Jim Cramer, the host of Mad Money, recently expressed his concerns about the uncertain economic outlook for 2025, particularly in relation to corporate earnings and the stock market’s expectations for the upcoming year. He highlighted the important question at the heart of the market’s direction: Will corporate earnings grow as Wall Street is predicting?
According to Cramer, analysts are projecting a 12.2% growth in earnings for the S&P 500 this year, followed by 11.9% growth in 2026 though that is still a long way off. Cramer emphasized that these growth estimates, if realized, would be impressive and one of the main reasons why investors are willing to pay nearly 22 times this year’s earnings for the S&P 500. He added:
“Now, that’s a big premium versus its average forward multiple of 17.7 times earnings over the past decade. Buyers are comfortable paying up because they believe in across-the-board corporate earnings growth of about 12%.”
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Cramer went on to question if the market could even handle a higher growth rate of 24%, which some investors might find acceptable, but he also acknowledged the uncertainty about whether that is achievable. Cramer hopes that earnings growth can be driven by factors such as a strong consumer base, increased capital spending, deregulation, and a rebound in international markets, particularly China, following the pandemic. He added:
“Perhaps starting in 2026, additional tax cuts could provide another easy tailwind for corporate growth but there are also things that could trip us on that path to 12% earnings growth… like tariffs, higher interest rates, or worse, an erosion of consumer spending.”
As earnings season unfolds, Cramer believes that we’ll get a clearer picture of what to expect for 2025. Over the next few weeks, companies will report their fourth-quarter results and offer initial guidance for the full year.
He explained that if any of them issued disappointing forecasts, it could lead to a downward revision of earnings estimates, which would be a significant negative development for the market. He also added that such an outcome could result in investors paying too high a price for stocks relative to their earnings potential, which would be bad news for the averages.
Jim Cramer’s Lightning Rounds: 9 Stocks in Focus
Our Methodology
For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the episodes of Mad Money aired on January 10 and 15. 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: 9 Stocks in Focus
9. Anavex Life Sciences Corp. (NASDAQ:AVXL)
Number of Hedge Fund Holders: 8
Cramer emphasized that Anavex Life Sciences Corp. (NASDAQ:AVXL) stock is a spec as he said:
“Okay, they’re after some brain stuff and I, you know, I was the spokesperson for the American Brain Foundation for a while. There’s nothing tougher than brain. It’s a good spec, 11 bucks, but understand it is indeed a spec.”
Anavex Life Sciences (NASDAQ:AVXL) is focused on developing therapeutics for central nervous system diseases, including Alzheimer’s, Parkinson’s, and rare neurological disorders, along with clinical trials for treatments targeting schizophrenia, dementia, and cancer. While Cramer expressed a little reluctance about the stock recently, this is what he said in 2022:
“This is another one that I kind of like, I’ve got to tell you. … I do not like losses in tech, but in biotech, I can accept the fact that they have a good pipeline.”
8. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)
Number of Hedge Fund Holders: 20
When a caller asked about Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS), Cramer said, “Modern military, modern defense, I like the story very much. I think you’re in good shape.”
Kratos Defense & Security Solutions (NASDAQ:KTOS) provides advanced technologies for defense and national security, including unmanned systems, propulsion systems, satellite technologies, and communication and defense solutions. Cramer’s sentiments for the company have not strayed as, in May 2024, he said, “I like defense contractors…I think you stay on it, maybe even buy more.” Since May 2024, the stock has gained over 55%.
7. AeroVironment, Inc. (NASDAQ:AVAV)
Number of Hedge Fund Holders: 22
Cramer noted that AeroVironment, Inc. (NASDAQ:AVAV) offers a significant solution to a Pentagon budget that may be overly inflated yet requires greater efficiency.
“Oh boy, I really like it. It really is the solution, I think, in a lot of ways to a Pentagon budget that may be too bloated but needs to be more effective. I like AVAV and I gotta tell you, Wahid Nawabi, he’s been on the show and every time he’s been a star.”
AeroVironment (NASDAQ:AVAV) designs, develops and supports a range of robotic systems and services, including uncrewed aircraft, ground robots, and loitering munitions, primarily for government agencies and allied governments. Back in July 2024, Cramer responded to a caller asking about the company and said:
“You know what, okay let me give you the bull and the bear on AVAV. My friends who watch the show say, Jim, you don’t understand, their stuff is way too expensive. It needs to come down versus the price of the Iranian drones. All I know is the drones work and therefore it’s a buy.”
6. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 30
Upon being asked about Rio Tinto Group (NYSE:RIO) during the lightning round, Cramer said, “Rio Tinto is really a play on the Chinese economy and I think the Chinese economy is *glass breaking buzzer sound*.”
Rio Tinto (NYSE:RIO) is involved in mining and processing a range of mineral resources, including iron ore, aluminum, and copper, while also developing projects for materials like lithium and operating related infrastructure. Over the past year, the stock has gone down more than 11%. Cramer’s opinion about the company was vastly different from today in 2023 when he remarked:
“I happen to like Rio Tinto very much. I like the mineral stocks, they’re really well-run, as Rio Tinto is, and I think the yield right now is still safe, so you’re ok.”
5. Transocean Ltd. (NYSE:RIG)
Number of Hedge Fund Holders: 30
Cramer was clear that he has no affinity for Transocean Ltd. (NYSE:RIG) as he does not even like SLB presently, which he implied was superior.
“I do not dig RIG. No, no, no. I do not dig RIG and I’ll tell you why, because if I don’t like SLB, there’s no way I can like RIG because they’re not nearly as good as SLB. So I’m gonna take a serious big-time size pass on your stock.”
Transocean (NYSE:RIG) offers offshore drilling services with specialized equipment and crews for both private and government energy companies. While Cramer made his dislike for RIG apparent recently, that was not the case in October 2024 when he commented:
“We hardly ever talk about the smaller offshore operators like Transocean, symbol RIG, I always love that… Transocean has lost money for the past 7 years. Its stock has plunged from $30 a decade ago to just below $4… in 2020 when oil prices collapsed at the beginning of the pandemic. Every major offshore driller except for Transocean went bankrupt but the stock rebounded dramatically from those lows before peaking at eight bucks and changed in the summer of last year. Since then it’s pulled back along with energy prices…
Transocean’s in the news. Last night, Bloomberg reported that the company’s exploring a merger with smaller rival, Seadrill. I don’t really have much of an opinion on the potential deal but it signifies more confidence in the offshore space than I’ve seen in over a decade. By the way, of course, the industry needs consolidation. Honestly, this group has been so bad for so long that it’s tough to recommend them here but if you strongly believe that the price of oil’s headed higher next year or the year after then Transocean is a winner. Personally, though, I don’t want to bet on that.”
4. Viking Therapeutics, Inc. (NASDAQ:VKTX)
Number of Hedge Fund Holders: 41
When a caller asked Cramer about Viking Therapeutics, Inc. (NASDAQ:VKTX), he suggested going for Viking Holdings instead as it might offer much less heartache.
“I want you to sell Viking Therapeutics and roll it into Viking Holdings, which is a fantastic cruise line, does not save lives, does not lower your blood pressure… but darn, you’ll have a good time.”
Viking Therapeutics, Inc. (NASDAQ:VKTX) focuses on developing novel therapies for metabolic and endocrine disorders, with several drug candidates in clinical trials for conditions such as non-alcoholic steatohepatitis, type 2 diabetes, and hip fracture recovery. Cramer has previously compared the company to its competitors in February 2024 as he said:
“If you should be king, you have to kill the king, but they’re not. Viking Therapeutics has a phase two trial that went well, that is able to get you to lose weight faster than Eli Lilly’s GLP-1… Now, here’s the problem… When you have these things, the FDA wants to favor the incumbent because it’s already been approved.
Secondly, Eli Lilly has a similar formulation, but third, what seems to be left out constantly is it’s really hard to build all the plants you need to get this. You’ve got David Ricks who’s very good, knows how to build the plants… Well, look, enjoy it while it lasts. There’s many challengers. Amgen was a challenger. Pfizer was a challenger… Everything that this Viking has, Dave Rick’s working on it at Lily, it has something… But people have to understand, I’ve worked with the FDA, the FDA, once you have a drug, they take their time with the second drug… I find the FDA to be incredibly responsible.”
3. DuPont de Nemours, Inc. (NYSE:DD)
Number of Hedge Fund Holders: 47
Discussing DuPont de Nemours, Inc. (NYSE:DD), Cramer remarked:
“Oh, DuPont. Okay, DuPont announced after the close that they’re accelerating the spinoff of one of the divisions and they’re keeping the other, and I think it’s gonna bring out more value. I say you hold on to DuPont, it’s very cheap versus the rest of the group.”
DuPont (NYSE:DD) offers innovative materials and solutions for various global markets, focusing on sectors like electronics, safety, water purification, and other specialized industries. In November 2024, during his daily Mad Dash, Cramer said:
“I want to focus on Dupont because Dupont did a classic beat and raise, moved up the timeline of the split of three companies And… what I want to say is that you have electronics industrial, which is really strong… You have water and protection, China, very strong, they came in with water orders, but… I want to know, when you’re splitting into three and you have one division that seems to be attractive to the other, water and protection…it’s possible that someone may just say, you know, I want that company while you guys are splitting up and that’s what I think could happen.”
Cramer praised Lori Koch, describing her as an excellent CEO of DuPont (NYSE:DD) and noting that she is the successor to Ed Breen. The company announced on January 15 that it would not spin off its water business but would still proceed with separating its electronics division, following earlier plans to split into three publicly traded companies for focused growth.
2. Sarepta Therapeutics, Inc. (NASDAQ:SRPT)
Number of Hedge Fund Holders: 50
A caller highlighted that while Sarepta Therapeutics, Inc. (NASDAQ:SRPT) exceeded earnings expectations and reiterated its guidance for this year, they found the price a little confusing. Here’s what Cramer said in response:
“You’re totally right. I, the RNA-based therapeutic companies are not doing well. I wonder if this isn’t like a reverse halo effect because of Moderna. I didn’t quite understand, I agree with you. It, it is troubling. I don’t want to be there.”
Sarepta Therapeutics (NASDAQ:SRPT) develops RNA-targeted and gene therapies for rare diseases, including treatments for Duchenne muscular dystrophy and ongoing research into new genetic therapies. Previously, Cramer discussed the company in July 2024 and said:
“I think Sarepta is a speculative situation where they have great science. I am never going to bet against a biotech company with great science, therefore I bless owning the stock. It’s too risky for me, but it’s ok if you want to be there.”
1. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 57
Cramer was asked about Verizon Communications Inc. (NYSE:VZ) during an episode aired in January and he said, “I don’t like to buy a stock just for the yield when it doesn’t have growth and that happens to be Verizon.”
Verizon Communications Inc. (NYSE:VZ) provides a variety of communication, technology, and entertainment services to consumers, businesses, and government clients globally, including wireless, broadband, and wireline offerings. As of January 30, the company stock has a dividend yield of around 6.9%.
While Cramer believes that the company does not have growth prospects, Aristotle Capital Management, LLC stated the following regarding Verizon Communications Inc. (NYSE:VZ) in its Q3 2024 investor letter:
“Headquartered in New York, Verizon Communications Inc. (NYSE:VZ) is one of the largest telecommunications companies in the U.S. The company was formed in 2000 with the combination of Bell Atlantic Corp. and GTE Corp., businesses with roots dating back to the late 19th century and the beginning of the telephone business.
Over the years, Verizon has expanded through strategic acquisitions and innovations, particularly in wireless technology, which has become the cornerstone of its business. Unlike its competitor AT&T’s strategy of vertical integration through the acquisition of media and entertainment companies, which AT&T is now unwinding, Verizon has instead focused on expanding its fiber networks in major cities and acquiring wireless spectrum to increase network capacity and performance. Today, Verizon’s wireless services account for approximately 70% of its revenue (serving over 90 million postpaid and 20 million prepaid phone customers), making it the country’s largest wireless carrier. Verizon also offers fixed-line operations with local networks in the Northeastern U.S., serving over 30 million homes and businesses and nine million broadband customers. In early September, Verizon announced the $20 billion all-cash acquisition of Frontier, the largest pure-play fiber internet provider in the U.S. Upon closing (expected within 18 months), Verizon’s fiber network will expand to 31 states…” (Click here to read the full text)
While we acknowledge the potential of Verizon Communications Inc. (NYSE:VZ) 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 VZ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey
