We recently compiled a list of the Jim Cramer’s Best Performers List: 12 Stocks Cramer is Talking About. In this article, we are going to take a look at where Fair Isaac Corporation (NYSE:FICO) stands against the other best performers on Jim Cramer’s list.
On a recent episode of Mad Money, Jim Cramer took a moment to celebrate the two-year anniversary of the current bull market. He mentioned that this particular bull market has been quiet and gentle, which he attributes to the unusual circumstances surrounding its rise. “The whole first year of this bull’s life was an anomaly. That’s because the Fed was furiously tightening and the market went up anyway,” Cramer explained.
He emphasized that for the past two years, opportunities have been evident, stating, “Every night I say there’s always a bull market somewhere, and for the last two years, well, it’s been right in front of you.”
Cramer then went on to discuss the lead performing stocks and ended the segment, saying:
“The bottom line, if you’re going to buy these stocks, I’d go first with Nvidia, then with Broadcom, and finally Fair Isaac, if only because we need something that’s not connected to the data center, even as we know, it will remain a strong story for the ages.”
Cramer also advised investors to shift their focus away from the consumer price index (CPI) report, suggesting that its significance has diminished since the Federal Reserve began cutting rates.
“We had to be concerned about this stuff when the Fed was on the warpath, either raising rates or leaving them higher for longer. Now, though, the Fed is your friend, so I wouldn’t obsess about the details.”
He did emphasize, however, that the monthly labor report remains important in the current climate. He remarked on the tendency for many to become “Fed watchers,” suggesting that this reliance on government data can detract from the deeper analysis of individual companies. Cramer referenced Austan D. Goolsbee, president of the Chicago Fed, who advised against an overemphasis on CPI data, as the Fed is unlikely to base decisions on it. Cramer explained:
“When the Fed’s raising rates in order to stamp out inflation, it can be very important. When we’re in a rate hike cycle, you’re trying to figure out when that’s going to end. But we’re not in that kind of cycle anymore. We’re in a rate cutting cycle.”
Cramer explained that last month the Fed implemented a double rate cut, setting a downward trend that is expected to continue. He added:
“Sure, if we had a huge spike in the CPI this morning, then maybe the Fed would change its stance. But that would have to be an extreme reading. And there’s nothing extreme about today’s 2.4% inflation number, just a tick above the expected 2.3, still down from the 2.5% reading from the prior month.”
Cramer concluded with a strong reminder about the nature of investing. “Forget the macro, people. It’s not that meaningful when the Fed’s cutting rates. And keep your eyes on the prize: Earnings,” he urged. Ultimately, he reinforced that earnings dictate stock prices in the long run, and that’s where the focus should be for those looking to make money in the market.
Our Methodology
For this article, we compiled a list of 12 stocks with the biggest gains over the past 2 years that were mentioned by Jim Cramer during his episode of Mad Money on October 10. 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 hands-on approach: technicians working on data management products in an open lab space.
Fair Isaac Corporation (NYSE:FICO)
Number of Hedge Fund Holders: 42
Cramer discussed Fair Isaac Corporation (NYSE:FICO) and mentioned the universal use and recognition of FICO scores. He fully endorses the stock and thinks the company is great.
“We’ve talked about the fifth biggest winner, it’s called Fair Isaac, before. In fact, we had the CEO, William Lansing, really impressive fellow, on the show a couple times this year. This one does credit score. You probably know it as FICO, and it’s by far the best at what it does. The FICO score is universally used, and no competitor comes close to its predictive power. I think Fair Isaac could be bought tomorrow morning, even with the stock up 390% in the past two years. And that is how great the company is. Full endorsement.”
Fair Isaac (NYSE:FICO) specializes in creating analytic and software solutions that empower businesses to automate and refine their decision-making processes. Additionally, its products include adaptable software platforms and scoring solutions that incorporate predictive analytics and can be seamlessly integrated into their transaction workflows and decision-making processes.
In its third quarter of fiscal 2024, Fair Isaac (NYSE:FICO) reported a revenue increase of 12.3% compared to the previous year, reaching $447.8 million. The company’s adjusted EPS also saw a rise, climbing to $6.25 from $5.66 a year earlier. It aligns well with the updated full-year earnings guidance of $23.16 by management.
On October 1, Wells Fargo analyst Jason Haas raised the price target on the stock to $2,200 from $2,100 and kept an Overweight rating. He also included the stock in the “Q4 Tactical Ideas List.” The firm projects a potential pricing advantage of nearly $200 million for fiscal year 2025 if FICO raises its mortgage score price to $5.00, with additional growth expected from pricing in the auto and card sectors.
Overall FICO ranks 12th on Jim Cramer’s list of best performing stocks. While we acknowledge the potential of FICO 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 FICO 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.