In this article, we will take a detailed look at the Jim Cramer’s Latest Portfolio: Top 10 Stocks.
Jim Cramer in a fresh episode of “Mad Money” on CNBC said that while investing isn’t easy, it’s made even more difficult by “authentic Wall Street gibberish” and “arcane technology.” Cramer said that there’s an “entire industry” in Wall Street wanting people to think that investing is hard and “ordinary people” cannot do it on their own. Cramer thinks many people in the financial industry are just “after your fees” and they aren’t interested in making money from original investing. Cramer believes hedge fund managers and mutual funds make investing look inaccessible and impenetrable.
Cramer said he’s “pulling back the curtain” and emphasized that investing isn’t “rocket science” or “brain surgery” and you don’t need to go to a business school to understand it. Cramer pitched himself as a “coach” or a “translator” who can explain the meaning of complex financial terms to ordinary people.
“You can comprehend all the mystical-sounding vocabulary we throw around here as long as you have a translator, a coach like me, who can explain what the darn words mean.”
For this article we watched several latest programs of Jim Cramer aired on CNBC and picked 10 stocks he’s talking about. 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. GE VERNOVA Inc (NYSE:GEV)
Number of Hedge Fund Investors: 18
Talking about the strong performance of GE VERNOVA Inc (NYSE:GEV) in a latest program, Cramer said that when General Electric separated this business, no one expected the company to be this strong.
“Turns out the ugly duckling was a swan in disguise.”
Cramer said that GE VERNOVA Inc (NYSE:GEV) “wins” because of data center demand. He said while GE VERNOVA Inc (NYSE:GEV) makes natural gas turbines, it also operates “small-form” wind and nuclear plants.
Cramer said that GE VERNOVA Inc (NYSE:GEV) is in a “sweet spot” in the energy industry.
GE VERNOVA Inc (NYSE:GEV) Power segment growth is driven by advanced gas turbines and related services. The Electrification segment is also expanding quickly, supported by trends such as AI data centers and the need for grid modernization and high-voltage direct current (HVDC) technologies.
Additionally, the renewable segment is expected to break even in 2024 and become profitable by 2025, indicating significant potential for growth.
GE VERNOVA Inc (NYSE:GEV) business is diversified since it operates across three segments: Power, Wind, and Electrification. The company operates across both the upstream and downstream channels of power generation. Its products are deployed across 100 countries, contributing to around 30% of global electricity generation. The stock is poised to grow on the back of secular growth trends. Electricity demand is expected to jump 55% by 2040, driven by data centers, EVs and broader energy transition.
9. Nextracker Inc. (NASDAQ:NXT)
Number of Hedge Fund Investors:47
Jim Cramer recently said there is a great buying opportunity on the dip around Nextracker Inc. (NASDAQ:NXT).
“Their technology lets you increase your yield from solar panels. The stock is down. It’s a great opportunity.”
Wall Street is also growing bullish on Nextracker Inc. (NASDAQ:NXT). Mizuho earlier this month gave a $59 price target on the stock, saying Nextracker Inc. (NASDAQ:NXT) is positioned to benefit from demand growth of solar power driven by data center and AI.
Nextracker Inc. (NASDAQ:NXT) is also seeing a boost in worldwide demand. During the fiscal fourth quarter, the company saw a 90% YoY increase in international revenue as it expands into markets such as India, Australia, Europe and Brazil. During the quarter, Nextracker Inc. (NASDAQ:NXT) reported an increase in full-year gross margins to 28%, thanks to global supply chain optimization which allowed the company to lower logistics expense. As of the end of the fiscal fourth quarter, Nextracker Inc. (NASDAQ:NXT) had $474 million in total cash, exceeding its total debt of $150 million by more than threefold. During an earnings call, Nextracker Inc. (NASDAQ:NXT) disclosed that its global supply chain capacity had expanded to over 50 gigawatts annually, with U.S. capacity surpassing 30 gigawatts per year.
Nextracker Inc. (NASDAQ:NXT) stands to benefit from the secular tailwinds in the industry. According to data from the U.S. Energy Information Administration, solar is expected to grow at a CAGR of 26% over the next five years.
8. Blackstone Inc (NYSE:BX)
Number of Hedge Fund Investors: 55
Answering a question about private equity industry and KKR, Jim Cramer said in a recent program that he’d recommend Blackstone Inc (NYSE:BX) and KKR in the private equity space.
“The other one I’d recommend is Blackstone. Those two are the most comfortable recommending. Beyond that I don’t really feel comfortable because I trust these people and know what they are up to.”
Blackstone Inc (NYSE:BX) is one of the biggest names in the financials and investment management industry. The company has over $1 trillion in assets under management. As of the end of March this year, Blackstone’s cash, cash equivalents and corporate treasury investments stood at a whopping $8.4 billion. Blackstone’s PE ratio stands 45, which is higher than industry peers. However, given the company’s growth mode and steady dividends, Blackstone’s higher PE ratio is justified. Blackstone’s dividends also look safe, backed by huge cash positions and years of dividend growth. The company’s dividend grew at a CAGR of about 9% over the past decade.
Baron Real Estate Fund stated the following regarding Blackstone Inc. (NYSE:BX) in its fourth quarter 2023 investor letter:
“We remain optimistic about the long-term prospects for Blackstone Inc. (NYSE:BX) and Brookfield because we believe both companies are likely to increase market share in a secular growth opportunity for alternative assets.
Institutional allocations to alternative investment assets such as real estate, infrastructure, and private equity are likely to continue to grow significantly in the years ahead because alternatives have a long track record of generating attractive relative and absolute returns with less volatility than several other investment options.
We are bullish on the long-term prospects for Blackstone and Brookfield. Both companies are led by exceptional management teams that attract and retain exceptional talent. They are two of the largest real estate managers in the world with impressive investment track records. Both Blackstone and Brookfield have global franchises, strong brands, and loyal customers.
We believe the shares of both companies are attractively valued and are optimistic about the long-term potential for the Fund’s investments in both companies.”
7. Vistra Corp (NYSE:VST)
Number of Hedge Fund Investors: 79
Jim Cramer in a recent program yet again talked about Vistra Corp (NYSE:VST), saying the company is benefiting from the rising demand of electricity “thanks to the all power-hungry data centers.”
“Vistra is somewhat special, because they recently acquired three nuclear plants on top of the one they already had. And right now nuclear is beloved because it’s the only way to get reliable clean energy at scale.”
Vistra Corp (NYSE:VST) is a power generation company that is also involved in electricity generation and wholesale energy purchases and sales. Vistra Corp (NYSE:VST) has about 5 million customers and operates a 41,000-megawatt portfolio of natural gas, coal, nuclear, and solar assets, as well as battery storage facilities.
Citi recently published a list of utilities stocks that it’s bullish on amid the importance of power grids, growth in renewable energy and AI-powered demand. Vistra Corp (NYSE:VST) is one of the stocks Citi likes.
Guggenheim analyst Shahriar Pourreza who holds a Buy recommendation and a Street-high price target of $133 on Vistra Corp (NYSE:VST) thinks VST is a “unicorn” for its portfolio of both gas and nuclear power plants. Pourreza further said in his note to clients that data centers are exploring 24-hour power sources that are clean and “nuclear plants are a very strong avenue for that”, further adding to his thesis for the stock.
Meridian Hedged Equity Fund stated the following regarding Vistra Corp. (NYSE:VST) in its first quarter 2024 investor letter:
“Vistra Corp. (NYSE:VST) is an integrated retail electricity and power generation company based in Irving, Texas. It operates in 12 states and six of the seven competitive markets in the U.S. Vistra’s retail brands serve approximately 2.9 million customers and its power generation fleet totals approximately 41,000 megawatts of natural gas, nuclear, coal, and solar facilities. Vistra was a top performer in the strategy over the past quarter, with its shares rallying over 80%. A key driver has been the thesis that the projected growth of power-hungry data centers, spurred by the rise of generative AI, will increase electricity demand and power prices. This is expected to significantly benefit incumbent power generators like Vistra. The company’s efficient generation portfolio, especially its nuclear and natural gas plants, is well-positioned to capitalize on rising demand, scarcity pricing, and ancillary services in the Texas power market. Vistra is also pursuing opportunities to potentially sign high-margin power offtake agreements directly with data center customers for its nuclear plants, similar to a recent deal by peer Talen Energy and Amazon. We continue to like Vistra’s strong free cash flow generation supporting continued share buybacks and debt reduction, synergies from the recent Energy Harbor acquisition, and a favorable power market backdrop with rising spark spreads. We trimmed the stock following its strong performance during the period.”
6. Walmart Inc (NYSE:WMT)
Number of Hedge Fund Investors: 88
Highlighting a latest analyst note on Walmart Inc (NYSE:WMT) by Piper Sandler, Jim Cramer said that Walmart is going to be the first retail company that becomes an ecommerce company. Cramer said Walmart Inc (NYSE:WMT) is trading at 28 times earnings despite its strong performance this year (+36%).
“If you ever were to go with me to a Walmart store you’d say oh my god it’s high fashion for $9,” Cramer said.
Asked whether he’s still positive about the stock despite its strong performance this year, Cramer said:
“I absolutely do.”
Cramer also said that Walmart Inc (NYSE:WMT) could join the “trillion-dollar club.”
Cramer was referring to the Piper Sandler note in which the firm initiated coverage of WMT with an Outperform rating, saying the stock rally can continue.
“We believe the company is in the early stages of an unprecedented profit growth acceleration for a large and mature retailer,” Piper Sandler said, setting a $81 price target on the stock.
Walmart is no longer just a retailer with big stores. Omnichannel retail, ecommerce growth and ads business are the new growth catalysts for Walmart. Wall Street expect 9% EPS growth for Walmart is fiscal 2025, potentially followed by 10% and 12% in FY2026 and FY2027, respectively. In the recently-reported quarter, Walmart’s ads revenue jumped 24%, driven by Walmart Connect’s 26% growth in the U.S. and 27% growth internationally.
During the NYSE/Bank of America London Investor Conference, Walmart said that it expects revenue growth of 4% per year over the next five years, while operating income is expected to rise 8% per year.
5. ServiceNow Inc (NYSE:NOW)
Number of Hedge Fund Investors: 90
Jim Cramer recently called a latest downgrade of ServiceNow Inc (NYSE:NOW) a “heresy,” calling the company “one of the greatest enterprise software companies of our lives.”
Cramer said that ServiceNow Inc (NYSE:NOW) CEO Bill McDermott “is money.”
“He’s said over and over again that they are actually making money with AI. I am not going to disagree with him.”
Goldman Sachs published a list of stocks mutual funds were piling into in their “hunt” for AI stocks and diversification of portfolios. ServiceNow Inc (NYSE:NOW) made it to the list. Goldman Sachs segmented the AI product cycle into different phase. ServiceNow Inc (NYSE:NOW) falls in the phase 2 of the cycle, where companies actually deploy and incorporate AI into their products to bolster revenue.
ServiceNow Inc (NYSE:NOW) is a pick-and-shovel name in the AI space since it’s an IT service management company that helps companies manage operations, workflows and maintain IT infrastructure. It’s not easy to switch away from ServiceNow because of the complexity of operations ServiceNow Inc (NYSE:NOW) provides. Its renewal rate came in at over 90% as of the latest quarter. In the first quarter, ServiceNow Inc’s (NYSE:NOW) subscription revenue growth came in at 25% YoY. At the end of the quarter the company had $8.8 billion of cash and investments versus $1.5 billion of debt.
ServiceNow Inc’s (NYSE:NOW) moat in AI lies in its customized generative AI solutions. The company recently made a custom generative AI solution for a bank and it’s pipeline in this respect is strong. ServiceNow management talked about the strong demand for its AI products during Q1 earnings call:
Our Gen AI products were in seven of our top 10 deals, and we closed seven deals over $1 million in ACV in the quarter. We had wins at a second Wall Street Bank, a leading cybersecurity firm and many more, including a significant win for ITOM Pro Plus, which just launched in March. Turning to profitability. Non-GAAP operating margin was over 30%, approximately 150 basis points above our guidance, driven by the timing of marketing spend, OpEx efficiencies and our top line outperformance.
ServiceNow Inc (NYSE:NOW) management also said:
Iconic brands are adopting ServiceNow’s Now Assist AI as a standard for their GenAI roadmaps. This quarter, we expanded our long-standing partnership with Microsoft to include new Generative AI capabilities while also integrating Now Assist AI and Copilot into employee experiences, really exciting. Hitachi Energy is using case summarization with NowAssist for ITSM to resolve cases faster, saving millions. Equinix is the deploying NowAssist AI for HR workflows, aiming to increase agent productivity by 30%. ServiceNow at IBM are combining the power of the Now Platform with Watson X to increase productivity for IBM’s employees, customers, and partners. BNY Mellon and ServiceNow are exploring the utilization of AI and other leading technologies and IT service management helping to unlock additional value for the bank and its clients.
ServiceNow Inc (NYSE:NOW) also helps companies automate their workflows. As more and more companies seek cost optimizations using AI, they will turn to ServiceNow to achieve their goals. That’s why ServiceNow Inc (NYSE:NOW) has a goal to achieve over 20% subscription revenue growth over the next few years.
Lakehouse Global Growth Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its April 2024 investor letter:
“US-based software company,ServiceNow, Inc. (NYSE:NOW), provided another strong result, continuing its long and consistent track record of 20%-plus revenue growth combined with healthy profitability. Subscription revenues grew 25% year-on-year to $2.5 billion and free cash flow grew 47% year-on-year to $1.2 billion. The company’s core operating metrics were also impressive with remaining performance obligations growing 26% year-on-year to $17.7 billion (i.e. roughly 2x 2023 revenue) and renewal rates holding steady at 98%. Performance was evenly spread across segments, products, and geographies, with notable strength in the US federal government. The company now boasts 1,933 customers generating in excess of $1 million in Annual Contract Value (ACV), which is pleasing to see as it implies multiple solutions are involved and that the company’s platform model is increasingly resonating with customers. In our view, ServiceNow is one the highest quality software businesses globally as the combination of consistent growth at scale, robust free cash flow generation and a large addressable market make it a compelling opportunity.”
