We recently compiled a list of the Jim Cramer’s Latest Lightning Round: 10 Stocks to Watch. In this article, we are going to take a look at where NIO Inc. (NYSE:NIO) stands against the other stocks to watch according to Jim Cramer.
The host of Mad Money, Jim Cramer, shared his insights on the persistent issue of inflation. He emphasized that companies need to lower their prices to entice consumers in today’s economic climate. Cramer pointed out the hesitation many companies exhibit in reducing prices.
Cramer said:
“Companies are so reluctant to take prices down because they don’t want to hurt their treasured gross margins but I think it may be time for a giant reset.”
While prices may have stabilized and no longer surged as they once did, Cramer warned that this does not imply they are decreasing. He believes many companies are failing to recognize the necessity for price rollbacks.
He gave a few examples from the liquor industry, where some producers have said that declining sales shifts are because of consumer preferences toward healthier lifestyles rather than acknowledging high prices.
Cramer went on to say:
“Funny enough, if you keep prices low, you can indeed make it up in volume because the consumer is a lot smarter than some of these companies are ever willing to admit.”
Cramer mentioned that both consumers and Wall Street are responding positively to companies that have opted for discounts or price reductions. He talked about the decision by McDonald’s to extend its $5 value meal, which has successfully attracted lower-income customers, and it led to an increase in its stock value.
Cramer mentioned that giants like Amazon, Costco, and Walmart have seen substantial stock gains this year. Cramer believes that businesses willing to reduce prices can compensate for their margins through increased sales volume.
Cramer speculated:
“I think we’ll look back on 2024 as the year when consumers took matters in their own hands and actually said no to inflated prices.”
He warned that companies that fail to adapt may face dire consequences, including leadership changes and plummeting stock prices. Talking about the consequences, he said:
“The result? Fired CEOs and crushed stock prices for all those who refused to heed the thunder, the thunder of those angry consumers who finally just said no to the scourge of inflation.”
Our Methodology
For this article, we compiled a list of 10 stocks that Jim Cramer talked about during the lightning rounds of his Mad Money episodes on October 1 and 2. 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).
A fleet of eco-friendly electric cars, a symbol of the company’s commitment to sustainability.
NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 20
NIO Inc. (NYSE:NIO) is engaged in the design, development, manufacturing, and sale of smart electric vehicles in China, offering a range of five and six-seater electric SUVs as well as smart sedans.
It differentiates itself through its comprehensive power solutions, which include Power Home for home charging, Power Swap for battery swapping, as well as both Power Charger and Destination Charger options. Additionally, the company offers a mobile charging service, Power Mobile.
Upon being asked about the company, Cramer said “I want you to hold on”.
Recently, NIO (NYSE:NIO) announced a significant cash injection of $1.9 billion. The investment comes from a group of strategic investors based in Shanghai, which includes Hefei Jianheng New Energy Automobile Investment Fund Partnership, Anhui Provincial Emerging Industry Investment Co., and CS Capital Co.
Together, the investors will contribute approximately 3.3 billion yuan, or about $470.6 million, to the subsidiary, NIO China. Alongside this investment, the company has committed to injecting 10 billion yuan, or roughly $1.43 billion, to acquire newly issued shares in NIO China.
It will increase its controlling interest in the subsidiary to 88.3%, while the remaining 11.7% will be held by strategic investors and existing shareholders.
The financial arrangement will be executed in two phases, with 70% of the funds expected to be delivered by November 2024, and the remaining 30% scheduled for December 2024. According to NIO’s (NYSE:NIO) press release, this strengthened financial foundation is designed to improve its long-term capabilities in technology, product development, services, and community engagement.
Overall NIO ranks 8th on our list of the stocks to watch according to Jim Cramer. While we acknowledge the potential of NIO 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 NIO 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.