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.”
4. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Investors: 77
Jim Cramer said in a latest program that Applied Materials is a Buy despite China-related headwinds.
“I think the company is doing well I think the government is not crazy about their posture because they do so much business in China. I think that’s a shame – to criticize a company or to be skeptical of a company that has done a great job,” Cramer said.
Applied Materials, Inc. (NASDAQ:AMAT) recently posted decent quarterly results which showed the contribution of China in the revenue mix fell.
In Q3, Applied Materials, Inc. (NASDAQ:AMAT) core semiconductor systems segment posted $4.924 billion in revenue, a $248 million increase year-over-year. The company guided Q4 EPS at $2.18, slightly ahead of analyst estimates by three cents, with revenue expected to land around $6.93 billion. While sales growth has been sluggish this year, there’s optimism for a pickup in 2025 and 2026.
Currently, Applied Materials, Inc. (NASDAQ:AMAT) is trading at around 23 times earnings, which is 5 points higher than its three-year average. While the current growth rates of the company might not justify this valuation, the possible increase in growth in 2025 and 2026 makes the stock a hold for the long term.
After the results, Wells Fargo analyst Joe Quatrochi reiterated his Overweight rating but reduced its price target to $260 from $280.
3. Alibaba Group Holding Ltd – ADR (NYSE:BABA)
Number of Hedge Fund Investors: 91
Jim Cramer reiterated in a latest program that Alibaba is an “incredibly cheap” stock.
Alibaba Group Holding Ltd – ADR (NYSE:BABA) recently posted its quarterly results which were mixed as revenue missed Wall Street estimates. BofA Securities and Truist reaffirmed their Buy ratings on the stock after the results. Bernstein, on the other hand, gave it a Market-Perform rating while upping the price target from $80 to $85. Truist also kept its Buy rating but adjusted its price target down from $110 to $100, noting that Alibaba Group Holding Ltd – ADR (NYSE:BABA) fiscal Q1 2025 results showed solid operational performance despite a challenging macro environment.
UBS is bullish on Alibaba Group Holding Ltd’s (NYSE:BABA) exposure to AI because of Alibaba Cloud, or Alibaba Cloud, which makes the Chinese company a formidable player in the AI enabling layer. In the intelligence layer, UBS highlighted Alibaba Group Holding Ltd’s (NYSE:BABA) Qwen large language model, while the Qwen agent makes the company’s presence notable in the application layer.
However, uncertainties in China and Alibaba Group Holding Ltd’s (NYSE:BABA) lackluster performance have damaged the sentiment around the stock. While Alibaba Cloud is a significant player in the market, analysts believe enormous growth and advancements of Alphabet, Amazon and Microsoft in the public Cloud markets have left Alibaba Group Holding Ltd (NYSE:BABA) behind. Wall Street analysts expect Alibaba earnings to grow at a CAGR of just 1.7% only over the next five years. Alibaba Group Holding Ltd’s (NYSE:BABA) forward PEG ratio is 3.29, which is high when we incorporate the unimpressive earnings growth expectations.
Alibaba Group Holding Ltd’s (NYSE:BABA) ecommerce business is also struggling as buyers in China become price-conscious amid a broader slowdown. However, Alibaba Group Holding Ltd (NYSE:BABA) bulls believe the stock could rebound if the situation improves in the country, given the company’s massive cash flow position.
O’keefe Stevens Advisory stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its Q2 2024 investor letter:
“We initiated two new positions during the quarter: Alibaba Group Holding Limited (NYSE:BABA) and Perrigo (PRGO). Both have seen their stocks decline over 70%+ from their all-time highs.
Alibaba is the largest e-commerce player in China, with 40% gross merchandise volume (GMV) market share through its Taobao and T-mall businesses. While the cloud computing business is relatively small, its 37% market share in China positions it well to capitalize on the increasing demand for AI-related products. In the most recent quarter, AI-related cloud revenue recorded triple-digit growth y/y, with the expectation that total cloud revenue will accelerate to double-digit growth in 2H 2025.
It’s rare to find a dominant market share business with significant tailwinds trading for ~10x adj. EPS. After accounting for their ~$60B net cash balance sheet, the stock is trading at 6-7x, which, we believe, is far too cheap. We understand this business would not trade at this price if it were a U.S. business. However, the valuation gap at a high single-digit P/E is pricing in a combination of the following risks – 1. China invading Taiwan. 2. Cash can never leave mainland China (disproven). 3. Increasing competition from Pinduoduo and Shien resulting in market share loss 4. China’s geopolitical tensions worsen. 5. Economic slowdown stemming from the recent housing market downturn. 6. VIE structure creates doubt over the actual ownership of the business. All risks have merit, with cash distribution restrictions at the lower end due to the recently announced dividend and special dividend. Cash returned to shareholders totaled $16.5B in FY24, up from $13.4B in FY23…” (Click here to read the full text)
2. Walmart Inc (NYSE:WMT)
Number of Hedge Fund Investors: 95
Jim Cramer in a latest program discussed Walmart’s latest quarterly results which were strong and showed the company is growing despite a weakening consumer sentiment. Cramer highlighted Walmart’s Flipkart growth in China and said while other retail companies are getting crushed in China, Walmart grew. Cramer also pointed to about 21% growth in Walmart’s global e-commerce business.
Jim Cramer said Walmart’s conference call was “heavenly” and highlighted the following comment from WMT CEO during the call:
So far, we aren’t experiencing a weaker consumer overall. Around the world, our customers and members continue to want four things. They want value; they want a broad assortment of items and services; they want a convenient and enjoyable experience buying them; and they want to do business with a company they trust. These four things are constant. But the way we provide them is changing and changing fast. The results we’re delivering are due to real progress across these dimensions. As it relates to value, we’re lowering prices. For the quarter, both Walmart U.S. and Sam’s Club U.S. were slightly deflationary overall.
Jim Cramer also highlighted how WMT is using generative AI to save money and improve efficiency, mentioning this quote from the management during the call:
“We’re finding tangible ways to leverage Generative AI to improve the customer, member, and associate experience. We’re leveraging data and large language models from others and building our own. One example is that we’ve used generative AI to improve our product catalog. The quality of the data in our catalog affects nearly everything we do from helping customers find and buy what they’re looking for, to how we store inventory in the network, to delivering orders. We’ve used multiple large language models to accurately create or improve over 850 million pieces of data in a catalog. Without the use of generative AI, this work would have required nearly 100 times the current headcount to complete in the same amount of time. ”
Here is what Cramer said about this:
“That’s the best use case (of AI) I’ve heard yet…So who says generative AI does not have a use case? It just saved Walmart a fortune.”
1. UnitedHealth Group Inc (NYSE:UNH)
Number of Hedge Fund Investors: 114
A caller recently asked Jim Cramer about Elevance Health. He said UNH is still the “cream of the crop.”
“I could not believe how they’ve been able to accomplish so much during this period that nobody else has.”
UnitedHealth Group Inc (NYSE:UNH) is indeed the top-of-the-line stock when it comes to the insurance industry. In July the stock was upgraded by Jefferies which cited a strong growth outlook.
“The NT MLR outlook may not be crystal clear, but ‘clear enough’ in Q1/Q2 to rotate focus to a ‘25 growth outlook that is favorable and improving over the past two months,” Jefferies wrote in a note
UnitedHealth Group Inc (NYSE:UNH) is one of the biggest managed healthcare players globally, with segments like UnitedHealthcare, OptumRx, OptumInsight, and OptumHealth. Analysts believe UNH has strong growth catalysts for 2025 because it may be able to raise prices. BofA expects the company’s EPS to approach $28 this year, with steady growth in the low double digits through 2026. Revenue growth is expected by Wall Street in the range of 7% to 8% annually. While dividends are forecasted to rise by more than 10% each year through 2026, the yield may remain under 2%, and its trailing 12-month free cash flow yield is modest at around 1%. Based on these factors, UnitedHealth Group Inc (NYSE:UNH) forward P/E of 20 looks attractive.
Baron Health Care Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q2 2024 investor letter:
“Managed health care stocks continued to be weighed down by Medicare Advantage utilization and reimbursement concerns. Lack of near-term visibility on utilization trends was exacerbated by the Change Healthcare cyberattack, which disrupted payors’ normal utilization review and claims adjudication processes while new CMS rules are restricting the number of lower cost hospital observation stays in favor of full inpatient admissions. We believe our managed care holdings are likely to perform better in the second half of the year as investors look to 2025. UnitedHealth Group Incorporated (NYSE:UNH) should see healthy MA enrollment growth as plans that bid aggressively to gain members in 2024 will be forced to cut benefits and/or raise prices to restore margins. We note a Republican win in the upcoming election could result in a more favorable environment for Medicare Advantage companies after two years of adverse Medicare Advantage rate updates under the Biden administration.”
While we acknowledge the potential of UnitedHealth Group Inc (NYSE:UNH), our conviction lies in the belief that under the radar 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 UNH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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