We recently compiled a list of the A Game Changer: Jim Cramer’s Latest Top 10 Stock Picks. In this article, we are going to take a look at where Salesforce.com Inc. (NYSE:CRM) stands against Jim Cramer’s other stock picks.
Jim Cramer: Billions to Flood the Market as Double Rate Cut Sparks Stock Surge!
In a recent episode of Mad Money, Jim Cramer explains that a double rate cut, or a 50 basis point reduction, is likely to attract tens of billions of dollars into the stock market from investors who have been sitting on the sidelines. Many people have been holding onto cash in money funds, eager to invest, especially as rates start to decline. While some are tied up in CDs or treasuries, those inaccessible money funds see the opportunity to move their cash into high-yield dividend stocks.
Cramer warns that they need to act quickly, as these stocks will soon rise in price and lose their high-yield appeal. He also criticizes commentators on television who downplay the Fed’s impact by focusing on the national debt. He argues that these voices are not interested in helping everyday investors; instead, they cater to the wealthy. Cramer reminds listeners that their audience is diverse, and it’s essential to focus on making informed investment decisions.
“When you get a double rate cut, meaning a 50 basis point monster, well, that’s going to bring tens of billions of dollars into the stock market from the sidelines. The sidelines have been so lucrative for so long that people in money funds have been coveting their dollars. Sure, there are plenty of folks sitting in two- to three-year CDs or treasuries who can’t easily cash out, but if you’re in an easily accessible money fund, you can see rates are going lower now, right? That’s all the more incentive to put your cash into, say, dividend stocks with high yields. You’ve got to do it fast because pretty soon, the high yielders will rally to the point where they’re just mid-yielders.
No matter how smart they sound, the people who come on television to argue that the Fed’s actions don’t matter because the national debt is too big are being unhelpful. These people are not concerned with helping you make money; you’re not important to them. They’re speaking to the billionaire class. Yes, they crowded you out a long time ago. Remember, we do have all sorts of audiences.”
Additionally, Jim Cramer points out that many Wall Street analysts like to go against popular opinion, which leads them to downplay the importance of a half-point rate cut. He believes this perspective ignores common sense. Cramer acknowledges that while aging has its downsides, like not being able to move around as easily at events, he feels he has gained wisdom. He understands the situation better than those who argue that the rate cut indicates panic, simply by being present and observing the market.
“Everybody on Wall Street loves to be a contrarian, which is why so many commentators keep trying to minimize the impact of a half-point rate cut. Not me! No matter what, common sense dictates that there are always people who think they know better than common sense, and they don’t. There are so few advantages to age, I have to tell you.”
Can the 50 Basis Point Cut Spark Stock Gains and Revive Housing?
Jim Cramer points out that during rate cuts, there are many promising winners to consider, while the losers are easy to spot and should be avoided. He emphasizes that when the Wall Street Journal reported the chance of a 50 basis point cut, it opened up more opportunities for stocks to benefit. A smaller 25 basis point cut could have aided homebuilders if they had built more homes, but they’ve been reluctant due to high rates. However, a 50 basis point cut will lower mortgage rates, making homes more affordable and likely giving a boost to the housing market.
“The winners in an easing cycle are varied and exciting, while the losers are obvious and must be avoided. From the moment the Journal reported that there could be a 50 basis point cut, the swatch of what can go higher expanded dogmatically. A 25-point cut would have been truly beneficial for homebuilders if they would just start building a lot more homes, that’s something they’ve been reluctant to do because rates are still too high. But a 50 basis point cut means lower mortgages for certain and, therefore, more affordable homes.”
Our Methodology:
In this article, we delve into the latest episode of Jim Cramer’s Morning Thoughts, where he analyzed various stocks. We rank these companies based on their popularity among hedge funds, starting with the least owned and moving up to the most favored.
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 customer service team in an office setting using the company’s Customer 360 platform to communicate with customers.
Salesforce.com Inc. (NYSE:CRM)
Number of Hedge Fund Investors: 117
Jim Cramer reports that KeyBanc believes Agentforce, a new initiative from Salesforce.com Inc. (NYSE:CRM), will require significant investment but will ultimately pay off. The analysts described it as a revolutionary approach to integrating AI. Barclays echoed this sentiment, stating that Agentforce will be a major success, especially given Salesforce.com Inc. (NYSE:CRM)’s extensive data resources.
“KeyBanc said that Agentforce is something that Club name Salesforce will spend a lot of money on and it will pay off. The analysts described it as a whole new way to accept AI. Barclays said Agentforce will be huge, too. Remember, Salesforce has all the data.”
Salesforce.com, Inc. (NYSE:CRM) has a promising outlook, bolstered by strong Q2 2024 earnings that reported $8.6 billion in revenue, a 17% increase from the previous year, and a net income of about $1.2 billion. Salesforce.com, Inc. (NYSE:CRM) success stems from notable growth in subscription and support revenue, driven by high demand for its cloud solutions. As more businesses transition to digital, Salesforce.com, Inc. (NYSE:CRM)’s strong foothold in Customer Relationship Management (CRM) positions it to capture a larger share of the market.
Salesforce.com, Inc. (NYSE:CRM) is making significant investments in artificial intelligence through its Einstein platform, enhancing customer experiences and streamlining sales processes, particularly with the introduction of new generative AI features. Strategic acquisitions like Slack and Tableau have broadened its product offerings, enhancing collaboration and analytics.
With a diverse and expanding customer base, Salesforce.com, Inc. (NYSE:CRM) serves both small businesses and large enterprises. Its commitment to sustainability and social responsibility aligns well with current market trends, boosting its reputation. Recent innovations in product features and a growing partner ecosystem further demonstrate Salesforce.com, Inc. (NYSE:CRM)’s dedication to enhancing user experience and collaboration, highlighting its potential for growth in the tech industry.
Ithaka US Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q2 2024 investor letter:
“Salesforce, Inc. (NYSE:CRM) is the largest pure-play cloud software company, holding a leading market share in customer relationship management applications and a top-five market share position in the company’s other clouds (Marketing, Service, Platform, Analytics, Integration, and Commerce). The company’s software subscription term-license model differs from the traditional perpetual-license software model in two respects:
(1) the software is hosted on centralized servers and delivered over the internet, as opposed to traditional enterprise software that is loaded directly onto customers’ hard drives or servers; and (2) the revenue model is subscription-based, typically charging monthly fees per user as opposed to charging one-time licensing fees. The stock’s weak relative performance followed its fiscal first quarter earnings announcement, where the company missed top-line and cRPO (current remaining performance obligations) estimates while also issuing weak forward guidance.”
Overall CRM ranks 2nd on our list of Jim Cramer’s latest top 10 stock picks. While we acknowledge the potential of CRM 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 CRM 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.