In this article, we’ll explore Jim Cramer’s Ultimate Stock Picks: 10 Hot Stocks to Consider.

In a recent episode of Mad Money, Jim Cramer emphasized the unexpected strength in the market, pointing out that many companies are doing better than Wall Street realizes. He suggests that investors should stop second-guessing these companies every time negative news surfaces. Cramer praises the excellent management and execution by CEOs, which he feels often goes unappreciated.

“Suddenly, all is forgiven, or if not all, then at least most. I’m talking about the incredible resilience in this market, buoyed by a recognition that many companies are simply better than Wall Street gives them credit for. We need to stop turning against them every time there’s a seemingly bad data point. Every day I come to work, I’m dazzled by the resourcefulness of executives who do their best to create value for you, the shareholder. Lots of stocks went up on days like today when the Dow advanced 335 points, the S&P gained 75%, and the NASDAQ jumped 1.0%, all thanks to good management and excellent execution that often goes unnoticed.”

Jim Cramer acknowledges that while some CEOs might warrant skepticism, many are truly exceptional and deserve more recognition for their efforts. He criticizes the overemphasis on short-term economic indicators, arguing that great companies stay focused and aren’t thrown off by minor fluctuations.

“Listen, I’m not a pushover. I can hit CEOs with tough questions when needed, some of them deserve skepticism and scorn. But there are also plenty of brilliant, hardworking CEOs with incredible teams, and you ignore their hustle at your own peril. This often gets lost in the shuffle when we’re focused on the parlor game of guessing the Fed’s next move, a quarter point, half a point, quarter, half. You know what I say? Let’s get serious. Terrific companies don’t get caught up in that quarter-half shuffle.”

Cramer highlights Kroger CEO Rodney McMullen as an example of strong leadership. Despite facing challenges like opposition to its acquisition of Albertsons and a tough economic climate, McMullen has successfully managed to keep food costs down. Through strategies such as an effective loyalty program and improvements to regional stores, the company has performed well. After a strong earnings report, the stock rose more than 7%, reflecting a successful turnaround.

“CEO Rodney McMullen has managed to keep food costs down and deliver fantastic numbers, all while maintaining an expensive, unionized labor force in a very uncertain commodity environment. How? The company confounded critics by developing a superior loyalty program, regionalizing their stores, and creating some of the best private-label products out there, second only to Costco. Food is still expensive, but cooking at home is far cheaper than dining out. McMullen tells us that consumers are no longer flush with cash, especially his most budget-conscious clientele. He notes, “Budget-conscious customers are buying more at the beginning of the month to stock up on essentials, and as the month progresses, they become more cautious with their spending.”

Wow, that’s a tough environment! When I heard this, I thought back to the old company, the one that used to miss its numbers whenever the environment got a little tough. Everybody else remembers the old company too, which is why the stock was just sitting there waiting to be picked up, until this quarter’s report, after which it soared more than 7% in response to the fabulous results. Everyone thought the company would drop the ball, as they used to, but McMullen has finally whipped his supermarket into shape.”

In contrast, Cramer points out that the tech industry often suffers from misunderstandings due to its complex nature. He believes that Wall Street analysts frequently fail to appreciate the expertise and potential of tech CEOs who have a deep grasp of their businesses.

“We all need to eat, so it’s not hard to understand the grocery business. But it’s quite different when it comes to tech, where analysts constantly doubt the resolve and expertise of CEOs who simply know more about their businesses than the critics. In tech, the complexity often leads Wall Street to conclusions that have little to do with reality.”

Our Methodology

This article reviews a recent edition of Jim Cramer’s Morning Thoughts, where he covered different stocks. We have selected and analyzed the ten most notable companies mentioned, ranking them according to how much they are owned by hedge funds, 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 Ultimate Stock Picks: 10 Hot Stocks to Consider

10. Darden Restaurants Inc. (NYSE:DRI)

Number of Hedge Fund Investors: 27

Jim Cramer notes that analysts at Stephens have reduced their price target for Darden Restaurants Inc. (NYSE:DRI), the parent company of Olive Garden, from $165 to $159 per share. For those interested in investing in restaurant stocks, it might be wise to consider other options.

“Analysts at Stephens lowered their price target on Olive Garden owner Darden Restaurants to $159 a share from $165. Investors in search of restaurant stocks need to look elsewhere.”

Darden Restaurants, Inc. (NYSE:DRI) presents a strong investment opportunity due to its excellent financial performance, strategic expansion, and favorable analyst outlook. In Q1 2024, Darden Restaurants, Inc. (NYSE:DRI) reported earnings per share (EPS) of $1.78 and revenues of $2.73 billion, both surpassing Wall Street expectations and showing an 11.4% year-over-year increase. This growth is driven by strong consumer demand across its brands, including Olive Garden and LongHorn Steakhouse.

Darden Restaurants, Inc. (NYSE:DRI) expects continued revenue growth due to steady same-store sales and easing inflation pressures. Darden Restaurants, Inc. (NYSE:DRI)’s successful acquisition and integration of Ruth’s Chris Steak House highlight its ability to expand and add value while managing expenses effectively. Analysts are optimistic, with Truist Securities raising their price target and predicting nearly 10% earnings growth over the next year, with an EPS estimate of $9.47 for fiscal 2025.

9. CAVA Group Inc. (NYSE:CAVA) 

Number of Hedge Fund Investors: 33

Jim Cramer suggests now is the right time to invest in CAVA Group Inc. (NYSE:CAVA). On Thursday night’s episode of Mad Money, Cramer interviewed CAVA Group Inc. (NYSE:CAVA) CEO Brett Schulman, who shared exciting expansion plans for the fast-casual Mediterranean restaurant chain.

“It is time to buy Cava. I had Cava CEO Brett Schulman on “Mad Money” Thursday night, and he detailed compelling expansion plans for the fast-casual Mediterranean chain.”

CAVA Group, Inc. (NYSE:CAVA) presents a strong investment opportunity due to its impressive financial performance, strategic expansion, and positive long-term outlook. In Q2 2024, CAVA Group, Inc. (NYSE:CAVA) achieved $233.5 million in revenue, a 35% increase from the previous year, surpassing the expected $219.47 million. CAVA Group, Inc. (NYSE:CAVA) also reported earnings per share (EPS) of $0.17, exceeding estimates, and generated $22.7 million in free cash flow, reflecting strong operational efficiency and a successful response to the growing demand for healthier, Mediterranean-inspired dining.

CAVA Group, Inc. (NYSE:CAVA)’s aggressive expansion strategy, which included adding 18 new locations in Q2 and plans to open 54-57 more by the end of the year, supports further growth and cost advantages. CAVA Group, Inc. (NYSE:CAVA)’s same-store sales growth of 14.4% highlights the success of its existing outlets. Analysts forecast an 18.6% increase in earnings over the next year, emphasizing CAVA Group, Inc. (NYSE:CAVA)’s strong market position and appeal to health-conscious consumers.

Next Century Growth Small Cap Strategy stated the following regarding CAVA Group, Inc. (NYSE:CAVA) in its first quarter 2024 investor letter:

“CAVA Group, Inc. (NYSE:CAVA) is a fast casual restaurant chain serving authentic Mediterranean cuisine, featuring customizable bowls and pitas. CAVA currently owns and operates >300 stores, and the company targets a 15% plus new store growth rate. The intermediate goal is to have 1,000 stores by 2032 with plenty of opportunity to grow beyond that level.

The company already delivers solid restaurant level margins >20% and they believe 3-5% same store sales growth is achievable over time. As the business matures, they should be able to leverage G&A expense which should lead to strong earnings growth over many years.”