We recently published an article titled, Jim Cramer’s Best Performers List: Top 10 Picks. In this article, we are going to take a look at where Axon Enterprise, Inc. (NASDAQ:AXON) stands against other stocks in Jim Cramer’s best performers list.
During Mad Money’s episode on October 1, host Jim Cramer urged investors to remember the market’s strong performance over the past quarter, making note of the rising tensions in the Middle East, which led to a decline in major stock indices on Tuesday.
He pointed out that the landscape has shifted beyond just the major technology companies, and shed light on the top performers of the S&P 500. Cramer observed that the last three months have witnessed what he described as “the revenge of the little guy companies.” He said:
“When you look at the 10 best performers of the third quarter, we discover that this formerly narrow market has totally changed its stripes.”
Cramer emphasized that the current market rally is driven by companies that are often overlooked. He said:
“It is a remarkable list that represents a real broadening out of the winners. Some would say it’s a sign of where we’re headed. I might not go that far, but clearly, we need to start digging a lot deeper to find winners going forward.”
In his recent commentary, Cramer highlighted that the major winners of the third quarter were unexpectedly obscure, primarily comprising a group of ten stocks focused on power generation and interest rate cuts.
He pointed out that these stocks diverged from the well-known Magnificent Seven and traditional FAANG names, with an absence of fast-growing medical or cybersecurity companies, many of which have faced challenges recently.
Cramer suggested that investors look to the bottom of the S&P 500 for insights into market trends. He noted that Super Micro finished last for the quarter, plummeting 49%. It serves as a reminder that backing the wrong AI investment can lead to significant losses. Despite this, Cramer emphasized the need for the market to focus on new stocks for long-term growth rather than relying on past leaders.
Our Methodology
For this article, we compiled a list of 10 stocks that Jim Cramer mentioned during his episode of Mad Money on October 1. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
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).
Jim Cramer Says Axon Enterprise, Inc. (NASDAQ:AXON) ‘Has Been Red Hot For Ages’
Axon Enterprise, Inc. (NASDAQ:AXON)
Number of Hedge Fund Holders: 36
Axon Enterprise, Inc. (NASDAQ:AXON) is engaged in the development, manufacturing, and sale of conducted energy devices (CEDs) under the TASER brand. The company operates through two main segments, Software and Sensors, and TASER.
It offers a comprehensive range of products that includes various Taser models, such as Taser 10 and Taser 7, as well as camera systems like Axon Body and Axon Fleet. Its software solutions encompass Axon Records and Evidence, supplemented by mobile applications, training services, and hardware extended warranties.
Cramer mentioned the company and said:
“Axon stock has been red hot for ages so it’s no surprise at all that it rallied another 35.8% in the third quarter. [It] seems strange that we don’t talk about this stock more but it’s very much part of the broadening of the winners column.”
In August, Axon Enterprise (NASDAQ:AXON) reported a significant increase in quarterly revenue, up 35% compared to the previous year. The growth was largely driven by a remarkable 47% rise in cloud sales, along with a 28% increase in Taser revenue.
The quarter marked an important achievement for the company, as cloud revenue reached $195 million, nearly matching the $197 million generated from hardware sales. The company serves customers across all 50 states in the U.S. and operates in 90 countries, with Axon Cloud now housing over 2 billion law enforcement evidence files.
The extensive cloud infrastructure is becoming essential for local, state, federal, and international public safety agencies, whether for evidence collection or analysis. The profitability of the cloud business adds another layer of appeal, as it recorded a gross margin of 72.4% for the quarter.
By the end of the reporting period, Axon Enterprise (NASDAQ:AXON) had secured $7.3 billion in future contracted revenue, a substantial increase from $5.2 billion the previous year.
Overall, AXON ranks 8th on our list of Jim Cramer’s best performers. While we acknowledge the potential of AXON as an investment, our conviction lies in the belief that 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 AXON but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.