We recently compiled a list of the 10 Stocks Jim Cramer Thinks You Should Check Out. In this article, we are going to take a look at where Cummins Inc. (NYSE:CMI) stands against the other stocks Jim Cramer thinks you should check out.
Jim Cramer draws an engaging parallel between fantasy football and stock investing as the NFL season begins. Cramer uses this occasion to introduce his concept of "Fantasy Stock Football." He likens selecting stocks for an investment portfolio to drafting players for a fantasy football team, emphasizing how both require strategic thinking and role balancing.
Cramer enjoys blending real-world sports with market insights to offer a unique perspective on investing. He notes that, like fantasy football teams, investment portfolios consist of various stocks that play different roles, contributing to overall performance. Reflecting on the previous year, he highlights that the 11 stocks he recommended have risen an average of 38%, outperforming the S&P 500's 23% gain. This comparison underscores his belief in the strategic approach to both fantasy football and stock selection.
Jim Cramer highlights some key mistakes investors are making and emphasizes the importance of a strategic approach to investing. He points out that many investors are making errors by overreacting to market fluctuations and trying to time their moves poorly. According to Cramer, sometimes the best strategy is to do nothing and avoid making rash decisions.
Cramer criticizes the persistent doubts about Federal Reserve Chair Jerome Powell. He believes Powell has managed the transition from tightening to easing policies well, despite earlier criticism for slow rate hikes. The ongoing panic over economic data -- whether strong or weak -- shows a lack of faith in Powell's ability to adjust rates appropriately. Cramer asserts that the Fed will act as needed, whether that means a 25 or 50 basis point cut, and advises investors to trust Powell's strategy rather than being swayed by market noise.
Cramer addresses skepticism around artificial intelligence (AI), arguing that it is premature to dismiss its potential. While current AI developments may not seem revolutionary, he believes that significant advancements, such as breakthroughs in cancer diagnosis, indicate that AI's impact will grow over time.
Jim Cramer believes that dismissing AI as a failure is premature. He argues that people are underestimating its potential, as we are still early in discovering its practical applications. According to Cramer, recent advances in accelerated computing and generative AI have already led to significant breakthroughs, such as improvements in cancer diagnosis. While the excitement around AI in healthcare may suggest we're on the brink of a major revolution, Cramer points out that we're actually witnessing a gradual but important evolution in the technology's capabilities.
Our Methodology
The article reviews a recent episode of Jim Cramer's Mad Money, where he discussed and recommended various stocks. It highlights ten companies that Cramer featured and explores their perception among hedge funds. The companies are ranked from the least owned to the most owned by hedge funds.
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).
A mechanic standing proudly in a factory floor surrounded by the engines the company produces.
Number of Hedge Fund Investors: 38
Jim Cramer compares Cummins Inc. (NYSE:CMI) to Jahmyr Gibbs of the Detroit Lions, noting that while both face some criticism -- Cummins for being an engine maker in a freight recession and Gibbs for sharing the workload with David Montgomery -- these concerns might be overstated. Cramer points out that Cummins Inc. (NYSE:CMI) is growing through new opportunities, such as selling backup power units for data centers, which was highlighted in their recent earnings call.
Cummins Inc. (NYSE:CMI) is a strong investment option due to its recent solid performance and forward-looking strategies. In Q2 2024, Cummins Inc. (NYSE:CMI) reported an EPS of $5.26, surpassing the expected $4.85, and earned $8.80 billion in revenue, exceeding the forecast of $8.33 billion. This 2.3% increase in revenue from the previous year was driven by high demand for its power generation and truck engines.
Cummins Inc. (NYSE:CMI) is also advancing in green technologies; its zero-emissions unit, Accelera, secured $75 million from the U.S. Department of Energy to boost manufacturing. Additionally, Cummins Inc. (NYSE:CMI)'s new battery joint venture with Daimler and PACCAR highlights its leadership in commercial vehicle electrification. Cummins Inc. (NYSE:CMI) has raised its full-year outlook, reflecting its growing market presence and commitment to alternative fuel technologies.
Parnassus Value Equity Fund stated the following regarding Cummins Inc. (NYSE:CMI) in its first quarter 2024 investor letter:
Overall CMI ranks 6th on our list of the stocks Jim Cramer thinks you should check out. While we acknowledge the potential of CMI as an investment, 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 CMI 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.