In this article, we will take a detailed look at Jim Cramer’s Latest Lightning Round: Top 10 Stocks.
Jim Cramer in a latest program on CNBC said that the market has already priced in the expected positive comments from the Fed Chair Jerome Powell at the Jackson Hole event in Wyoming. Cramer said some bulls might be hoping for an indication of “multiple rate cuts,” but that’s “not gonna happen.”
Cramer talked about the latest 8-day winning streak of the market which he called a “resurrection.” He said that almost “anything” during these days went up. Even the companies with “bad” results went up because investors thought they would improve once the Fed begins to cut interest rates, Cramer said.
“But that was then, this is now. Since the winning streak ended we are starting to get into what I call the buyer’s remorse phase of this move. Stocks have had a nice run based on nothing more than hope are now rolling over hard.”
Jim Cramer also pointed to the possible events in the coming months that could keep the markets depressed:
“Maybe the Fed is already too late and the economy will get real ugly or maybe traders are beginning to fear the possibility of a democratic sweep in November which could lead to higher corporate tax rate, bad for earnings. And a potential witchhunt for price gouging in the aisles of the supermarket and the drug stores.”
For this article we picked 10 stocks Jim Cramer talked about during his latest programs on CNBC. With each company 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. Royalty Pharma plc (NASDAQ:RPRX)
Number of Hedge Fund Investors: 34
Jim Cramer was recently asked about Royalty Pharma. Here is what he said:
“I always thought there is going to be more in this stock than it has been. It’s really been a bit of a bust, I feel badly.”
During the second quarter, the company’s portfolio receipts saw a 12% rise year over year, aided by growth in the cystic fibrosis franchise and GSK’s Trelegy.
Royalty Pharma plc (NASDAQ:RPRX) controls about 60% of the pharma royalty market. What makes the company stand out is its long-term royalty agreements, primarily backing drugs that are nearing full approval. This approach reduces risk for Royalty Pharma, as it invests in drugs with a clearer path to market. Currently, the average duration of Royalty Pharma plc (NASDAQ:RPRX) portfolio is around 13 years.
Despite a challenging market environment with tighter capital requirements and rising costs, Royalty Pharma is confident that it can grow. The management has raised its guidance for portfolio receipt growth, increasing the expected range from 5-9% to 9-12% for the year.
Royalty Pharma plc (NASDAQ:RPRX) has a dividend yield of about 3%.
9. Snap Inc (NYSE:SNAP)
Number of Hedge Fund Investors: 44
Jim Cramer in a latest program said that he believes Snap Inc (NYSE:SNAP) is not an “investable” company.
“I just have to tell you that they seem like an irrelevant company. I know it’s a tough judgement but that’s what I am paid to do,” Cramers said.
Snap Inc (NYSE:SNAP) shares recently fell after the company missed Q2 revenue guidance and gave a soft Q3 outlook. But does that really make Snap an irrelevant company?
Over the past year, Snap Inc (NYSE:SNAP) added 35 million users to its platform, bringing its total user count to 432 million by the end of June—a 9% year-over-year increase. In Q2 alone, the company gained 10 million users on a QoQ basis, with most of that growth coming from regions outside the U.S., Canada, and Europe. This expansion, combined with a rise in digital marketing spend, drove a 16% year-over-year boost in Snap’s revenue.
One of the biggest problems Snap Inc (NYSE:SNAP) faced is monetization. Most of its users are under 25, and usually don’t have disposable income. But Snapchat+ is the company’s solution to that problem. It’s a paid subscription service that offers users early access to new products and features, including Snap’s AI technology, which has proven to be a strong selling point. By the end of June, Snapchat+ had attracted 11 million subscribers, with 2 million new subscribers added in Q2 2024 alone.
RiverPark Large Growth Fund stated the following regarding Snap Inc. (NYSE:SNAP) in its first quarter 2024 investor letter:
“Snap Inc. (NYSE:SNAP): SNAP was our top detractor in the quarter despite reporting fourth quarter results generally in line with or better than expectations. Revenue growth of 5% was roughly in line with investor estimates and at the high end of guidance, and EBITDA of $159 million was $49 million better than estimates. Daily Active Users (DAUs) were also ahead of investor expectations, ending the quarter at 414 million (about 2 million better), driven by continued innovation in Snap’s offerings. Revenue guidance for 1Q24 was also roughly in line with investor estimates, but EBITDA guidance of negative $55-95 million was well below estimates. The company pointed to increased infrastructure costs and a US focused marketing campaign for the lower-than-expected margin guidance.
Although the company continues to face near-term macro headwinds, we believe SNAP can accelerate its revenue growth over the next several years. With 2023 revenue expected to be $4.6 billion (as compared with Meta’s $134 billion), we believe SNAP has a long runway for both revenue growth and expanded profitability as it improves platform functionality, continues to grow its audience (daily active users continue to grow at a double-digit rate), and expands its monetization.”
8. Ally Financial Inc (NYSE:ALLY)
Number of Hedge Fund Investors: 47
A caller recently asked Jim Cramer about Ally Financial Inc (NYSE:ALLY) during his program on CNBC. Cramer instantly hit the “buy, buy, buy” button, saying this call a “really simple” one.
Cramer agreed with the caller’s thesis that the auto and home loans company is better positioned to benefit from the upcoming rate cuts.
Ally Financial Inc (NYSE:ALLY) recently reported quarterly results, beating estimates on earnings and revenue. Net interest margin in the quarter was strong, reaching 3.30%, up 14 basis points sequentially, as it began lowering deposit rates. Deposit costs dropped by 7 basis points to an average of 4.21% during the quarter. With higher-yielding CDs maturing and continued pricing reductions, this positive trend is expected to persist, especially since Ally Financial Inc (NYSE:ALLY) deposit rates remain competitive compared to other banks. The company is also expected to pass these reductions through to its deposit rates following rate cuts.
For the full year the company now expects net interest margin at 3.3% from 3.25-3.3% previously, with an exit rate of 3.45-3.50%.
7. Royal Caribbean Cruises Ltd (NYSE:RCL)
Number of Hedge Fund Investors: 48
A caller recently asked Jim Cramer about his thoughts on Norwegian Cruise Lines. He instead recommended Royal Caribbean Cruises Ltd (NYSE:RCL) as a better buy.
“I like Royal Caribbean Cruises because every time that stock is down there are like thousands of buyers come in, every time Norwegian is down, nobody cares.”
Royal Caribbean Cruises Ltd (NYSE:RCL) is benefitting from strong demand from younger customers as people around the world continue to spend on experiences despite inflation. Secular growth trends are expected to keep boosting the company. The global cruise passenger numbers hit 31.7 million last year, a 7% increase over pre-pandemic levels. Projections suggest this figure could approach 40 million by 2027, highlighting the robust demand for cruise vacations.
Amid the after-effects of the pandemic, cruise companies have been reluctant when it comes to expansion of capacity and new orders. This resulted in a shortage of ships, which gives giants like Royal Caribbean Cruises Ltd (NYSE:RCL) a space to raise prices. Royal Caribbean saw its net yield—revenue per passenger per cruise day—rise 13% in Q2 2024 year-over-year.
The company raised its full-year EPS guidance to $11.25-$11.45 per share, reflecting 68% year-over-year growth, surpassing the consensus of $11.07 per share. Additionally, Royal Caribbean Cruises Ltd (NYSE:RCL) reinstated its quarterly dividend at $0.40 per share, the first since its suspension in 2020.
Ariel Fund stated the following regarding Royal Caribbean Cruises Ltd. (NYSE:RCL) in its Q2 2024 investor letter:
“Global cruise vacation company, Royal Caribbean Cruises Ltd. (NYSE:RCL), advanced on another quarterly earnings beat and subsequent raise in full-year guidance. Stronger than anticipated consumer demand, healthy onboard spend, robust pricing and solid cost containment lifted recent results. Additionally, RCL is benefitting from several new megaships, more island destinations and re-entry into the China market. The resiliency of the core cruise consumer, in combination with management’s superior operational expertise and revised earnings outlook, lays the foundation for RCL to exceed its three-year strategic imperative, the Trifecta Program, a year earlier than expected.”
6. Core Scientific Inc (NASDAQ:CORZ)
Number of Hedge Fund Investors: 53
Jim Cramer said in a latest program that Core Scientific Inc (NASDAQ:CORZ) is in a “very overvalued situation” primarily because it “has never made any money.”
“It is another play on crypto. If you like crypto, buy crypto.”
Core Scientific Inc (NASDAQ:CORZ) offsets digital assets mining and hosting services. The stock is gaining attention after its deals with CoreWeave, a startup backed by Nvidia. As part of the deal, Core Scientific (NASDAQ:CORZ) will deliver an additional ~112 megawatts of computing infrastructure to support the operations for CoreWeave.
Riley Securities upgraded Core Scientific (NASDAQ:CORZ) to Buy from Neutral, saying the company will be a “future leader” in high-performance computing (HPC) hosting. The firm said the latest deals with CoreWeave and “management’s deep experience in operating enterprise data centers,” is driving Core’s (CORZ) HPC expansion.
Why do companies turn to CORZ for their power needs? Nvidia’s GPUs require more than twice the power of standard CPUs, and many colocation facilities, particularly in large metro areas like Northern Virginia, aren’t equipped to meet these energy demands due to high utility demand and restrictions. This has created a need for AI-specific data centers.
Core Scientific Inc (NASDAQ:CORZ) operates 830 megawatts, with contracts covering 1,200 megawatts. As a result of the contract with CoreWeave, Core Scientific Inc (NASDAQ:CORZ) could potentially generate $6.7 billion from HPC hosting over the next 12 years, starting in the first half of 2026—equivalent to about $550 million annually.
Amid challenges in the bitcoin mining industry and increasing competition, Core Scientific Inc (NASDAQ:CORZ) is expanding into other areas like HPC. During the second quarter, the company made about 78% of its revenue from mining and the rest came from leases of hosting space to other miners and the emerging HPC business (4%).
5. Snowflake Inc (NYSE:SNOW)
Number of Hedge Fund Investors: 69
When asked about Snowflake Inc (NYSE:SNOW), Cramer said that the “latest feedback” he’s received about the company shows it’s facing “some difficulties.” Cramer said that Snowflake is “challenged by a couple of companies” and he’d “hold off” on recommending the stock for now.
Jefferies analyst Brent Thill named Snowflake Inc (NYSE:SNOW) as his top AI pick for the back half of 2024 as he expects the stock to benefit from the rising demand in infrastructure and software. Thill believes companies like Snowflake will benefit as companies begin to install and deploy AI software in the POC (proof of concept) stage of the AI cycle.
Snowflake Inc (NYSE:SNOW) is a Cloud-based data warehouse offering data storage and analytics services. The company’s moat lies in its data technologies that let companies analyze and make sense of unstructured data. Amid the generative AI boom, companies are ready to spend a fortune to use huge datasets to their advantage. This would bode well for Snowflake Inc (NYSE:SNOW). The company’s usage-based pricing model also gives it an edge in the market. The company expects the total addressable market for its Cloud data platform to rise to $342 billion by 2028, which is double the market size of 2023.
Alger Focus Equity Fund stated the following regarding Snowflake Inc. (NYSE:SNOW) in its Q1 2024 investor letter:
“Snowflake Inc. (NYSE:SNOW) is a cloud-based data warehousing company that allows organizations to store, analyze and share data in a secure. scalable and cost-effective manner. This includes the Data Cloud. an ecosystem where Snowflake customers, partners. data providers, and data consumers can break down data silos and derive value from rapidly growing data sets in a secure, governed, and compliant way. Its platform supports a range of use cases. including data warehousing, data lakes, data engineering, data science, data application development, and data sharing. While the company reported an overall healthy fiscal fourth quarter. shares detracted from performance after management lowered their fiscal 2025 forward revenue guidance below analyst estimates. Further, the company announced that CEO Frank Slootman would be retiring from the role immediately, succeeded by Sridhar Ramaswamy, the former SVP of Al who has demonstrated impressive speed in bringing new Al products and features to market.”
