We recently published a list of Jim Cramer’s Top 10 Most Optimistic Stock PicksIn this article, we’ll look at how NextEra Energy Inc. (NYSE:NEE) stacks up against Jim Cramer’s other bullish stock picks.
On a recent episode of Mad Money, Jim Cramer expressed his excitement about the current market while highlighting an important historical perspective. He reminded viewers that 20 years ago, Google went public at $85 per share and closed its first day up 18%. While many traders were excited by that initial gain, looking back, it was a huge missed opportunity. The stock has since returned 7,736%, far outperforming the S&P 500’s return of just over 600%. This example illustrates the potential wealth that individual stocks can offer compared to broader indexes, especially if you choose wisely.
“Twenty years ago today, Google went public at a split-adjusted price of $85 per share. The stock closed up 18 percent on the first day. Many traders were excited by that initial gain and took the profit. In retrospect, this was one of the biggest mistakes of all time. Since then, the company has returned 7,736 percent, compared to the S&P 500’s return of just over 600 percent with dividends. This reminds us how much wealth individual stocks can generate compared to indexes if you choose wisely. And I’m telling you, it’s not that hard if you know how to do your research. So I think it’s time to rethink the average approach, at least for today.”
Cramer noted that despite strong recent performance — the Dow gained 237 points, the S&P 500 gained 0.97 percent and the NASDAQ gained 1.39 percent — the near-term market outlook is more complex. The market is currently on its longest winning streak since November of last year, with 93 percent of S&P 500 stocks posting gains.
However, he warned that the market could be “overbought,” as indicated by the Market Edge oscillator, a tool Cramer has relied on since 1987. When the oscillator hits plus five or more, it signals it may be time to sell. Conversely, readings of minus five or less indicate oversold conditions, suggesting it’s a good time to buy.
“While it was another good day for the markets, we must consider both the short-term and long-term outlook. The short-term backdrop is not so favorable. We are currently on a clear winning streak, with the market up for several days in a row, the longest streak since November of last year. Impressively, 93% of S&P 500 stocks are up.”
This came after a Monday when the market fell sharply due to the collapse of the yen carry trade, leading to a wave of forced selling and subsequent panic.
“As I have said many times, panic is not a strategy. Since that panic, the market has been mostly up.”
Jim Cramer has also expressed concern about the upcoming Justice Department case challenging the search engine giant’s role in the ad exchange market. This litigation could have a significant negative impact on the company, which has profited greatly from this system. A Justice Department victory could be even more damaging than the previous dispute with Apple over search engine defaults, which contributed to the company’s monopoly concerns.
According to Cramer, the resilience of the tech giants is evident, with strong recoveries occurring even after short-term dips. (see Top 33 AI companies to watch out for).
Jim Cramer emphasizes that investing in truly exceptional companies, rather than just tracking market indexes, usually yields the best returns. Cramer advises investors not to panic when markets fluctuate and to focus on strong companies for long-term success.
“As we look to the future, it’s important to remember that investing in truly great companies, rather than simply following the index, often yields the best returns. Google’s significant gains over 20 years are one example. Avoiding panic during market turbulence and holding on to strong companies is critical to long-term success.”
Our methodology
In this article, we discussed a recent episode of Jim Cramer’s Mad Money and highlighted ten stocks he is bullish on. We also included information on hedge fund sentiment for each stock and ranked them by how many hedge funds own them, starting with the least owned stock.
At Insider Monkey, we are obsessed with the stocks that hedge funds invest in. The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (Further details can be found here).
A wind turbine whose blades rotate to generate clean, renewable energy.
NextEra Energy Inc. (NYSE:NEE)
Number of hedge fund investors: 73
Jim Cramer expressed his strong support for NextEra Energy Inc. (NYSE:NEE), pointing out that the company offers a sizeable dividend. However, he admitted that his enthusiasm for NextEra Energy Inc. (NYSE:NEE) is primarily based on its attractive dividend and he has some concerns about whether there are any other compelling reasons to invest in the company.
“The stock I want to support the Brinks truck on is NextEra Energy Partners. It offers a high dividend, but I’m not sure why we should buy it beyond that – and that worries me a little.”
NextEra Energy Inc. (NYSE:NEE) is a top player in the renewable energy space with a strong focus on wind and solar energy. With a large pipeline of renewable energy projects, NextEra Energy Inc. (NYSE:NEE) will see significant revenue and earnings growth in the near future. The company’s proven track record of efficient operations and effective cost management supports this positive outlook.
The regulated utility business through Florida Power & Light (FPL) provides stability and reliable cash flow for NextEra Energy Inc. (NYSE:NEE). In addition, favorable government policies and incentives for renewable energy and carbon reduction align with NextEra Energy Inc.’s (NYSE:NEE) goals and position the company well for continued success in the evolving energy market.
ClearBridge Large Cap Growth Strategy stated the following about NextEra Energy, Inc. (NYSE:NEE) in its second quarter 2024 investor letter:
“Momentum around AI was a key performance driver in the second quarter, boosting both technology companies and holdings such as the renewable energy producer. NextEra Energy, Inc. (NYSE:NEE) that meet the growing energy needs of data centers. Non-AI-related parts of the market, such as our medical device holdings, underperformed despite unchanged fundamentals. We have weathered several similar periods of momentum during our tenure and delivered long-term results for shareholders by staying true to an approach that emphasizes diversification across three buckets of growth companies (select, stable and cyclical) and seeks to capitalize on attractive entry points in high-quality growth companies.”
Total NEE 6th place on our list of Jim Cramer’s best stock picks. While we recognize NEE’s potential as an investment, we believe AI stocks that fly under the radar promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than NEE but trades at less than 5x earnings, read our report on the cheapest AI stock.
READ MORE: $30 trillion opportunity: The 15 best humanoid robot stocks to buy, according to Morgan Stanley And According to Jim Cramer, NVIDIA has “become a wasteland”.
Disclosure: None. This article was originally published on Insider Monkey.
