We recently compiled a list titled Jim Cramer’s Top 10 Stocks to Track for Potential Growth. In this article, we will look at where MongoDB, Inc. (NASDAQ:MDB) ranks among Jim Cramer’s top stocks to track for potential growth.
In a recent episode of Mad Money, Jim Cramer points out the surprising strength in the market, noting that many companies are performing better than Wall Street recognizes. He argues that people should stop doubting these companies every time there’s a negative data point. Cramer highlights the impressive management and execution by CEOs, which often goes unnoticed.
“Suddenly, all is forgiven, or if not all, then at least most. I’m talking about the incredible resilience in this market, buoyed by a recognition that many companies are simply better than Wall Street gives them credit for. We need to stop turning against them every time there’s a seemingly bad data point. Every day I come to work, I’m dazzled by the resourcefulness of executives who do their best to create value for you, the shareholder. Lots of stocks went up on days like today when the Dow advanced 335 points, the S&P gained 75%, and the NASDAQ jumped 1.0%, all thanks to good management and excellent execution that often goes unnoticed.”
While Cramer acknowledges that some CEOs deserve skepticism, he emphasizes that many are outstanding and deserve recognition for their hard work. He criticizes the focus on short-term economic indicators and emphasizes that great companies aren’t distracted by minor fluctuations.
“Listen, I’m not a pushover. I can hit CEOs with tough questions when needed, some of them deserve skepticism and scorn. But there are also plenty of brilliant, hardworking CEOs with incredible teams, and you ignore their hustle at your own peril. This often gets lost in the shuffle when we’re focused on the parlor game of guessing the Fed’s next move—a quarter point, half a point, quarter, half. You know what I say? Let’s get serious. Terrific companies don’t get caught up in that quarter-half shuffle.”
Cramer explains how Kroger CEO Rodney McMullen has led the supermarket chain to success despite challenges, including resistance to its acquisition of Albertsons and a tough economic environment. McMullen has managed to keep food costs down and deliver strong results through effective strategies like a superior loyalty program and regional store improvements. Despite high food prices, the company’s stock rose more than 7% following a positive earnings report, showcasing the company’s successful turnaround.
“CEO Rodney McMullen has managed to keep food costs down and deliver fantastic numbers, all while maintaining an expensive, unionized labor force in a very uncertain commodity environment. How? The company confounded critics by developing a superior loyalty program, regionalizing their stores, and creating some of the best private-label products out there, second only to Costco. Food is still expensive, but cooking at home is far cheaper than dining out. McMullen tells us that consumers are no longer flush with cash, especially his most budget-conscious clientele. He notes, “Budget-conscious customers are buying more at the beginning of the month to stock up on essentials, and as the month progresses, they become more cautious with their spending.”
Wow, that’s a tough environment. When I heard this, I thought back to the old company, the one that used to miss its numbers whenever the environment got a little tough. Everybody else remembers the old company too, which is why the stock was just sitting there waiting to be picked up, until this quarter’s report, after which it soared more than 7% in response to the fabulous results. Everyone thought the company would drop the ball, as they used to, but McMullen has finally whipped his supermarket into shape.”
Cramer contrasts this with the tech industry, where complex details often lead Wall Street to misunderstand a company’s true potential. He believes that in tech, analysts frequently overlook the expertise and capabilities of CEOs who have a deep understanding of their businesses.
“We all need to eat, so it’s not hard to understand the grocery business. But it’s quite different when it comes to tech, where analysts constantly doubt the resolve and expertise of CEOs who simply know more about their businesses than the critics. In tech, the complexity often leads Wall Street to conclusions that have little to do with reality.”
Our Methodology
This article reviews a recent episode of Jim Cramer’s Mad Money, where he discussed several stocks. We selected and analyzed ten companies from that episode and ranked them by the level of hedge fund ownership, from the least to the most owned.
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 software engineer hosting a remote video training session on a multi-cloud database-as-a-service solution.
MongoDB Inc.(NASDAQ:MDB)
Number of Hedge Fund Investors: 54
Jim Cramer believes MongoDB, Inc. (NASDAQ:MDB) is an enterprise software company delivering excellent results, but it isn’t receiving the same level of recognition as competitors like Salesforce.com (NYSE:CRM). He notes that investors generally seem to shy away from enterprise software companies, with the exception of Salesforce.com (NYSE:CRM). However, Cramer feels that MongoDB, Inc. (NASDAQ:MDB) is currently at a good price, suggesting it may be undervalued despite its strong performance. Cramer sees potential in MongoDB, Inc. (NASDAQ:MDB) and implies it deserves more attention in the enterprise software space.
“You know, MongoDB, Inc.(NASDAQ:MDB) is an enterprise software company that put up terrific numbers and isn’t getting credit in the same way Salesforce.com, inc. (NYSE:CRM) and others are. People tend to dislike enterprise software, except for ServiceNow. I think MongoDB, Inc.(NASDAQ:MDB) is at the right price.”
MongoDB, Inc. (NASDAQ:MDB) offers a strong case for long-term growth, driven by its outstanding financial performance and strategic advancements. In Q2 2024, MongoDB, Inc. (NASDAQ:MDB) reported a 40% jump in revenue, reaching $423.8 million, with its cloud-based Atlas platform accounting for 65% of total revenue. This growth exceeded market expectations and demonstrates the growing demand for its flexible database solutions. MongoDB, Inc. (NASDAQ:MDB) also turned its operating loss from the previous year into a profit of $53.6 million, reflecting its ability to grow while controlling costs.
Analysts are optimistic about MongoDB, Inc. (NASDAQ:MDB), with KeyBanc raising its price target to $543, citing MongoDB’s dominant position in the NoSQL database market and its potential to capitalize on rising demand from cloud and AI-driven applications. MongoDB, Inc. (NASDAQ:MDB)’s educational initiatives, such as partnering with India’s Ministry of Education to train 500,000 students, further strengthen its developer community and support future growth.
ClearBridge All Cap Growth Strategy stated the following regarding MongoDB, Inc. (NASDAQ:MDB) in its first quarter 2024 investor letter:
“During the first quarter, we initiated a new position in MongoDB, Inc. (NASDAQ:MDB), in the IT sector. The company offers a leading modern database platform that handles all data types and is geared toward modern Internet applications, which constitute the bulk of new workloads. Database is one of the largest and fastest-growing software segments, and we believe it is early innings in the company’s ability to penetrate this market. MongoDB is actively expanding its potential market by adding ancillary capabilities like vector search for AI applications, streaming and real-time data analytics. The company reached non-GAAP profitability in 2022, and we see significant room for improved margins as revenue scales.”
Overall MDB ranks 6th on the list of Jim Cramer’s top stocks to track for potential growth. While we acknowledge the potential of MDB 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 MDB 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 was originally published on Insider Monkey.