Jim Cramer, host of Mad Money, recently discussed the outlook for the stock market following a year of strong gains, cautioning that investors’ overly optimistic expectations for Federal Reserve rate cuts could lead to trouble. As the year draws to a close, brokerages are releasing their official market predictions for 2025, and so far, they are almost universally positive.
He said that this optimism is understandable given the strong earnings season and the significant stock market rally following the election. Cramer noted that many investors are betting that a business-friendly administration will continue to drive better returns.
“See, after all these gains, you gotta get a little squeamish, don’t you? Unless something drastic happens in the next few weeks, we’re in line for our second straight year of 20% plus returns for the S&P 500. First time that’s happened since 1999, ooh, not the best precedent. Plus, the market’s gotten really expensive by historical standards.”
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Cramer said that his main worry is that Wall Street may have gotten ahead of itself, with too many investors expecting more rate cuts from the Federal Reserve than are realistically likely. He highlighted the unusual situation that has unfolded since the Fed’s surprise double rate cut in September. While short-term interest rates have come down, long-term rates set by the bond market have actually risen, creating a stark contrast. He remarked:
“The market’s betting on a December rate cut. Anything that derails that will be bad news for the averages.”
When looking ahead to 2025, Cramer noted a significant lack of consensus about future rate cuts. He pointed to Fed funds futures for December 2025, which show a wide range of predicted outcomes. Investors are betting on anywhere from zero to eight rate cuts by then, with the most likely scenario being three cuts by the end of 2025.
Cramer explained that while he thinks three rate cuts sound reasonable, it also suggests that roughly 41% of the market is anticipating too many cuts over the next year, a scenario that could disappoint many money managers.
“So here’s the bottom line: Given all the success we’ve had in this market, we need to guard against complacency and that’s why I’m flagging my biggest worry that the market might be getting too aggressive with its expectations for rate cuts over the next year.”
Jim Cramer’s Lightning Rounds: 12 Stocks Under the Spotlight
Our Methodology
For this article, we compiled a list of 12 stocks that were discussed by Jim Cramer during recent episodes of Mad Money. 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 Lightning Rounds: 12 Stocks Under the Spotlight
12. NANO Nuclear Energy Inc. (NASDAQ:NNE)
Number of Hedge Fund Holders: N/A
While Cramer expressed faith in nuclear power, discussing NANO Nuclear Energy Inc. (NASDAQ:NNE), he commented:
“No earnings. I do believe in the nuclear story, which is why I say GE Vernova. But let me tell you what to do right now, right here, tomorrow I want you to take out almost all of your cost basis and let the rest run and then you can never lose money and how happy is that? What is that? That’s called Nirvana.”
NANO Nuclear Energy (NASDAQ:NNE) is a company focused on advancing microreactor technology, with a particular emphasis on developing two distinct reactors. These include ZEUS, a solid-core battery reactor, and ODIN, which employs a low-pressure coolant system. In August, the company reported GAAP earnings per share of -17 cents.
As mentioned in our article, 10 Small Cap Stocks with High Potential, for the second quarter and the first half of the year ending March 31, 2024, it reported net losses of $1.68 million and $2.99 million, respectively, compared to $1.52 million and $2.2 million in the same periods of 2023. The higher losses were primarily due to a significant increase in research and development (R&D) expenses, which rose by 205% year-over-year as the company intensified efforts to acquire and develop new technologies, including the ALIP technology.
In a November Investor presentation, NANO Nuclear Energy (NASDAQ:NNE) outlined its efforts to push the boundaries of nuclear energy innovation, including a notable acquisition. The company’s newly secured reactor cooling technology, known as the Annular Linear Induction Pump (ALIP), intends to be commercialized within the next year. This could potentially lead to revenue generation in the near future, marking a significant step forward in the company’s plans.
11. Omeros Corporation (NASDAQ:OMER)
Number of Hedge Fund Holders: 8
During the lightning round, when a viewer asked Cramer about Omeros Corporation (NASDAQ:OMER), he said that it is possibly time to take some profit.
“Well, it finally seems to have its day, but this weekend, there’s some big presentations at the thing called ASH… They’re going to make presentations, a lot of other companies, and it better be good after that run and I can’t be assured that it is good. Maybe it’s a little profit-taking time.”
Omeros (NASDAQ:OMER) is a clinical-stage biopharmaceutical company developing therapeutics for immunologic diseases, cancers, and addictive disorders, with key products in trials for various conditions. It should be noted that over the first nine months of 2024, the company’s net loss amounted to $125.5 million, or $2.15 per share, which is a deeper loss compared to the net loss of $108.8 million, or $1.73 per share, for the same period in the previous year.
As of September 30, 2024, the company had $123.2 million in cash and short-term investments, marking a decrease of $48.7 million from the end of 2023. These funds are being used for ongoing operations and debt obligations. The company recently reported some good news as it made a significant announcement regarding its investigational drug zaltenibart (OMS906. It has received a rare pediatric disease designation from the U.S. Food and Drug Administration (FDA).
This designation is for the drug’s potential use in treating complement 3 glomerulopathy (C3G), a rare and serious kidney disorder that primarily affects children and young adults. Additionally, Omeros’ (NASDAQ:OMER) zaltenibart is being developed for paroxysmal nocturnal hemoglobinuria (PNH), another rare disease, for which it has already received orphan drug designation from the FDA. The market for PNH treatments is anticipated to grow substantially, from $3.9 billion in 2023 to $10.1 billion by 2032, reflecting the increasing demand for effective therapies for these complex conditions.
10. Navitas Semiconductor Corporation (NASDAQ:NVTS)
Number of Hedge Fund Holders: 8
Talking about Navitas Semiconductor Corporation (NASDAQ:NVTS), Cramer said:
“… I’ve gotta tell you, that company’s losing a lot of money. I think you can take a flyer at three bucks but understand, it’s losing a lot of money and it’s a flyer.”
Navitas Semiconductor (NASDAQ:NVTS) specializes in the design, development, and marketing of advanced semiconductor products. These components are primarily used in power conversion and charging applications. In its third quarter, reported in November, the company generated $21.7 million in revenue, a figure that remained essentially unchanged compared to the same period the previous year.
However, the company reported a significant operating loss of $29 million for the quarter, compared to the $28.6 million loss recorded in the third quarter of 2023 and the $31.1 million loss from the second quarter of 2024. This financial performance has been attributed to ongoing softness in some of its key end markets and delays in customer projects, which have contributed to a less favorable outlook for the company in the near term.
Navitas Semiconductor (NASDAQ:NVTS) has projected a sequential decline in revenue for the fourth quarter, reflecting challenges in the mobile business as well as continued delays in customer projects. In response to these challenges, the company has initiated a cost-reduction plan aimed at improving its financial position.
This plan is expected to save the company $2 million per quarter and will focus on streamlining the organization while concentrating on high-growth sectors such as AI data centers, electric vehicles, and mobile applications. As part of this plan, the company will reduce its workforce by approximately 14%, equivalent to about 45 employees, as it works to align its operations with its path toward profitability.
9. LandBridge Company LLC (NYSE:LB)
Number of Hedge Fund Holders: 12
Talking about LandBridge Company LLC (NYSE:LB), Cramer stated, “I’ll tell you that’s a winner. I would just hold onto it.”
LandBridge Company (NYSE:LB) owns and manages land and resources to support oil and natural gas development, primarily in the Delaware Basin. The company holds oil and gas royalties and sells brackish water and surface composite materials. Recently, it has made significant moves to expand its footprint. In the third quarter, the company acquired 1,280 surface acres in Winkler County, Texas, and secured a purchase agreement for an additional 5,800 acres in Lea County, New Mexico.
It will bring its total surface ownership to approximately 227,000 acres. Further adding to its portfolio, the company also entered into a lease development agreement for a data center and related facilities on about 2,000 acres of land in Reeves County, Texas. In a notable acquisition, the company purchased around 46,000 contiguous acres in the Southern Delaware Basin, known as the Wolf Bone Ranch, from a subsidiary of VTX Energy Partners, LLC.
The deal, valued at $245 million in cash, is expected to contribute to the LandBridge Company’s (NYSE:LB) revenue growth, particularly through the development of additional water infrastructure. This includes a potential distribution hub for water supply into New Mexico, managed by WaterBridge, an affiliate of LandBridge.
With these acquisitions, which also include the recent acquisition in Winkler County, the company has added approximately 53,080 acres in the fourth quarter of 2024 alone. These strategic purchases are expected to drive revenue growth, with an estimated 2025 EBITDA multiple of 7.6x.
8. Archer Aviation Inc. (NYSE:ACHR)
Number of Hedge Fund Holders: 24
When a caller asked about Archer Aviation Inc. (NYSE:ACHR), Cramer expressed apprehension that speculative stocks are facing the possibility of getting hit.
“No, this stock, all of these came down today. Joby came down too. I actually think these stocks have overheated and I am worried about a strong unemployment number on Friday… and that these more aggressive speculative stocks could get hurt. That’s my fear.”
Archer Aviation (NYSE:ACHR) is a company focused on designing, developing, and operating electric vertical takeoff and landing (eVTOL) aircraft, primarily aimed at revolutionizing urban air mobility. The company has achieved significant regulatory progress, including receiving final airworthiness criteria from the Federal Aviation Administration (FAA). Earlier this year, it completed 400 test flights and expects to begin initial flights as early as next year.
The company plans to produce approximately two aircraft per month by 2025 and aims to begin operations in major cities such as New York, Tokyo, and Abu Dhabi. The company stock experienced a remarkable increase of more than 190% in November.
This rise in stock value was further fueled by Archer Aviation’s (NYSE:ACHR) announcement of a new partnership on December 6. The agreement, made with several parties in the UAE and Abu Dhabi, is aimed at launching and expanding flying taxi operations in the region. The collaboration positions Archer to become the first manufacturer of electric flying taxis in the Middle East and North Africa, with plans to initiate commercial operations in the UAE.
7. Sterling Infrastructure, Inc. (NASDAQ:STRL)
Number of Hedge Fund Holders: 30
When asked about Sterling Infrastructure, Inc. (NASDAQ:STRL), Cramer said:
“This stock’s up 120%. Now I will tell you, Sterling infrastructure… It is living off, I think, a lot of the federal money that’s been spent. So, I don’t want to get greedy… Take some off the table and let the rest run.”
Sterling Infrastructure (NASDAQ:STRL) provides a range of services, including site development for e-commerce, data centers, and power generation, infrastructure projects for transportation systems, and concrete foundations and plumbing services for residential and commercial buildings. It works with federal, state, and municipal governments, particularly state Departments of Transportation (DOTs) and other regional authorities overseeing airports, ports, water systems, and railroads.
Four state DOTs accounted for half of the segment’s revenue in 2023, a slight increase from 44% in 2022 and 42% in 2021. In the third-quarter earnings call, management highlighted that the company is currently in the second half of the federal funding cycle for transportation projects. They mentioned that the company has built up a backlog of over two years and continues to see strong activity in the sector.
Management believes that the company is positioned in a market environment that supports sustained growth above historical levels, assuming margins hold steady or improve. In addition to its transportation work, Sterling Infrastructure (NASDAQ:STRL) continues to benefit from the growing demand for hyperscale data center development.
Earlier this year, its subsidiary, Plateau Excavation, was awarded a data center project in the southeastern U.S., valued at approximately $100 million. The project includes 280 acres of site work, with 125,000 linear feet of underground infrastructure installation.
6. Allison Transmission Holdings, Inc. (NYSE:ALSN)
Number of Hedge Fund Holders: 31
While Cramer called Allison Transmission Holdings, Inc. (NYSE:ALSN) a storied company, he suggested going for GM instead.
“Storied company, terrific. It does great but let me tell you something, at $117 with the 14 times earnings, I actually would prefer you to swap out right now and go to be with Mary Barra at GM. Cheaper and will be just as good.”
Allison Transmission (NYSE:ALSN) designs and manufactures automatic transmissions and electrified propulsion systems for commercial and defense vehicles, offering solutions for various applications and providing remanufactured transmissions, parts, and services. It has seen strong demand for its on-highway products, especially the 3000 and 4000 Series fully automatic transmissions.
This demand is largely driven by continued infrastructure spending in North America, which has fueled unprecedented demand for Class 8 vocational vehicles. To address this demand, the company has invested in expanding its supply chain and improving manufacturing efficiency to increase capacity and throughput. In October, the company announced plans for further long-term growth, particularly through investments in its Chennai, India facility.
This facility will initially focus on producing parts for the 1000 and 2000 Series on-highway products but is expected to expand significantly to support the production of the 3000 and 4000 Series as well. Allison Transmission’s (NYSE:ALSN) investment in Chennai will nearly double the manufacturing footprint, with over $100 million planned for the expansion over the next few years, half of which is anticipated to occur in 2025.
As the facility ramps up operations, it is expected to reach full production by 2027, supporting the company’s long-term growth objectives and expanding its global production capabilities to meet regional demand outside North America.
5. AstraZeneca PLC (NASDAQ:AZN)
Number of Hedge Fund Holders: 42
Cramer expressed disappointment in AstraZeneca PLC (NASDAQ:AZN) despite his earlier enthusiasm and said:
“Oh man, I gotta tell you, AstraZeneca, I was so excited about that stock after the CEO came on and then there’s just been a series of disappointments. I don’t know what to make of it. I’m gonna have to say, take a pass.”
AstraZeneca (NASDAQ:AZN) is a biopharmaceutical company focused on the discovery, development, manufacturing, and commercialization of prescription medicines. The company has made significant investments in its operations, particularly in key markets such as China. Recently, it appointed Iskra Reic as its new international executive vice president (EVP), following the detention of Leon Wang by Chinese authorities in October.
The company is actively working to stabilize its operations in China, although it has stated that it does not have key details regarding Wang’s ongoing investigation. While Wang remains an employee of the company, he is on extended leave during this period, and the reasons behind the investigation remain unclear.
In addition to Wang’s situation, AstraZeneca (NASDAQ:AZN) is aware of two other separate investigations being conducted by the Chinese government. One investigation concerns suspected medical insurance fraud, and the other involves the importation of cancer drugs from Hong Kong into mainland China.
4. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 43
When asked about United Parcel Service, Inc. (NYSE:UPS), Cramer stated that with the holiday season approaching, the company has disrupted many holiday seasons in the past.
“You’re going right into the holiday season and UPS has screwed up a lot of holiday seasons. If you want to take a shot, then I say take a shot with FedEx. I’m not kidding because they have it better. They’re all set.”
United Parcel Service (NYSE:UPS) is a prominent global package delivery and logistics company that provides a broad range of services including transportation, distribution, contract logistics, ocean and air freight, customs brokerage, and insurance. Recently, it reported its third-quarter earnings, marking the first year-over-year growth in adjusted earnings per share after six consecutive quarters of declines. This performance comes amidst a challenging landscape for the parcel industry, which has faced weaker shipping demand following the surge seen during the pandemic.
In the third quarter, the company’s revenue met analyst expectations. However, for the full year, the company revised its consolidated revenue forecast downward, adjusting it to $91.1 billion from the previous estimate of $93 billion. United Parcel Service (NYSE:UPS) management recently noted that the company faced a macroeconomic environment that proved somewhat worse than expected, with a slowdown in U.S. online sales and lower-than-anticipated manufacturing activity. These trends were also evident internationally, where reduced industrial production in several regions continued to put pressure on volume.
3. Merus N.V. (NASDAQ:MRUS)
Number of Hedge Fund Holders: 48
Calling Merus N.V. (NASDAQ:MRUS) a speculative stock, Cramer said:
“Okay, now this is a stock… you and I both know… This is one of those things that, it may not work out. They do have some good news. They have FDA approval of a drug, but it is still very, very speculative”
Merus (NASDAQ:MRUS) is a clinical-stage immuno-oncology company developing bispecific antibody therapeutics, with several candidates in clinical trials for the treatment of various cancers. Recently, it received approval from the U.S. Food and Drug Administration (FDA) for its therapy, Bizengri, which targets the NRG1 gene. This gene is linked to the formation and progression of multiple types of tumors, including those associated with lung and pancreatic cancers.
Bizengri marks the company’s first commercial product, providing a treatment option for patients with these aggressive cancers who have experienced disease progression despite prior systemic therapies. The FDA’s approval of Bizengri offers hope to individuals facing these hard-to-treat cancers, and it is expected to be available to patients in the near future.
Additionally, recently, it was announced that Merus (NASDAQ:MRUS) and Partner Therapeutics, Inc. have entered into an exclusive agreement granting PTx the rights to commercialize zenocutuzumab (Zeno) for treating NRG1 fusion-positive cancer in the U.S. Merus will receive an upfront payment, milestone payments, and royalties based on future sales of Zeno in the U.S. following a transition period.
2. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 58
Referring to Elon Musk’s comments regarding unmanned aerial vehicles versus having a human pilot, a caller asked about Lockheed Martin Corporation (NYSE:LMT). Cramer responded, saying:
“I think he’s right. I gotta tell you… I love Jim Taiclet. I think he’s terrific… I would not touch this thing until it broke $500, but it’s run by Jim Taiclet. He’s really fabulous… but it doesn’t matter at this point.”
Lockheed Martin (NYSE:LMT) is a global security and aerospace company that designs, develops, and manufactures advanced technology systems, products, and services for defense, aerospace, and space applications. It plays a central role as the prime contractor for several of the Pentagon’s most significant projects.
It should be noted that recently, Musk stated that the F-35 design was flawed from the very beginning due to its requirements, and that manned fighter jets are outdated in the era of drones. In a separate post, he criticized the continued development of manned fighter jets like the F-35, referring to it as a foolish endeavor. Additionally, despite its dominant position in the defense industry, the company has recently faced challenges.
In its third quarter, Lockheed Martin (NYSE:LMT) management cited a $480 million loss in sales of its F-35 fighter jets, which they attributed to a reduction in production volumes. This was largely a result of delays in receiving the necessary contractual authorization and funding for additional production contracts.
Additionally, the company’s Aeronautics division saw a decline, primarily due to a delayed revenue recognition of approximately $700 million. This delay stemmed from a lapse in funding for the F-35 program as the company worked through negotiations related to Lot 18 of the fighter jet’s production schedule.
1. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)
Number of Hedge Fund Holders: 62
Cramer noted that Regeneron Pharmaceuticals, Inc.’s (NASDAQ:REGN) sales did not live up to his expectations and said:
“Regeneron’s a quandary. I’ve gotta tell you, I expected sales to be better, they’re not. I don’t wanna give up on a stock down at $749, but I do prefer Eli Lilly even at $900 because you know, I think that $900 is the next stop for Lily at $813. I’m not sure what the next stop is for Regeneron.”
Regeneron (NASDAQ:REGN) develops and commercializes medicines for a variety of conditions. It also focuses on developing new treatments for a range of medical conditions. In the third quarter, the company’s higher-dose version of EYLEA, called EYLEA HD, underperformed in terms of quarterly sales.
For the quarter, EYLEA HD generated $392 million in sales, falling short of expectations for the second consecutive quarter. However, the company noted that net sales of EYLEA were positively impacted by an increase in wholesaler inventory levels for EYLEA HD at the end of the third quarter, contributing an additional $40 million in revenue. Despite this, management anticipates that EYLEA HD sales in the fourth quarter will be negatively affected as wholesalers absorb this inventory boost.
It should be noted that Regeneron (NASDAQ:REGN) management remains optimistic about the potential for EYLEA HD, particularly after its first year on the market. Marion McCourt, executive vice president of commercial, pointed out that positive feedback from both physicians and patients has helped EYLEA HD achieve billion-dollar brand status, signaling strong growth potential for the drug moving forward.
While we acknowledge the potential of Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) 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 REGN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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