In this article, we will take a detailed look at Jim Cramer’s Latest Lightning Round: Top 10 Stocks.
Jim Cramer in a recent program on CNBC recommended investors to avoid worrying when others are anxious or get too excited about something when others are also doing the same. Cramer said by the time an idea is common among investors, its price already reflects its potential.
“Stocks don’t quite travel at the speed of thought but they come pretty close. So the moment a preponderance of hedge fund and mutual fund managers decide that the economy is slowing, speeding up, or flatlining, stocks start trading like that’s already the case. Usually, it takes some time to build that kind of consensus, which is why you rarely see these moves happening instantaneously. But once the big institutional portfolio managers are on the same page about something, you can be pretty darn confident that it’s baked into the averages. This is some basic economics 101 stuff.”
If every piece of news is priced in, does that mean it’s meaningless to invest in stocks and you are better off putting your money in broader market funds? Cramer calls this idea “bogus” and says the market is pretty irrational at times and stocks are incorrectly priced, giving investors an opportunity.
“The simple truth is that markets are not perfectly efficient. In fact, frankly, they’re often irrational. They ignore things, make mistakes, misvalue information every day. And that’s a major reason why anyone can make money picking individual stocks. These anomalies are everywhere, and they can be great for your portfolio,” Cramer added.
READ ALSO 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In
For this article, we watched the latest programs of Jim Cramer and picked 10 stocks he is talking about these days. 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. Ralph Lauren Corp (NYSE:RL)
Number of Hedge Fund Investors: 30
Jim Cramer was recently asked about Levi Strauss. He said the stock is “intriguing” but Ralph Lauren Corp (NYSE:RL) is better.
“People magazine says they make the best jean jackets. I didn’t know anyone else made jean jackets. I think the product is terrific. The stock itself, with a 3% yield and 13 times earnings, is intriguing, but Ralph Lauren Corp (NYSE:RL) is better—RL.”
For fiscal 2025, Ralph Lauren’s revenue is expected to keep growing, though at a slower pace. RL anticipates revenue growth of 2-3% at constant currency (CC), a slight dip from the 3% growth seen in FY24. Despite ongoing weakness in its largest market, North America, which accounts for 40% of its revenue, RL is managing to grow. In Q1 FY25, North America shrank by 3.7% YoY. Reported revenue growth remained positive thanks to Europe, where revenue rose by 6.3% YoY.
9. Robinhood Markets Inc (NASDAQ:HOOD)
Number of Hedge Fund Investors: 38
When asked about Robinhood Markets Inc (NASDAQ:HOOD) earlier in December, Cramer said he’d stay away from the stock for now until it pulls back.
“I call this what I call an up stock. Alright, everyone’s decided that this is the fintech one to buy. They’ve come on, they’ve been highly promotional. It did an island reversal today, which I typically don’t like. I think it’s headed to 35. We can revisit it there.”
8. PepsiCo Inc (NASDAQ:PEP)
Number of Hedge Fund Investors: 58
Jim Cramer in a latest program talked about PepsiCo Inc (NASDAQ:PEP) and warned investors about the potential headwinds for the company stemming from weight loss drugs.
“Look, it’s not expensive, yields three and a half—not a bad level to start a position. But understand you’re up against GLP-1s, or at least the elusive story of what GLP-1s can do to a company that owns Frito-Lay.”
Artisan Global Equity Fund stated the following regarding PepsiCo, Inc. (NASDAQ:PEP) in its Q1 2024 investor letter:
“In the demographics/consumer trends theme, slowing sales volumes led us to focus more on services versus goods. As an example, we sold our position in food and beverage leader PepsiCo, Inc. (NASDAQ:PEP) given slowing growth in its underperforming core beverage business, one which generates about 60% of revenues. Adding to the uncertainty of growth prospects beverages, PepsiCo was forced by local lawmakers and industry wholesalers to shift to a new distribution model during the rollout of Hard Mtn Dew, a new line of drinks that combines Mountain Dew with malt liquor. We also exited our position in Wal-Mart de Mexico as the company regroups after Hurricane Otis devastated parts of Mexico’s west coast last fall. The damages will likely affect earnings over the medium term. We also sold consumer food and beverage giant Nestle due to slowing sales volume growth. Food inflation over the last two years has increased consumer price sensitivity, putting pressure on many in the industry. In contrast to these goods providers, we bought shares of TUI, an online travel agency that provides custom travel experiences via dynamically priced services such as airfare, lodging and local activities on one platform. We believe the addition of Ryanair to the platform, Europe’s largest airline, will strengthen TUI’s service offering at a time when travel spending is predicted to remain elevated at least through the summer.”
7. Dell Technologies Inc (NYSE:DELL)
Number of Hedge Fund Investors: 60
Jim Cramer was recently asked about his thoughts on Dell Technologies Inc (NYSE:DELL). Here is what he said:
“Dell Technologies Inc (NYSE:DELL) did not have a good quarter. It really was a disappointing quarter. I agree with people, even though I think the world of Michael Dell Technologies Inc (NYSE:DELL). However, I think Dell’s second half will be much better. I do not think much of its first half. If you have the patience to own the stock here, I don’t think there’s a lot of downside, and I think there’s a lot of upside. However, we own other stocks in the portfolio that I think are better, even at this price. Do you know that I actually like Nvidia at 134 more than I like Dell? Just saying.”
In the most recently reported quarter, Dell’s Infrastructure Solutions Group (ISG) posted an impressive 34% year-over-year growth, reaching $11.4 billion in revenue. The server business rose a whopping 58% increase YoY to $7.4 billion.
Dell Tech Inc (NYSE:DELL) experienced a shift in AI server demand toward the next-generation Blackwell architecture. Dell Tech Inc (NYSE:DELL)’s management highlighted that there was a dramatic shift in orders toward Nvidia’s (NVDA) Blackwell-based systems during Q3, which impacted short-term shipments as these products ramp up production. This shift shows Dell Tech Inc (NYSE:DELL)’s competitive position, as customers are willing to wait for the latest tech solutions. Dell secured $3.6 billion in AI server orders this quarter, an 11% increase from the previous quarter. Dell Tech Inc (NYSE:DELL) also signed over 2,000 enterprise customers for their AI solutions.
Carillon Scout Mid Cap Fund stated the following regarding Dell Technologies Inc. (NYSE:DELL) in its Q2 2024 investor letter:
“Dell Technologies Inc. (NYSE:DELL) was a top contributor despite reporting disappointing first-quarter earnings results, because investors looked through the near-term disappointment and expected strong growth from AI-related servers and personal computers. We expect Dell to participate in the growth of artificial intelligence hardware, especially as enterprises invest more aggressively. We like the company’s depth and breadth of products and services, as well as its focus on keeping costs low.”
6. T-Mobile Us Inc (NASDAQ:TMUS)
Number of Hedge Fund Investors: 66
A questioner recently asked Jim Cramer about AT&T. Cramer said he prefers T-Mobile Us Inc (NASDAQ:TMUS).
“I don’t want to own AT&T. Your description of what’s going to happen is very true. AT&T is reforming into a better company. Why do I want to own it? Because if I do want to own anything in that space, I want to buy growth. If I want to buy growth, that means I want to buy T-Mobile Us Inc (NASDAQ:TMUS). Mike Sievert is doing a terrific job. The stock has been incredible, it’s been a horse, and they’ve got a great relationship with Apple. I’d rather be in that and forgo the dividend, which just can’t be nearly as important as the capital gain stream that you’ll get from being with T-Mobile Us Inc (NASDAQ:TMUS).”
With a forward P/E ratio of about 20, T-Mobile is attractively valued. By 2028, T-Mobile anticipates adding another 12 million customers. Through partnerships with firms like Metronet and Lumos, T-Mobile plans to extend fiber coverage to 12-15 million more homes, helping to capture additional customers. T-Mobile expects its AI-driven customer service solutions to reduce inbound calls by about 75%, enhancing the overall customer experience.
5. Crowdstrike Holdings Inc (NASDAQ:CRWD)
Number of Hedge Fund Investors: 74
Jim Cramer was recently asked about Palo Alto Networks. He instead recommended Crowdstrike Holdings Inc (NASDAQ:CRWD) as a better buy.
” Crowdstrike Holdings Inc (NASDAQ:CRWD) fell precipitously, almost 10% over a week, with nothing going on whatsoever. Therefore, that was a disparity with the fundamentals, which I think are excellent. The one to buy right now, at this moment, is Crowdstrike Holdings Inc (NASDAQ:CRWD), as it’s starting to bounce back. That’s the one now playing offense after we had George Kurtz, the CEO, visit 130 companies in 100 days as part of what you’d call the apology tour for what occurred in the third week of July. I really like that one better now.”
Fidelity Growth Strategies Fund stated the following regarding CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q3 2024 investor letter:
“A non-benchmark stake in CrowdStrike Holdings, Inc. (NASDAQ:CRWD) (-40%) was the biggest detractor among individual stocks. The shares of this cybersecurity platform provider fell precipitously in July, after a glitch in a CrowdStrike software update led to a global outage for many of its customers that, among other impacts, caused the mass cancellation of flights around the world. After bottoming out in early August, the stock made a partial rebound by quarter end, but we exited the fund’s holding during the summer.”
4. Walt Disney Co (NYSE:DIS)
Number of Hedge Fund Investors: 76
A caller recently asked Jim Cramer about his thoughts on Paramount Global. Cramer recommended the investor to stay away from the stock and instead buy Walt Disney Co (NYSE:DIS).
“Over? Don’t go done—let’s skip it. Let’s find something that works. I think that Walt Disney Co (NYSE:DIS), which by the way has pulled back nicely, is a charitable trust name. What a great level to buy. Walt Disney Co (NYSE:DIS) is maybe even a buy tomorrow.”
Disney continued to grow its subscriber base in the fourth fiscal quarter. By the end of October, the company had 56 million paying U.S. subscribers (+1.3M Q/Q) on its main Disney+ platform, along with 66.7 million international subscribers (+3.2M Q/Q).
Average revenue per user rose year over year in both the domestic and international markets. The subscription price hikes in October should also have a positive impact on the segment’s profitability moving forward. A major highlight from Disney’s fourth-quarter results was its streaming business, which reported its first significant operating profit. In Q3’24, Disney earned $0.3B from its streaming operations.
Meridian Hedged Equity Fund stated the following regarding The Walt Disney Company (NYSE:DIS) in its Q2 2024 investor letter:
“The Walt Disney Company (NYSE:DIS) operates a diversified entertainment business with theme parks, media networks, and streaming services. We own Disney because we believe its strong brand, valuable IP, and expanding streaming offerings will drive sustainable long-term growth. The company’s stock, however, underperformed in the quarter due to concerns about a slowdown in growth at its theme park division. While park revenue still grew by 10% year-over-year, management’s commentary suggested a moderation in post-pandemic demand and rising costs, leading to a disappointing outlook for park operating income in the second half of the year. This overshadowed the positive news that the company’s streaming segment, driven by strong subscriber growth at Disney+, reached profitability ahead of schedule. We held our position and will continue to monitor the performance of the theme park division.”
3. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Investors: 91
A caller recently asked Jim Cramer about his thoughts on Vertiv Holdings Co (NYSE:VRT). Here is what Cramer said:
“Here’s the problem. You just came across it, others have come across it long before. We’ve had them on. I know the company really, really well, and it’s up like 10 times now. But here’s what matters: if you buy some and then let it come in, you know what? I’m fine. I just don’t want you to buy it all at this level because it is very high.”
Baron Small Cap Fund stated the following regarding Vertiv Holdings Co (NYSE:VRT) in its Q3 2024 investor letter:
“Vertiv Holdings Co (NYSE:VRT) is a leader in data center equipment, with significant share in both power and cooling applications. The stock rebounded off recent weakness, as investors gained confidence that a massive build out of AI data centers globally was on the horizon. Vertiv’s strong relationship with chip manufacturers and involvement in the necessary technology roadmap for solutions as the energy density of server racks increases were catalysts. Vertiv’s orders were up 57% year-over-year in the second quarter, backlog was $7 billion, a record, and 2024 operating profit margin and EPS guidance was raised.”
2. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 193
Jim Cramer in a recent program said that there’s “nothing” wrong with NVIDIA Corp (NASDAQ:NVDA) and the company remains the market leader in the AI chips space. He also told investors when to buy NVIDIA Corp (NASDAQ:NVDA) shares.
“NVIDIA Corp (NASDAQ:NVDA) is not being dethroned by any competitor. Even the companies trying to compete against it are faithful customers who have no choice but to develop alternatives because NVIDIA Corp (NASDAQ:NVDA) can’t supply enough chips to meet demand. I think it’s just profit-taking after a monster run. It has been a monster run, hasn’t it?
On January 6, 2025, NVIDIA Corp (NASDAQ:NVDA) founder and CEO Jensen Huang will present a keynote at CES, the largest tech expo in the world. He has previously used that podium to introduce many innovations that turned NVIDIA Corp (NASDAQ:NVDA) into one of the most valuable companies on Earth.
When will the stock bottom? I always let a stock tell me what to do. NVIDIA Corp (NASDAQ:NVDA) bottoms when the stock rolls over at the open, then hits a level on big volume where it stops before working its way back up to well above where it opened. That, people, is called a crescendo bottom—when everyone of size who wants to get out has done so. No need to jump the gun, but keep in mind that if you don’t own any, you might want to wait until right ahead of the CES.”
Simply beating earnings estimates or announcing new products is not enough for NVIDIA Corporation (NASDAQ:NVDA) anymore, and the impact of high expectations will continue to weigh on the stock as growth cools.
Nvidia’s forward P/E ratio for the fiscal year ending January 2026 is around 31. An EPS surprise of 8.5% was not able to help the stock. A similar trend occurred following the second-quarter earnings after a 5.6% EPS surprise. It’s difficult to see Nvidia maintaining a mid-70s gross margin by the end of 2026. Over the last two quarters, Nvidia has already reported a drop in its gross margin from 78% to 74.5%.
Then there’s competition. Amazon (AMZN) recently disclosed its Trainium 3 chip, which is set to be released by the end of 2025. The chip is expected to be twice as fast with 40% more power efficiency than the previous generation, manufactured on TSMC’s (TSM) cutting-edge N3 technology. Reportedly, technology giant Apple (AAPL) will be a consumer of Amazon’s new silicon.
Manole Capital Management stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter:
“As of this publication, Nvidia is up roughly 150% year-to-date. NVIDIA Corporation (NASDAQ:NVDA) was the largest gainer in the S&P 500 last year and has more than tripled in value over the last year. It hit an eye-opening market capitalization of $3 trillion in June, less than four months after it eclipsed the $2 trillion mark. Enthusiasm for everything AI-related, especially for the primary chip maker whose products are essential to powering AI technology, continues to fuel the market. Last quarter, and for the fifth consecutive quarter, Nvidia reported sales and profits that blew past Wall Street expectations. The stock rose +37% in the second quarter alone.”
1. Netflix Inc (NASDAQ:NFLX)
Number of Hedge Fund Investors: 121
A questioner recently asked Jim Cramer whether he should hold, sell or decrease his stake in Netflix Inc (NASDAQ:NFLX) heading into 2025. Cramer recommended the investor to buy more Netflix shares.
“I would actually add a buy. You’ve got Squid Games 2 coming up, you’ve got the NFL game on Christmas Day, you have management being vastly superior, and you’ve got an ad tier that is just going to put a huge amount of money in the coffers of Netflix Inc (NASDAQ:NFLX). This company’s been consistently underestimated by Wall Street, and I think it is sensational.”
Polen Focus Growth Strategy stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its Q2 2024 investor letter:
“Finally, we trimmed Netflix, Inc. (NASDAQ:NFLX) mostly due to valuation but also as a source of funds to add to the new position in Shopify. As a reminder, we added to our position in August 2022 amid broad concerns about the company’s ability to grow and monetize shared passwords. We expected Netflix to show progress in monetizing shared passwords, leading to robust free cash flow generation. This is now playing out and is appreciated by the market. Hence, given the balance of growth and valuation, we felt it was appropriate to reduce our exposure to a more normal weight.”
While we acknowledge the potential of Netflix Inc (NASDAQ:NFLX), 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 NFLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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