This article presents an overview of Jim Cramer’s Top 5 Stock Picks This Week. For a detailed overview of such stocks, read our article, Jim Cramer’s Top 10 Stock Picks This Week.
5. Cadence Design Systems Inc (NASDAQ:CDNS)
Number of Hedge Fund Investors: 58
Cadence Design Systems Inc (NASDAQ:CDNS) provides software, hardware, services, and reusable integrated circuit (IC) design blocks.
Jim Cramer earlier this week said that Cadence Design Systems Inc (NASDAQ:CDNS), which is also an Nvidia partner, is down because analysts didn’t like Cadence Design Systems Inc’s (NASDAQ:CDNS) weak Q1’2024 guidance. However, Cramer said Cadence Design Systems Inc (NASDAQ:CDNS) is “always conservative” and that he likes the stock.
As of the end of the third quarter of 2023, 58 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Cadence Design Systems Inc (NASDAQ:CDNS).
4. General Electric Co (NYSE:GE)
Number of Hedge Fund Investors: 76
Jim Cramer earlier this week gave some bullish comments on General Electric Co (NYSE:GE) after General Electric Co’s (NYSE:GE) renewable energy arm Vernova received approval from the Nuclear Regulatory Commission in the United States to create and ship higher enrichment fuel.
Cramer said that his charitable trust owns a stake in GE HealthCare and “it’s been a rocket lately.” The analyst also praised General Electric Co (NYSE:GE) CEO H. Lawrence Culp Jr. and said he “really has the zeitgeist and it’s not just for show.”
General Electric Co (NYSE:GE) expects to complete the GE Vernova spin-off in April 2024.
Longleaf Partners Fund stated the following regarding General Electric Company (NYSE:GE) in its fourth quarter 2023 investor letter:
“General Electric Company (NYSE:GE) – Industrial conglomerate General Electric (GE) was the top performer for the year. We exited this multi-year investment as its price went above our appraisal. In 1Q23, GE spun out GE Healthcare, which we sold as it traded at our value. The share price continued its strong performance throughout the spring and summer, and we ultimately sold the position in the third quarter when we no longer saw a margin of safety for the business. CEO Larry Culp was a great partner who created significant value for shareholders by reducing leverage, cutting costs, streamlining operations, improving company culture and simplifying the structure with plans to split the company into three businesses. We hope to have the opportunity to partner with him again in the future.”
3. Eli Lilly And Co (NYSE:LLY)
Number of Hedge Fund Investors: 102
Jim Cramer earlier this week said Eli Lilly And Co’s (NYSE:LLY) weight loss drug could be the best-selling drug of all time and could beat Novo Nordisk’s drug. Cramer said the “Wall Street is way behind on this one.” Eli Lilly And Co (NYSE:LLY) shares have gained about 27% year to date through February 16.
As of the end of the third quarter of 2023, 102 hedge funds tracked by Insider Monkey had stakes in Eli Lilly And Co (NYSE:LLY). The biggest stake in Eli Lilly And Co (NYSE:LLY) is owned by Ken Fisher’s Fisher Asset Management which owns a $2.4 billion stake in Eli Lilly And Co (NYSE:LLY).
Baron Health Care Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its fourth quarter 2023 investor letter:
“Stock selection was also positive in the sub-industry owing to strong gains from therapeutics-focused pharmaceutical giant Eli Lilly and Company (NYSE:LLY). Lilly’s stock continued to outperform driven by strong sales of blockbuster diabetes medicine Mounjaro and ongoing enthusiasm surrounding the company’s obesity and diabetes franchises, particularly after Novo Nordisk released its SELECT trial results showing a 20% relative risk reduction in overweight patients with cardiovascular disease and no prior history of diabetes.
Eli Lilly and Company is a global pharmaceutical company that discovers, develops, manufactures, and sells medicines in the categories of diabetes, oncology, neuroscience, and immunology, among other areas. Stock performance was strong due to strong third quarter sales of blockbuster diabetes medicine Mounjaro and ongoing enthusiasm surrounding the company’s obesity and diabetes franchises. We continue to think Lilly is well positioned to grow revenue and earnings at attractive rates through the end of the decade and beyond.
We own Eli Lilly and Company, which we believe will remain a leader in the GLP-1 medicine class with Mounjaro, Zepbound, and the company’s deep pipeline of next generation GLP-1 medicines.”
2. Uber Technologies Inc (NYSE:UBER)
Number of Hedge Fund Investors: 146
A questioner earlier this week told Jim Cramer during his program that he’d want to invest in Uber Technologies Inc (NYSE:UBER) as a beginner and believes it would be a good start for him. Cramer agreed with him and said he’s a “huge believer” in ride-sharing stocks including Lyft. Cramer said he thinks “ride share is the future.”
Cramer said “this is a good level” to buy Uber Technologies Inc (NYSE:UBER) shares. Cramer recommended the questioner to buy some Uber Technologies Inc (NYSE:UBER) shares now and then buy more if the stock goes down.
RiverPark Advisors made the following comment about Uber Technologies, Inc. (NYSE:UBER) in its Q3 2023 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): UBER was the top contributor in the quarter following a better-than-expected 2Q23 earnings report and 3Q23 guidance. Gross bookings of $33.6 billion were up 16% year over year. Mobility gross bookings of $17 billion grew 25% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $16 billion were up 12% from last year. 2Q Adjusted EBITDA of $916 million, up $552 million year over year, significantly beat Street estimates of $845 million and the company generated $1.1 billion of free cash flow. Management guided to continuing growth in 3Q Gross Bookings (17%-20% growth) and Adjusted EBITDA (of $975-1,025 million).
UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than just ride sharing and food delivery, but also as a global mobility platform with the ability to sell to its 130 million users (by comparison, Amazon Prime has 200 million members) and penetrate new markets of on-demand services, such as package and grocery delivery, travel, and worker staffing for shift work. Given its $4.3 billion of unrestricted cash and $4.4 billion of investments, the company’s enterprise value of $95 billion equates to just over 20x next year’s estimated free cash flow.”
1. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 180
Jim Cramer has been bullish on NVIDIA Corp (NASDAQ:NVDA) for the past several months. His charitable trust owns the stock. This week, Cramer reiterated his bullish take on NVIDIA Corp (NASDAQ:NVDA) and said NVIDIA Corp (NASDAQ:NVDA) has become a “battleground stock.” Cramer said NVIDIA Corp (NASDAQ:NVDA) evolved from a gaming chips company and it now dominates the artificial intelligence industry.
Cramer also said that NVIDIA Corp’s (NASDAQ:NVDA) rapid rise is causing unease in some circles amid valuation concerns. Cramer shrugged off such concerns and said NVIDIA Corp (NASDAQ:NVDA) is a “keeper.”
In a separate program this week, Cramer quipped:
“Don’t yawn and mock me when I say buy Nvidia.”
Polen Focus Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its fourth quarter 2023 investor letter:
“Apple and NVIDIA Corporation (NASDAQ:NVDA) alone drove over 1,100 basis points of the Russell 1000 Growth Index’s 42% return, so not owning them was a meaningful headwind to our relative return in 2023. NVIDIA shares rocketed higher by well over 200% in 2023 although they slightly underperformed our Portfolio and the Russell 1000 Growth in the fourth quarter. Generative AI has been a huge boon for NVIDIA as the use of LLMs like ChatGPT and others requires tremendous processing power that, today, is mostly provided by NVIDIA’s GPUs. All large cloud service providers, AI factories, and many large consumer internet companies are laying the foundation for generative AI by deploying NVIDIA GPUs and other parallel processing chips to be able to do large scale generative AI either for internal use (i.e., Meta) or as a service for others (i.e., AI factories) or both (cloud service providers such as Amazon, Microsoft, and Google).
Given many of NVIDIA’s customers or its end customers are still very much in the experimentation phase with generative AI, it is unclear how sustainable the current demand for GPUs truly is. At the same time, it is known that NVIDIA has historically been highly cyclical. By the end of 2024, we believe NVIDIA will already account for roughly half the market for datacenter chips, servers, and networking equipment, which is unprecedented. Even though the valuation at 25x forward earnings doesn’t look very demanding at first glance, it assumes NVIDIA will own virtually the entire datacenter chip market in just the next few years and will sustain year-on-year growth despite being a cyclical business that is currently experiencing much higher new peaks.
We believe NVIDIA is a highly advantaged business, but we also believe the long-term growth outcomes are currently too variable, and the expectations built into the company’s $1.2 trillion valuation as of this writing assume the most optimistic of those scenarios.”
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