We recently published a list of Jim Cramer’s Lightning Rounds: 12 Stocks Under the Spotlight. In this article, we are going to take a look at where Sterling Infrastructure (NASDAQ:STRL) stands against other stocks under Jim Cramer’s lightning rounds’ spotlight.
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.”
READ ALSO: Jim Cramer Discussed 10 Stocks That Can Do Well in December and Jim Cramer’s Lightning Round: 7 Stocks to Watch
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.”
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).
A busy airport terminal, highlighting the company’s strong transportation arm.
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.
Overall, STRL ranks 7th on our list of stocks under Jim Cramer’s lightning rounds’ spotlight. While we acknowledge the potential of STRL 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 time frame. If you are looking for an AI stock that is more promising than STRL 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 is originally published at Insider Monkey.