In this article, we’ll explore Jim Cramer’s Must-Watch List: 10 Stocks to Look After.
In a recent episode of Mad Money, Jim Cramer explained that with the economy slowing down, the Federal Reserve is poised to ease its policies. He anticipates that the Fed will decide to cut rates, but the exact size of the cut, whether 25 or 50 basis points, remains uncertain. This upcoming decision is particularly important because it could significantly impact the market.
“At last, the economy has slowed enough that the Fed can take its foot off the brakes and step on the gas. That’s why we’re starting our game plan in the middle of next week when the Federal Reserve renders its verdict: 25 or 50 basis points. We don’t typically have a lot of drama in this business, but this one counts as a nail-biter because we really don’t know how big the rate cut will be. We just know they’re going to cut.”
Cramer highlighted Friday’s market performance, where the Dow gained 297 points, the S&P rose by 0.54%, and the Nasdaq increased by 0.65%. This strong performance marked the best two weeks of the year for the S&P and the Nasdaq. The rise in these indices suggests that the market might be expecting a substantial rate cut, potentially 50 basis points. Cramer noted that stocks sensitive to interest rates, especially those related to housing, surged in anticipation of this.
“Today’s rally saw the Dow gaining 297 points, the S&P advancing 0.54%, and the Nasdaq climbing 0.65%, capping off the best two weeks of the year for both the latter two indices. The S&P and the Nasdaq suggest the Fed might actually go for 50. That’s a double rate cut. I know this because the stocks most sensitive to interest rates, particularly housing and housing-related names, soared today.”
Using an analogy from NFL fantasy football, Cramer compared the market’s optimism to waiting for a major play from the Fed. Despite this, he personally bets on a 25 basis point cut rather than 50. He argues that while a larger cut could help the slowing economy, particularly affecting lower-income groups, it also risks reigniting inflation and causing panic. A 50 basis point cut might signal severe economic problems, which could lead to unnecessary anxiety.
“To use a little NFL fantasy football lingo, they soared presumably in anticipation of something huge from Jay Powell and company. All aboard! I still find myself betting on a quarter-point cut, though. It’s not that we don’t need a half-point cut, as the economy is slowing pretty quickly, especially for the lower-income cohort. However, I’ve always believed that the Fed should be measured when it cuts rates at this stage of the business cycle.
The biggest risk is that inflation might flare up again if you cut too much, and a 50 basis point cut all at once makes that a lot more likely. Plus, a double rate cut signals that something may be very wrong with the economy—something we don’t know about, something lurking. So going for 50 could inspire panic, and there’s simply no reason for the Fed to take that chance when it can simply hit us with a series of thoughtful 25 basis point cuts that neither reignite inflation nor cause panic.”
Cramer also cautioned that if the housing market rally continues, it could lead to a sell-off if only a 25 basis point cut is announced. He pointed out that traders are currently pricing in a higher chance of a 50 basis point cut, according to the CME Group’s FedWatch tool. If the Fed opts for a smaller cut, traders who bought in anticipation of a larger reduction might sell off their stocks, potentially causing market volatility.
“Now, if the housing rally continues at this pace, these stocks run the risk of being too hot to handle for a mere 25 basis point cut, and we’ll get a sell-off in response. Keep in mind how the CME Group’s FedWatch tool, which tracks interest rate expectations based on the Fed Funds Futures Market, indicates that traders are now pricing in a much higher probability of a double rate cut, currently at 45%. That’s much higher than it was a week ago. These traders could indeed be disappointed if the Fed decides to be more measured. They could be your enemy come Wednesday at 2 p.m. as they dump what they bought incorrectly, and that is what happens. That’s what traders do, they let the stocks go.”
Jim Cramer Sees Market Turnaround: This Week’s Gains Signal Future Upside
Finally, Jim Cramer believes that this coming week marks a significant moment for the market. He advises that if the market declines following a 25 basis point rate cut, investors should keep in mind the strong performance of this week. He suggests that this week’s gains are a sign of more positive developments to come as the Federal Reserve continues to ease monetary policy.
“When I look at next week, I can only conclude that we’re finally at the moment we’ve all been waiting for. So let me give you the bottom line: if we sell off on a 25 basis point rate cut, remember this phenomenal week, because there will be plenty more like it as the easing process continues and progresses.”
Our Methodology
This article reviews a recent episode of Jim Cramer’s Mad Money, where he discussed various stocks. We selected and analyzed the ten most notable companies, ranking them based on their level of hedge fund ownership, from the least owned to the most owned.
At Insider Monkey we are obsessed with 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 Must-Watch List: 10 Stocks to Look After
10. Cracker Barrel Old Country Store Inc. (NASDAQ:CBRL)
Number of Hedge Fund Investors: 17
Jim Cramer discussed Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), describing it as a “work in progress.” According to Cramer, Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL)’s CEO, Julie Felss Masino, is facing a tough challenge in revitalizing the business. She must balance satisfying existing customers with attracting new ones. Cramer appreciates Masino’s methodical approach to this task and believes she has the potential to succeed, though he is uncertain about the speed of the turnaround.
“Next, we have Cracker Barrel, which is a work in progress. The formidable CEO, Julie Masino, is attempting to turn this whole battleship around, and it won’t be easy. She has to keep the current clientele pleased while luring in new customers. MSO is approaching this task methodically, and I really like that. I think she can get it right; I just don’t know if she can do it quickly. Again, I’m calling this a work in progress.”
Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) is investing about $700 million through 2027 to modernize its restaurants, upgrade technology, and enhance its retail offerings, all crucial to its business. Despite a slight drop in revenue to $817 million in Q3 FY2024, Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) managed to increase menu prices by 4% and significantly beat earnings expectations with $0.88 per share compared to the forecasted $0.56.
The cut in its quarterly dividend from $1.30 to $0.25 per share reflects a strategic move to reinvest in growth and strengthen its balance sheet. Although Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) faces challenges like fluctuating commodity prices and rising labor costs, its strong cost management and focus on efficiency position it well for future earnings growth. If consumer spending stabilizes and the company successfully carries out its transformation plan, Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) could see substantial growth ahead.
9. Darden Restaurants Inc. (NYSE:DRI)
Number of Hedge Fund Investors: 27
Jim Cramer highlighted a busy day for earnings reports this coming Thursday, starting with Darden Restaurants Inc. (NYSE:DRI). He noted that Darden Restaurants Inc. (NYSE:DRI)’s performance is closely tied to the same-store sales of its largest division, Olive Garden.
“On Thursday, there’s a cornucopia of earnings starting with Darden Restaurants, which tends to swing with the same-store sales of its largest division, Olive Garden. It could surprise me, but after speaking to the CEOs of Sweetgreen and Cava in the last couple of weeks, I vastly prefer those two fast-casual chains. Even at their current prices, they are worth buying on any pullback.”
Darden Restaurants, Inc. (NYSE:DRI) looks like a strong investment opportunity due to its solid financial performance, positive analyst outlook, and strategic moves. In Q1 FY2024, Darden Restaurants Inc. (NYSE:DRI) reported a significant 11.6% rise in total sales, reaching $2.73 billion, and earnings per share of $1.78, which were above expectations. Key brands like Olive Garden and LongHorn Steakhouse saw strong same-store sales growth.
Analysts are positive, with Citigroup and Truist Securities increasing their price targets due to Darden Restaurants, Inc. (NYSE:DRI)’s excellent sales and favorable cost conditions. Despite some economic challenges, Darden Restaurants, Inc. (NYSE:DRI) has expanded its market share and improved margins, partly due to its diverse brand portfolio. The recent acquisition of 77 Ruth’s Chris Steak House locations shows Darden Restaurants Inc. (NYSE:DRI)’s focus on strategic growth and cost management.
8. RH (NYSE:RH)
Number of Hedge Fund Investors: 39
Jim Cramer discussed RH (NYSE:RH), formerly known as Restoration Hardware, noting its impressive 25% surge in a single day. Although recommending a stock with such a large daily gain isn’t his usual approach, Cramer made an exception for RH (NYSE:RH). He praised RH (NYSE:RH) for its remarkable performance and its leadership under Gary Friedman, who has transformed RH into a leading name in home furnishings.
“Here, it’s not my style to recommend a stock that’s up 25% in a single day, but if I were ever going to stick my neck out like that, I’d do it for RH, the old Restoration Hardware. It had a spectacular run today. This is an incredible retailer run by the iconic Gary Friedman, the impresario of what is suddenly the hottest store in home furnishings. How does he do it? Well, Gary’s a high roller when it comes to betting on himself…
Now, you may not want to buy the stock of anything that’s up 25% in one day, but everything related to housing is starting to take off. Just like RH, you have to buy early to get ahead of the turn when mortgage rates plummet, thanks to the Fed. As Gary told us in the conference call, I’m quoting: “We expect industry conditions to remain challenging, and as interest rates ease and the housing market begins to rebound, we expect our demand trends to accelerate throughout 2024 and 2025.””
RH (NYSE:RH) is an appealing investment due to its strategic efforts to become a leading luxury lifestyle brand. In Q2 2024, RH (NYSE:RH) reported a 3.6% increase in revenue to $829.66 million, surpassing expectations, and an EPS of $1.69, showing strong performance despite challenging market conditions. RH (NYSE:RH) is investing heavily in expanding its luxury offerings through Design Galleries and upscale experiences like restaurants and rooftop spaces, which set it apart from competitors.
RH (NYSE:RH)’s plans to open new luxury galleries in key markets, expand internationally, and explore luxury housing and travel further enhance its growth potential. Although recent stock fluctuations have been influenced by macroeconomic factors like the housing market and interest rates, analysts remain positive about RH (NYSE:RH)’s long-term prospects. RH (NYSE:RH)’s focus on high-end customer experiences and brand development makes it a strong candidate for future growth in the luxury home furnishings market.
7. e.l.f. Beauty Inc. (NYSE:ELF)
Number of Hedge Fund Investors: 40
Jim Cramer discussed e.l.f. Beauty, noting that it is heavily shorted, meaning many investors are betting against it. He observed that these short sellers have put pressure on the stock, causing concern among investors. He also highlighted the broader struggles in the cosmetics industry, mentioning that Estée Lauder (NYSE:EL) has been declining almost daily and Ulta Beauty (NASDAQ:ULTA) has also been weak.
“Okay, a couple of things: one, e.l.f. is a heavily shorted stock, and I thought the shorts came in and leaned on it, which scared a lot of people. Secondly, you’ve got to understand that Estée Lauder seems to go down almost every single day, and Ulta has been very weak. So the cosmetics group is doing terribly. E.l.f. is the best house in a bad neighborhood, and that’s not a place to be.”
e.l.f. Beauty, Inc. (NYSE:ELF) is an appealing investment due to its impressive financial performance, strategic growth efforts, and market leadership. In fiscal year 2024, e.l.f. Beauty, Inc. (NYSE:ELF) saw a 77% increase in net sales, surpassing $1 billion in annual revenue, and a 101% rise in adjusted EBITDA. e.l.f. Beauty, Inc. (NYSE:ELF) achieved a 71% jump in fourth-quarter net sales, becoming the second-largest brand in its category, outpacing competitors like L’Oréal Paris and Maybelline. e.l.f.’s success is driven by its focus on product innovation, digital marketing, and expanding partnerships with major retailers such as Ulta Beauty (NASDAQ:ULTA).
Additionally, its recent expansion into international markets like Mexico supports a positive growth outlook for fiscal year 2025, with projected net sales growth of 20-22%. The strong earnings performance, with a Q1 2025 EPS of $0.87—well above the expected $0.67—reinforces its solid financial outlook. Overall, e.l.f. Beauty, Inc. (NYSE:ELF)’s market share gains, international expansion, and effective cost management make it a compelling investment with strong growth potential.
6. Motorola Solutions Inc. (NYSE:MSI)
Number of Hedge Fund Investors: 42
Jim Cramer praised Motorola Solutions Inc (NYSE:MSI), noting that the company excels in various areas, including two-way radios, barcode technology, and government infrastructure projects. He highlighted that Motorola Solutions Inc (NYSE:MSI) is highly profitable and generates substantial revenue. Cramer also expressed enthusiasm for having Greg Brown, Motorola Solutions Inc (NYSE:MSI)’s executive, on his show, praising him as a remarkable leader.
“I’ve got to tell you, Motorola is a company that does two-way radios, it does barcodes, and it handles lots of government infrastructure. It just prints money, and I would welcome Greg Brown on the show anytime because he is a remarkable executive.”
In Q2 2024, Motorola Solutions Inc (NYSE:MSI)’s revenue grew to $2.63 billion from $2.4 billion a year earlier, showing significant improvements in operating and net earnings. Its diluted EPS of $2.60 surpassed expectations, highlighting its operational efficiency and focus on shareholder value. Institutional investors, including hedge funds, hold about 84% of Motorola Solutions Inc (NYSE:MSI), reflecting confidence in its stability and growth prospects.
Motorola Solutions Inc (NYSE:MSI)’s leading role in public safety and enterprise security, along with recurring revenue from software and services, positions it to benefit from global security investments. Motorola Solutions Inc (NYSE:MSI)’s reliable dividend payouts also make it appealing to investors. Together, these factors make Motorola Solutions Inc (NYSE:MSI) a strong investment with promising growth potential.
5. Sharkninja Inc. (NYSE:SN)
Number of Hedge Fund Investors: 52
Jim Cramer shared his positive view on Sharkninja Inc. (NYSE:SN), expressing that he doesn’t believe lower interest rates are necessary for it to perform well. He reflected on how he often wonders why he didn’t buy Sharkninja Inc. (NYSE:SN) for his travel trust after meeting with the company. Cramer praised Sharkninja Inc. (NYSE:SN) as a strong investment, highlighting its unique and innovative products, such as an exclusive ice cream maker that stands out in the market. He emphasized that his focus is more on Sharkninja Inc. (NYSE:SN)’s creativity and innovation rather than interest rates, noting that the company excels in these areas.
“I’ve got to tell you, I don’t think you need to have lower rates for this thing. The more I look at the stock every day, I ask, “Why didn’t we just buy the stock for the travel trust after meeting them?” It has been such a good investment. By the way, it has a lot of really interesting products, like the ice cream maker—things that nobody else has. So the answer is, I don’t care so much about rates; I care about ingenuity, and they have it in spades.”
Sharkninja Inc. (NYSE:SN) is an attractive investment due to its strong financial performance and significant growth potential. In Q2 2024, Sharkninja Inc. (NYSE:SN) saw a 31% increase in sales and a 34% rise in earnings per share, driven by impressive gains across its product lines. Sales in food preparation appliances grew nearly 80%, while cooking and beverage appliances rose by 18.2%, supported by its expansion into Europe.
Sharkninja Inc. (NYSE:SN) also experienced triple-digit growth in haircare, fans, and air purifiers, leading to a 41.4% increase in gross profit. Sharkninja Inc. (NYSE:SN) has raised its full-year guidance, expecting 31% EPS growth and a 21% increase in sales for FY24, with analysts forecasting an additional 14% EPS growth for FY25. Sharkninja Inc. (NYSE:SN) has nearly doubled in 2024 and is near its 52-week high, outperforming the S&P 500.
4. Domino’s Pizza Inc. (NYSE:DPZ)
Number of Hedge Fund Investors: 52
Jim Cramer addressed the recent lawsuit against Domino’s Pizza, Inc. (NYSE:DPZ) , stating that it is not a significant concern. He noted that such lawsuits often arise whenever a stock declines, and he expressed frustration with this trend. Cramer criticized these legal actions, suggesting they primarily benefit the lawyers involved rather than the people they claim to help. He indicated that he is considering taking a strong stance against these lawsuits due to their negative impact.
“Okay, first, I’m going to ease your mind here: the lawsuit against Domino’s is meaningless. They just file these lawsuits every time a stock goes down, and I wish they would stop that. If they keep doing it, I have to tell you, I’m thinking about major takeout on this nonsense because they hurt everybody, even the people they claim to represent, frankly. They charge so much, and not a lot of money is going to come to anybody other than them.
Domino’s itself did screw up; they didn’t know they had a weak franchise that was missing its numbers from overseas, and that caused people to think, “Wait a second, maybe they’re not as in control of their destiny as we thought.” That’s why the stock is going down, and that is an actual worry for me too.”
Domino’s Pizza, Inc. (NYSE:DPZ) is an attractive investment due to its strong financial performance, operational improvements, and ambitious growth plans. In Q2 2024, Domino’s Pizza, Inc. (NYSE:DPZ) reported an EPS of $4.03, up 30.8% from the previous year, and revenue of $1.1 billion, marking a 7.1% increase despite industry-wide cost pressures. Domino’s Pizza, Inc. (NYSE:DPZ)’s improved supply chain management and higher U.S. franchise royalties contributed to a 29.8% rise in net income.
Domino’s Pizza, Inc. (NYSE:DPZ) plans to open 825 to 925 new stores globally in 2024, demonstrating confidence in its long-term growth. Additionally, its quarterly dividend of $1.51 per share and share buybacks underscore its commitment to shareholder value. Overall, Domino’s Pizza, Inc. (NYSE:DPZ)’s strong financials, operational efficiency, and growth strategies make it a promising investment in the consumer discretionary sector.
3. Regeneron Pharmaceuticals Inc. (NASDAQ:REGN)
Number of Hedge Fund Investors: 57
Jim Cramer discussed Regeneron Pharmaceuticals Inc. (NASDAQ:REGN), a biotech company that will be presenting at the European Society for Medical Oncology annual meeting on Monday. Regeneron Pharmaceuticals Inc. (NASDAQ:REGN) will highlight its impressive oncology portfolio, which includes treatments for advanced melanoma and non-small cell lung cancer. These drugs have expanded Regeneron Pharmaceuticals Inc. (NASDAQ:REGN)’s business, but Cramer is particularly interested in the company’s potential obesity drug.
“On Monday, Regeneron is presenting. That’s a biotech company holding an analyst meeting at the European Society for Medical Oncology annual meeting, where they’ll showcase their oncology portfolio, which is beautiful, including forms to treat advanced melanoma and non-small cell lung cancer. These are important drugs that have helped diversify Regeneron’s business, but I’m still focused on the company’s obesity drug candidate.
When I was at the JP Morgan Healthcare Conference in San Francisco earlier this year, I spoke with Regeneron CEO Len Schleifer, an old friend of the show who was one of our first guests. He was confident that his company might have a weight loss drug that only attacks fat, not muscle. That’s huge, as people who take GLP-1s experience muscle atrophy unless they work out pretty consistently. I think this drug would be an instant success if it can get through the clinical trials. Right now, it’s too early in the process to take anything as gospel.”
Regeneron Pharmaceuticals Inc. (NASDAQ:REGN) stands out as a strong investment choice due to its solid financial results, promising oncology pipeline, and robust product lineup. In Q2 2024, Regeneron Pharmaceuticals Inc. (NASDAQ:REGN) saw a 12% increase in revenue compared to the previous year, reaching $3.5 billion, thanks to strong sales of Dupixent and the successful launch of EYLEA HD.
Its revenue from collaborations with Sanofi also grew by 21%, enhancing its financial health. Regeneron Pharmaceuticals Inc. (NASDAQ:REGN)’s oncology pipeline is impressive, with its PD-1 inhibitor Libtayo performing well and ongoing research into new treatments like fianlimab and davutamig. Regeneron Pharmaceuticals Inc. (NASDAQ:REGN)’s substantial investment in research and development, along with strategic partnerships with Sanofi and Bayer, highlights its commitment to innovation.
2. Lennar Corporation (NYSE:LEN)
Number of Hedge Fund Investors: 60
Jim Cramer discussed Lennar Corporation (NYSE:LEN), a well-known home builder, noting that the company is set to report its results the day after the Federal Reserve’s meeting. He expects Lennar Corporation (NYSE:LEN) to present a strong performance and believes that if the Fed announces a 50 basis point cut, Lennar’s stock could be a great investment opportunity. Cramer’s analysis suggests that favorable conditions from the Fed could make Lennar Corporation (NYSE:LEN)’s stock particularly attractive.
“Lennar, a classic home builder, will report a day after the Fed meeting, which could be very enlightening. I think Lennar will tell a terrific story, and if we get a 50 basis point cut, its stock might be a terrific place to be.”
Lennar Corporation (NYSE:LEN), in its Q2 2024 earnings report, showed impressive results with a 12% increase in revenue, reaching $8.5 billion, and a 15% rise in net income to $1.2 billion. Lennar Corporation (NYSE:LEN) also improved its gross margin to 23%, up from 20%, reflecting its ability to stay profitable and efficient in a competitive market. Lennar Corporation (NYSE:LEN) is boosting its growth through smart investments and acquisitions of land in promising areas.
Lennar Corporation (NYSE:LEN)’s focus on affordable and sustainable home designs is aligned with current market needs, which should attract more buyers. The housing market remains strong, driven by high demand and a shortage of homes. Even with rising mortgage rates, Lennar Corporation (NYSE:LEN)’s focus on both entry-level and move-up homes puts it in a good position to take advantage of these trends. Overall, Lennar Corporation (NYSE:LEN)’s solid financial performance, strategic growth initiatives, and favorable industry trends make it a promising investment.
1. Schlumberger Limited (NYSE:SLB)
Number of Hedge Fund Investors: 67
Jim Cramer praised Schlumberger Limited (NYSE:SLB), describing it as an “amazing company.” He recalled his own experience from 1983 when he interviewed for a job at Schlumberger Limited (NYSE:SLB) and was told he lacked the necessary knowledge. Cramer took that feedback seriously but now views Schlumberger Limited (NYSE:SLB) as a highly undervalued stock. He believes that, despite his past experience, Schlumberger Limited (NYSE:SLB) is a great investment opportunity and advised against selling the stock at its current level.
“Schlumberger is an amazing company. I actually interviewed with SLB in 1983 for a job, and they told me to get the hell out because I didn’t know anything. I took that as gospel. I do think that Schlumberger is a very inexpensive stock, and I would not sell it down here.”
Schlumberger Limited (NYSE:SLB) is a strong investment opportunity due to its solid financial performance, growing international presence, and strategic focus on digital and energy transition projects. In Q2 2024, Schlumberger Limited (NYSE:SLB) saw a 5% increase in revenue, reaching $9.1 billion, thanks to a 6% rise in international revenue, especially in the Middle East and Asia.
Schlumberger Limited (NYSE:SLB) also reported an 11% increase in adjusted EBITDA and earnings per share (EPS) of $0.85, showing growth both from the previous quarter and year-over-year. Operating margins improved by 135 basis points to 20.3%, and its digital and integration divisions achieved 31% margins. Schlumberger Limited (NYSE:SLB)’s emphasis on deepwater offshore projects and energy transition technologies, along with a 10% increase in digital revenue, highlights its strong position for future growth. With strong financials, expanding margins, and a forward-looking strategy, Schlumberger Limited (NYSE:SLB) is well-positioned for continued success.
While we acknowledge the potential of Schlumberger Limited (NYSE:SLB), 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 the ones on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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