in the coming year.
This projected production marks an increase from the current 45 million tons per year across the nine existing LNG trains in operation. As per the company, following the commissioning of additional facilities, total production will reach between 46 million and 47 million tons. This will significantly support the company’s EBITDA for 2025. The company forecasts that around 3 million to 4 million tons of this production will be available for spot sales through Cheniere Marketing International (CMI) after fulfilling its long-term contracts.
These long-term agreements already account for approximately 43 million tons. Further, Cheniere Energy (NYSE:LNG) is actively marketing some of this spot volume for 2025 and expects to have 2 million to 3 million tons, or roughly 100 to 150 trillion TBtu, of unsold open capacity in that year. The company is planning for substantial completion of its remaining four mid-scale LNG trains by 2026, with new long-term contracts beginning in 2026 and 2027.
These additional contracts will maintain a strong position for the company, ensuring that its platform remains over 90% contracted with investment-grade counterparties, while maintaining a consistent revenue stream. With this level of contracting, the company projects an average of about 95% of its capacity will be secured under long-term, take-or-pay contracts through the mid-2030s.
4. Carvana Co. (NYSE:CVNA)
Number of Hedge Fund Holders: 66
A caller asked Cramer about Carvana Co. (NYSE:CVNA) and mentioned that they bought the stock when it was $11 per share.
“Well, I’ll tell you, you’re up a lot. You take that, double your cost basis, you take out 22 bucks, you’ll have caught a double, and then let the rest run and I’ll feel terrific. I won’t have to worry about you.”
Carvana (NYSE:CVNA) operates a prominent e-commerce platform for buying and selling used cars in the United States. The company initially experienced rapid growth as it expanded into new markets and increased its customer base. However, this expansion came with substantial financial challenges, as it faced significant debt accumulation while scaling its operations.
The company spent much of 2023 retrenching its business and restructuring its debt after taking on billions of dollars during a period of aggressive growth, only to see used-car prices decline and losses increase. In response to its financial difficulties, the company entered into efforts to stabilize its operations.
According to Bloomberg Intelligence analyst Joel Levington, the company’s operational improvements are expected to be sustainable, potentially leading to a credit upgrade in the coming year. Such an upgrade could provide Carvana (NYSE:CVNA) with the opportunity to refinance its high-interest debt, thereby significantly reducing its interest payments. As of the third quarter of fiscal 2024, it reported $5.4 billion in long-term debt and paid $157 million in interest expenses, which exceeded its net income of $148 million for the period.
Levington projected that the company would pay $668 million in interest for the year and could potentially cut this figure by half if the company succeeds in securing a credit upgrade and restructuring its debt through the capital markets.
3. Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Holders: 70
Cramer called Arista Networks, Inc.’s (NYSE:ANET) CEO “incredible” and said that he is a buyer of the stock.
“Jayshree Ullal, she is some incredible CEO and that business is smoking hot. I would be a buyer of Arista.”
Arista (NYSE:ANET) is a leading provider of networking solutions, specializing in products for data centers, campuses, and routing. The company is particularly recognized for its focus on AI-driven switches and software tailored for automation, monitoring, and security.
In its third-quarter earnings call, Chair and CEO, Jayshree Ullal, revealed that the company’s total addressable market is projected to reach $70 billion by 2028. The company has experienced impressive growth, with a 33.8% increase in 2023. Ullal noted that the company is on track to exceed its initial growth projections for 2024, now forecasting at least 18% growth, driven in part by the acceleration of AI-related projects.
For 2025, Arista (NYSE:ANET) expects revenue to reach approximately $8 billion, with annual growth between 15% and 17%. Within this projected $8 billion revenue, It is particularly optimistic about meeting its targets in campus networking and AI back-end networking, both of which are expected to contribute $750 million each by 2025. The company’s AI center networking revenues are likely to surpass these targets, with a new aim of around $1.5 billion in 2025.
2. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 72
Cramer thinks that 2025 will be a great year for Wells Fargo & Company (NYSE:WFC) and mentioned that he is a buyer of the stock.
“I like Wells Fargo right here. I think it’s gonna be a fantastic year in 2025. I would be a buyer of Wells Fargo.”
Wells Fargo (NYSE:WFC) is a prominent global financial services institution, offering a wide range of banking, investment, mortgage, and financial products. Over the past few years, the company’s earnings profile has changed significantly. This shift has led to a more diverse revenue structure. In particular, its fee-based revenue has seen a 16% increase during the first nine months of the year, helping to offset challenges faced in net interest income.
The bank continues to focus on its efficiency initiatives with expenses down from a year ago and headcount down for 17 consecutive quarters. Additionally, Wells Fargo has maintained growth in its credit card portfolio, with balances increasing for 13 consecutive quarters. The company’s management noted that after several years without growth, the number of net checking accounts has risen for three straight quarters, and management has observed an increase in the company’s share of debit cards.
In the third quarter, its mobile mobile active users grew by 1.6 million or 5% from last year. Additionally, Wells Fargo (NYSE:WFC) is also approaching a significant regulatory milestone. It is nearing the completion of tests required to lift a $1.95 trillion asset cap that was imposed on the bank in 2018 following the fake accounts scandal. As reported by Reuters on December 11, CEO Charlie Scharf expressed greater confidence in the company’s progress toward resolving its compliance issues. Scharf emphasized that detailed plans have been implemented to address regulatory requirements, and these plans are regularly reviewed by regulators.
1. Eaton Corporation plc (NYSE:ETN)
Number of Hedge Fund Holders: 90
Cramer likes Eaton Corporation plc (NYSE:ETN) and said to own the stock, not sell it.
“Oh no, you want to hold, you know Eaton is a buy-and-hold story. They’ve really done incredible work to be able to revolutionize that portfolio. They are pure winners at Eaton. Do not sell, own.”
Eaton (NYSE:ETN) is a global power management company that specializes in providing various products and services across several sectors, including electrical, aerospace, vehicle, and eMobility industries. The company has been actively making strategic investments to expand its capacity and improve its operations.
It has committed to incremental capacity investments totaling $1.5 billion, an increase of $500 million from its earlier projection. This revised estimate reflects the company’s growing confidence in its business outlook, especially with the rising demand it is experiencing in data center markets. These investments are expected to be spread across multiple years, with the largest additions slated for the latter half of 2025 and into 2026.
Eaton’s (NYSE:ETN) outlook for growth is strong, with the company anticipating attractive growth across nearly all of its markets. Particularly, it expects double-digit growth in data centers, distributed IT, commercial aerospace, and electric vehicles. It also anticipates steady growth in the utility sector, while most other end markets are expected to see more modest growth. Overall, 2025 is expected to be another year of significant progress for the company, with more than 90% of its end markets projected to experience positive growth.
While we acknowledge the potential of Eaton Corporation plc (NYSE:ETN) 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 ETN 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.