Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell

In this article, we will take a detailed look at Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell.

Commenting on the aggressive rate cut by the Federal Reserve, Jim Cramer said in a latest program on CNBC that the “double” rate cut was needed for the economy and it would help the housing market, industrials and companies catering to the “less well-off” households.

“There really are two economies in this country. There is the one that needs lower interest rates because business is slowing and it’s harder to find a job and then there is one that says we don’t really care about where the stinking rates are. That’s who we can get a double rate cut today and still going lower.”

Cramer said he is currently in Silicon Valley and after talking to many companies, he feels tech companies do not care about interest rates since they are selling to businesses. Cramer said these technology companies are focused on innovation.

For this article, we picked 10 stocks Jim Cramer recently talked about during his latest programs on CNBC. With each company we have mentioned the number of hedge fund investors. 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).

10. IONQ Inc (NYSE:IONQ)

Number of Hedge Fund Investors: 12

When asked about quantum computing hardware and software company IONQ Inc (NYSE:IONQ), Jim Cramer said that he cannot recommend the stock because it’s losing too much money.

Cramer is right about IONQ Inc (NYSE:IONQ) losing money. While it has no debt and over $360 million in cash and marketable securities, it’s burning a lot of cash.

In the second quarter, IONQ Inc (NYSE:IONQ) generated just under $8 million in revenue but burned through more than $34 million in free cash flow. For every $1 of revenue, IonQ is spending $4 in cash, which is far from sustainable.

Quantum computing is a promising but capital-intensive industry with no promises of profits especially in the current volatile environment.

IONQ Inc (NYSE:IONQ) focuses on quantum computing, a cutting-edge technology that uses quantum mechanics to solve problems beyond the capabilities of traditional computers. The company is improving the accuracy and performance of its systems by increasing the fidelity of its qubits, the fundamental units of quantum information. By enhancing the fidelity of its barium qubits, IonQ aims to reduce errors and move closer to commercially viable quantum solutions.

IONQ Inc (NYSE:IONQ) has made notable progress in the commercial sector, surpassing revenue expectations and securing a significant contract with ARLIS, part of the U.S. national security apparatus. With innovations such as new error-correction techniques and ongoing improvements in qubit fidelity, IonQ is optimistic about reaching key milestones in quantum computing by 2025.

IONQ Inc (NYSE:IONQ) has increased its revenue outlook for 2024, but consistent profitability remains elusive, and scalable quantum computing is still a long-term objective. The stock is currently priced at 36x forward sales, down from over 50x earlier this year. But even at 34x, expectations are sky-high for a company that is far from profitable.

9. Garmin Ltd (NYSE:GRMN)

Number of Hedge Fund Investors: 31

Jim Cramer in a latest program praised Garmin Ltd (NYSE:GRMN) products, saying the company has “unbelievable” fitness watches and fishing equipment.

Cramer said that Garmin is the “real deal.”

“This company has it going people have given up on it they are quite wrong and you are dead right it is going higher.”

Thanks to its high spending on R&D, Garmin Ltd (NYSE:GRMN) has been able to develop a diverse revenue stream. It operates across five segments: fitness, outdoor, aviation, marine, and auto OEM, with the outdoor segment generating the highest revenue and operating income in 2023.

Garmin is known for its innovation, particularly in the aviation and marine sectors, where it is a market leader. In aviation, Garmin Ltd (NYSE:GRMN) has won top honors in Aviation International News’ Product Support Survey for flight deck avionics for 20 consecutive years. In the marine industry, it was recently named Supplier of the Year by Independent Boat Builders, Inc.

The wearable and smartwatch market, where Garmin Ltd (NYSE:GRMN) fitness and outdoor products play a key role, is also expanding. According to Grand View Research, the North American wearables market is expected to grow at a compound annual growth rate (CAGR) of 12.9%. This positions Garmin Ltd (NYSE:GRMN) well for continued growth in these categories.

Garmin (GRMN) holds a strong financial position with approximately $2.2 billion in cash and no debt.

Diamond Hill Long-Short Fund stated the following regarding Garmin Ltd. (NYSE:GRMN) in its fourth quarter 2023 investor letter:

“Other bottom contributors included our short positions in Garmin Ltd. (NYSE:GRMN) and International Business Machines (IBM), as well as our long position in Chevron. Outdoor fitness and adventure equipment maker Garmin benefited from strong growth in its fitness and auto original equipment manufacturer segments. Over the long term, we believe the company’s high-end wearables products will face significant competition from competitors like Apple and Samsung.”

8. Hertz Global Holdings Inc (NASDAQ:HTZ)

Number of Hedge Fund Investors: 38

When asked about Hertz Global Holdings Inc (NASDAQ:HTZ) in a latest program, here is what Jim Cramer said:

“That stock really does have me very concerned.”

Hertz Global Holdings Inc (NASDAQ:HTZ) shares are down about 69% so far this year. The company’s second-quarter results came in short of market expectations amid the “fleet refresh” steps taken by the company and higher operating expenses per transaction in addition to depreciation costs that has been dragging the company’s results for multiple quarters.

The rise in direct operating expenses per transaction was primarily due to non-recurring charges, with the rest attributed to higher insurance, personnel, collision, and damage costs, as well as general inflation. Adjusted corporate EBITDA turned negative at $460 million, compared to a positive $347 million last year, mainly driven by a spike in vehicle depreciation, which jumped to $600 per unit per month from $197 a year earlier.

The number of rental vehicles grew by 3%, but utilization dropped by 2 percentage points to 80%. Revenue per transaction day (RPD) fell 3% to $59.94, contributing to a 3% drop in overall revenue to $2.4 billion, falling short of Wall Street estimates.

On the balance sheet, vehicle-related debt increased by 4.3%, while non-vehicle debt surged 33%, leading to an 11% rise in total debt to $17.4 billion. Free cash flow remained negative, widening to -$553 million.

Amid increasing problems and lack of visibility into new catalysts, analysts believe it’s better to stay away from Hertz Global Holdings Inc (NASDAQ:HTZ) for now.

7. Motorola Solutions Inc (NYSE:MSI)

Number of Hedge Fund Investors: 42

When asked about Motorola Solutions Inc (NYSE:MSI), Cramer said the company is “incredibly, incredibly good.”

“I got to tell you, it does two-way radios, it does barcodes, it does lots of government infrastructure and it just coins money,” Cramer added.

Motorola Solutions Inc (NYSE:MSI) has raised its full-year revenue growth guidance to 8% as it reported strong growth in the second quarter for Video Security and Land Mobile Radio (LMR) businesses, with year-over-year increases of 10% and 9%, respectively.

For Motorola Solutions Inc (NYSE:MSI), Video security remains a key growth area for the company, covering both fixed and mobile solutions that offer end-to-end security for the public sector, including detection, analysis, and communication tools. Rising demand for public safety from governments and agencies continues to drive this expansion.

Motorola Solutions Inc (NYSE:MSI) has been investing in its video offerings, launching new products like a video recorder that works on both cloud and on-premises platforms. Its large customer base for LMR products also relies on regular upgrades and services, supported by the ongoing APX NEXT refresh cycle, which could boost revenue as outdated tech is replaced. Analysts believe the company can deliver high-single-digit revenue growth soon. The LMR business is benefiting from supply chain improvements and should grow 10% in FY24. In video, Motorola’s Avigilon Unity Video 8, its latest surveillance solution, should drive a 12% increase. Cloud-based video management could also make this business more recurring.

Wedgewood Partners stated the following regarding Motorola Solutions, Inc. (NYSE:MSI) in its Q2 2024 investor letter:

“Motorola Solutions, Inc. (NYSE:MSI) was a contributor to performance as the Company continued its steady execution with +10% sales growth and +20% operating earnings growth. Motorola also continues to grow its backlog due to its competively advantaged core land mobile radio (LMR) business is a critical long-term solution for emergency services around the globe. The technology behind LMR is relatively simple compared to current 5G wireless standards, but it is an extremely robust implementation that must withstand regular and even mega catastrophes to guarantee uptime to the emergency services that depend on it for communications. Motorola has unmatched competitive positioning in this core business and should be able to continue to expand value-added service offerings to LMR and drive attractive long-term growth.”

6. AES Corp (NYSE:AES)

Number of Hedge Fund Investors: 46

Jim Cramer was recently asked about the utility and power generation company AES Corp (NYSE:AES). Here is what he said:

“I think it’s good. At 4% yield, I am surprised it is this low. It is very inexpensive. Let’s go for it.”

Jefferies recently started covering AES Corp (NYSE:AES) shares with a Buy rating and a  $20 price target, as the firm sees the company as “a way to gain exposure to U.S. renewables with a quality improvement twist at a discounted price.”

AES Corp (NYSE:AES) is selling power in 15 countries and employs about 10,000 people. As a Fortune 500 company, AES positions itself as a key player in the renewable energy sector, with plans to expand its solar power portfolio to 25-30 GW by 2027. The company expects a 10% annualized base growth rate, one of the highest in the U.S. utility sector, making it an attractive investment.

AES Corp (NYSE:AES) has a 66 GW development pipeline, with 12.7 GW in backlog and nearly 35 GW already in operation, of which 54% is renewable. So far this year, it has added over half a gigawatt and aims to add 3.6 GW by year-end. For 2024, 92% of the necessary equipment for construction is already on-site.

Much of AES Corp (NYSE:AES) future demand will come from data centers, with major tech companies—many of which are committed to CO2-neutral operations by 2030—accounting for over 40% of its backlog. This sector is likely to fuel AES’s growth.

AES Corp (NYSE:AES) talked in detail about its data center projects in its latest earnings call:

“We have further expanded our partnership with Google, signing a 15-year PPA for 727 megawatts in Texas to power its datacenter growth.

The agreement includes a combination of wind and solar to further Google’s 24-7 carbon-free energy goals. These projects are expected to come online in 2026 and 2027. We also recently signed a retail supply agreement with Google for 310 megawatts to support their Ohio datacenters. This agreement demonstrates the strong trust and collaboration between our companies, which began with our original 2021 partnership to provide 24-7 renewable power in Virginia. We see further opportunities to add renewables to support Google’s datacenter growth in Ohio. Turning to slide seven, with these major announcements today on our collaborations with hyperscalers, we have now signed a total of 8.1 gigawatts directly with technology companies, which is clearly a leading market position.”

Read the entire earnings call transcript here.

5. Domino’s Pizza Inc (NYSE:DPZ)

Number of Hedge Fund Investors: 52

Cramer was recently asked about Domino’s Pizza Inc (NYSE:DPZ). Here is what he said:

“Domino’s itself did screw up. They didn’t know that they had a weak franchise that was missing its numbers from overseas, and that caused people to think that wait a second maybe they are not in control of their destiny as we thought and that’s why the stock is going down and that is the actually worry for me too.”

In July, Australia’s Domino’s Pizza (NYSE:DPZ) said it will close up to 80 low-volume stores in Japan and 10–20 stores in France and anticipates flat to slightly positive store growth for the current fiscal year.

Domino’s Pizza Inc (NYSE:DPZ) shares have been posting lackluster performance ever since the glory days of the pandemic ended. While the company still expects to open about 175 net new stores per year from 2024 to 2028, it’s facing growth headwinds internationally.

So far this year the stock is down about 2%. Despite this, it’s fairly valued and investors should not expect strong growth in the stock price during the upcoming months. Wall Street expects Domino’s Pizza Inc (NYSE:DPZ) to post $16.16 in earnings per share (EPS) for fiscal 2024, giving the stock a forward price-to-earnings (P/E) ratio of 25.3x. While this is about 16.2% lower than the five-year average of 30.15x, the drop is somewhat justified as the company’s growth has slowed. Domino’s five-year compound annual growth rate (CAGR) for diluted EPS is 11.9%. Analysts’ current estimates suggest slightly slower growth.