In this article, we discuss the 10 stocks Jim Cramer is recommending. If you want to skip our detailed analysis of these stocks, go directly to the 5 Stocks Jim Cramer Is Recommending.
Jim Cramer, the host of Mad Money on news platform CNBC, has made a name for himself in the finance world over the past few decades. Cramer has a cult following on social media and his television show is one of the most eccentric but widely appreciated in the business world. Cramer brings a wealth of experience to television. He was a former stockbroker at investment bank Goldman Sachs. In 1987, he left that job to set up his own hedge fund, raising $450 million in $5 million increments, taking home 20% of the profits generated.
Cramer left the hedge fund at the turn of the millennium and went on towards broadcast television. During his stint as a hedge fund manager, he averaged an annual return of 24% over fourteen years, firmly placing him in the list of one of the most successful investors of the post-war era. Cramer made $10 million per year as a money manager and his hedge fund returned a record high of 47% in 1999. The next year, as he prepared to leave the fund, he returned 28% to investors, beating the benchmark S&P 500 by 38 percentage points.
Since his debut on CNBC, Cramer has not only become a global celebrity, but has also authored best-selling books and contributed to leading publications as a finance expert. His start-up, The Street, that he founded in 1996, has become one of the most trusted news platforms for finance. Cramer is a big believer in tech stocks and has consistently recommended that investors take advantage of the tech bubble that has dominated the market in recent years. He is sometimes referred to as the ‘Mad Man’ on Wall Street, a play on the name of his show.
Some of the stocks that Cramer has recently recommended include Global Payments Inc. (NYSE: GPN), Lyft, Inc. (NASDAQ: LYFT), Ford Motor Company (NYSE: F), D.R. Horton, Inc. (NYSE: DHI), and Walmart Inc. (NYSE: WMT), among others discussed in detail below. The net worth of the Harvard-educated, Pennsylvania-born finance guru is around $150 million. The success of Cramer and his hedge fund over the years has been an exception in an industry that has struggled to adapt to rapid technological and sociological changes taking place in society.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here is our list of the 10 stocks Jim Cramer is recommending. These were ranked keeping in mind analyst ratings, hedge fund sentiment, and basic business fundamentals. The exact reasons why Cramer recommends these stocks are also mentioned along with the other details about each company below. These were compiled using the videos of the show uploaded to the CNBC website and YouTube.
Stocks Jim Cramer Is Recommending
10. Golden Nugget Online Gaming, Inc. (NASDAQ: GNOG)
Number of Hedge Fund Holders: 10
Golden Nugget Online Gaming, Inc. (NASDAQ: GNOG) is placed tenth on our list of 10 stocks Jim Cramer is recommending. The firm is headquartered in Texas and operates as an online gaming and entertainment entity. Responding to a question on a lightning round segment of his show this week, Cramer said that with news that DraftKings was buying the firm for $1.5 billion, buyers of the stock were actually purchasing DraftKings, which was a very smart acquisition for Golden Nugget people. Here is what he said:
"You’re really just buying DraftKings [now after Monday’s acquisition announcement]. That’s a very smart acquisition for Golden Nugget people, but you’re not an arbitrager. I would ring the register. You just had a very big day today."
On May 18, investment advisory Benchmark kept a Buy rating on Golden Nugget Online Gaming, Inc. (NASDAQ: GNOG) stock but lowered the price target to $20 from $24, noting that the firm delivered earnings for the first quarter in line with market expectations.
At the end of the first quarter of 2021, 10 hedge funds in the database of Insider Monkey held stakes worth $34 million in Golden Nugget Online Gaming, Inc. (NASDAQ: GNOG), down from 16 in the preceding quarter worth $78 million.
Just like Global Payments Inc. (NYSE: GPN), Lyft, Inc. (NASDAQ: LYFT), Ford Motor Company (NYSE: F), D.R. Horton, Inc. (NYSE: DHI), and Walmart Inc. (NYSE: WMT), Golden Nugget Online Gaming, Inc. (NASDAQ: GNOG) is one of the stocks Jim Cramer is recommending.
9. Nucor Corporation (NYSE: NUE)
Number of Hedge Fund Holders: 25
Nucor Corporation (NYSE: NUE) is ranked ninth on our list of 10 stocks Jim Cramer is recommending. The company operates from North Carolina and makes and sells steel products. Last week, Cramer identified a few stocks on his show that he thought were cheap given the bull run in the market, picking Nucor as one of these and noting that the valuations of steel firms were absurdly low. He also said that Nucor was the best-run steelmaker on the planet, and one that was making fortunes right now. Here is what he said:
"Nucor is the best-run steelmaker on earth, one that’s making fortunes right now with a terrific balance sheet and a healthy dividend."
On July 1, investment advisory Deutsche Bank kept a Hold rating on Nucor Corporation (NYSE: NUE) stock but raised the price target to $100 from $75, noting that a further correction was likely owing to anticipated increase in supply.
At the end of the first quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $191 million in Nucor Corporation (NYSE: NUE), down from 29 in the preceding quarter worth $138 million.
Alongside Global Payments Inc. (NYSE: GPN), Lyft, Inc. (NASDAQ: LYFT), Ford Motor Company (NYSE: F), D.R. Horton, Inc. (NYSE: DHI), and Walmart Inc. (NYSE: WMT), Nucor Corporation (NYSE: NUE) is one of the stocks Jim Cramer is recommending.
“This quarter we are highlighting Nucor (NUE) as a relative yield example within the Materials sector. NUE is a leading manufacturer of steel and steel products. It is the largest steelmaker in the U.S. based on production volume with a vertically integrated business model. The company has a low fixed-cost position due to its use of electric arc furnaces, which are cleaner, less labor and energy-intensive than blast furnaces, and this results in low total costs per unit of steel produced. Our view is that a low cost position is an important attribute in a commodity business. NUE’s historical financial record supports this view as it has been profitable every year except for one over the past fifty years, unlike many steel producing peers. In addition, the company has a diverse product and mill portfolio that takes market share over time. We believe its scale, low fixed-cost position, consistent record of profitability and diverse mill portfolio result in a sustainable competitive advantage versus peers.
Our thesis on NUE is that it should benefit from higher steel prices as the U.S. economy recovers from the downturn caused by the Covid-19 pandemic. The company may also be a beneficiary of on-shoring, where manufacturing returns to the United States. These two dynamics should drive growth this year, and if the United States Congress passes new infrastructure legislation, that will provide another avenue for growth longer-term.
Importantly, NUE has a strong balance sheet and flexible capital spending model that can quickly adjust to changing economic
conditions. If economic growth slows, NUE can quickly reduce its cost structure, something it has done successfully in prior cyclical downturns. The company has low financial leverage as its net debt/adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was only 0.9x at the end of last year, and it consistently generates positive free cash flow. These favorable characteristics differentiate NUE from other steel producers and help the company gain market share through disciplined capital allocation.
The fund purchased NUE at $56 in January, 2021, after it reached a low valuation with an attractive dividend yield and relative dividend yield versus the S&P 500. At the time or purchase, the stock yielded 3.3% and had a relative dividend yield of more than 2x the S&P 500, which was the high end of its historical range as shown in the bottom pane in the graph. The company is also a Dividend Aristocrat that has raised its dividend annually for 48 years. We expect continued dividend increases going forward.
Risks to the thesis include a prolonged economic downturn, lower steel prices and increasing steel import volumes that could hurt NUE financial performance. We believe these risks are manageable as economic growth is expected to be well above average this year. Specifically, Goldman Sachs is forecasting U.S. gross domestic product (GDP) growth of +8% in 2021, which would be the fastest pace of growth since 1950. Strong growth is likely to result in higher manufacturing activity, which we believe would be supportive of higher steel prices and limit risks to the thesis.”
8. Toll Brothers, Inc. (NYSE: TOL)
Number of Hedge Fund Holders: 30
Toll Brothers, Inc. (NYSE: TOL) is a firm that develops and sells homes in luxury residential communities. It is placed eighth on our list of 10 stocks Jim Cramer is recommending. The firm is based in Pennsylvania. Last week, Cramer singled out the homebuilding industry as one of the undervalued ones on the market, picking Toll Brothers, Inc. (NYSE: TOL) as one of the firms that investors should invest in to ride this trend. He also said that the firm could see share price climb further if interest rates were not raised anytime soon. Here is what he said:
"If Federal Reserve Chairman Jerome Powell stays true to his word and lets the economy percolate rather than raising interest rates, these stocks could roar."
On June 28, investment advisory BTIG upgraded Toll Brothers, Inc. (NYSE: TOL) stock to Neutral from Sell without a price target, underlining that the shares would not underperform peers at the market in the short term.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Greenhaven Associates is a leading shareholder in Toll Brothers, Inc. (NYSE: TOL) with 5.3 million shares worth more than $303 million.
In addition to Global Payments Inc. (NYSE: GPN), Lyft, Inc. (NASDAQ: LYFT), Ford Motor Company (NYSE: F), D.R. Horton, Inc. (NYSE: DHI), and Walmart Inc. (NYSE: WMT), Toll Brothers, Inc. (NYSE: TOL) is one of the stocks Jim Cramer is recommending.
7. Moderna, Inc. (NASDAQ: MRNA)
Number of Hedge Fund Holders: 39
Moderna, Inc. (NASDAQ: MRNA) is a biotechnology company that makes and sells vaccines which use the messenger RNA system. It is ranked seventh on our list of 10 stocks Jim Cramer is recommending. Moderna, Inc. (NASDAQ: MRNA) operates from Cambridge. During his show, Cramer said that it looks like the firm will have a better-than-expected 2021 on the back of the power of the vaccine it was selling and the spread of the Delta variant of the virus. He also highlighted that the stock had been one of the best performers on the market in the first half of 2021 as well. Here is what he said:
"If you think COVID’s behind us, well then Moderna’s a sell. If you think the delta variant is just the beginning and we might need regular booster shots, maybe there’s more to it."
On July 15, investment advisory Jefferies kept a Hold rating on Moderna, Inc. (NASDAQ: MRNA) stock but raised the price target to $250 from $170, noting that the firm would soon have positive commentary on boosters in development.
At the end of the first quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in Moderna, Inc. (NASDAQ: MRNA), down from 41 in the preceding quarter worth $1.4 billion.
Global Payments Inc. (NYSE: GPN), Lyft, Inc. (NASDAQ: LYFT), Ford Motor Company (NYSE: F), D.R. Horton, Inc. (NYSE: DHI), and Walmart Inc. (NYSE: WMT) are some of the stocks Jim Cramer is recommending, just like Moderna, Inc. (NASDAQ: MRNA).
“Among the top contributors to Fund performance in the second quarter was Moderna. Moderna has just reported its first profitable quarter in the company’s history – net income for the most recent quarter was $1.2 billion. It reported revenue of $1.9 billion, an impressive increase compared to $8 million a year ago, driven by the sales of its Covid-19 vaccine. Moderna is expecting to deliver up to 1 billion vaccine doses in 2021 and is in discussions to increase global supply to governments around the world. Our long-term focus remains on the transformational potential of Moderna’s technology and its ability to address different diseases.”
6. Teradyne, Inc. (NASDAQ: TER)
Number of Hedge Fund Holders: 44
Teradyne, Inc. (NASDAQ: TER) is placed sixth on our list of 10 stocks Jim Cramer is recommending. The firm makes and sells automatic test equipment and is headquartered in North Reading. Responding to a lightning round question on his show in the middle of July, Cramer said that he would own Teradyne. He added that it was a very good company that had built a great legacy. He noted that it was absolutely the right time to own the stock. Teradyne, Inc. (NASDAQ: TER) has a market cap of close to $21 billion. Here is what he said:
"I would own that."
On July 29, investment advisory Susquehanna upgraded Teradyne, Inc. (NASDAQ: TER) stock to Positive from Neutral with a price target of $165. Mehdi Hosseini, an analyst at the firm, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Teradyne, Inc. (NASDAQ: TER) with 128 million shares worth more than $493 million.
Global Payments Inc. (NYSE: GPN), Lyft, Inc. (NASDAQ: LYFT), Ford Motor Company (NYSE: F), D.R. Horton, Inc. (NYSE: DHI), and Walmart Inc. (NYSE: WMT) are some of the stocks Jim Cramer is recommending, alongside Teradyne, Inc. (NASDAQ: TER).
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Disclosure. None. 10 Stocks Jim Cramer Is Recommending is originally published on Insider Monkey.