We recently compiled a list of the Jim Cramer on Tesla and Other Stocks. In this article, we are going to take a look at where ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) stands against the other stocks Jim Cramer is talking about.
Jim Cramer, host of Mad Money, emphasized the ongoing significance of fossil fuels in supporting technological advancements, even as investments in renewable energy continue to increase. He stated:
“This is not just a grudge match between the old and the new, a battle of electric vehicles versus internal combustion. The truth is, fossil fuels are essential for a lot more than vehicles, like it or not.”
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Cramer highlighted the growing energy demands of major tech companies, noting that the data centers they are constructing consume vast amounts of electricity. While these tech giants are making substantial investments in nuclear energy, he pointed out that this power source is unlikely to significantly impact data centers for at least another decade due to the complexities of building nuclear facilities and community resistance to having them nearby.
“If we need more energy, we’re going to get it from what comes out of the ground … fossil fuels that will power the data center, specifically natural gas… You may be reluctant to invest in it, you might think who cares, but you need to know how vital all of this fossil fuel technology is to the growth of the Magnificent Seven.”
Cramer also reflected on the shift in the U.S. energy landscape, recalling how the nation was once heavily reliant on OPEC for oil imports just two decades ago. Today, he pointed out, the U.S. produces over 13 million barrels per day, making it the largest oil producer globally and a net exporter. He mentioned the Permian Basin’s unexpected resilience, continually producing despite earlier predictions of depletion.
Cramer noted that the decline of OPEC has transformed the geopolitical landscape. He referenced the 1973 oil crisis, triggered by OPEC’s retaliation against U.S. support for Israel, which led to stagflation and economic turmoil. In contrast, he pointed out that despite Israel’s current conflict, the U.S. economy is not experiencing stagflation or recession, resulting instead in a bull market. He attributed this stability to the industry, saying:
“… This industry that spent billions upon billions of dollars to try to be as low carbon as possible is the reason why oil prices have actually come down during this period. They’ve gotten so much production that OPEC is now powerless.”
Turning his attention to the broader oil industry, Cramer explored the role of oil service companies that facilitate production, including offshore drillers. He recalled becoming optimistic about oil service stocks earlier in the year, anticipating higher energy prices but admitted that this expectation did not materialize due to economic concerns dampening oil and gas markets. Despite current investor reluctance toward oil service stocks, Cramer suggested that sentiment could shift over time, especially because of the Federal Reserve’s recent rate cutting.
“Now that the FED is our friend and more rate cuts are on the table, that’s good news for the industry. I am not worried about the election either. If Trump wins, maybe we’re back to that “drill baby drill” thing. If Harris wins, we get exactly what we’ve had the last four years. Not ideal for the industry but it’s still led to record oil and gas production here in the United States.”
Our Methodology
For this article, we compiled a list of 14 stocks that were discussed by Jim Cramer during his episodes of Mad Money on October 23 and 24. 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 vessels docking at a busy harbor, signaling the company’s presence in global marine shipping.
ZIM Integrated Shipping Services Ltd. (NYSE:ZIM)
Number of Hedge Fund Holders: 26
Talking about ZIM Integrated Shipping Services Ltd. (NYSE:ZIM), Cramer remarked that he has faced monetary losses because of the shipping stock.
“A lot of people feel that it’s Zim’s time. I’m much more on the fence because historically, I’ve lost a lot more money than I made in the shipping stock so I say stay away.”
ZIM (NYSE:ZIM) offers container shipping and related services both in Israel and on a global scale. On October 23, Barclays analyst Marco Limite raised the price target on the stock to $13.90 from $12.30 and kept an Underweight rating. This change showed updates to third-quarter and 2024 forecasts, indicating that the guidance increase has been largely priced in. The firm noted a continued negative outlook for the sector overall.
As of June 30, 2024, ZIM’s (NYSE:ZIM) total cash position, which includes cash, cash equivalents, and investments in various financial instruments, fell by $351 million, decreasing from $2.69 billion at the end of December 2023 to $2.34 billion. The company reported capital expenditures of $66 million for the second quarter of 2024, a rise from the $26 million spent during the same period in 2023. Additionally, its net debt position grew to $3.25 billion by the end of June 2024, up from $2.31 billion at the close of the previous year, showing an increase of $936 million.
However, the company has raised its full-year guidance for 2024, projecting Adjusted EBITDA in the range of $2.6 billion to $3.0 billion, and Adjusted EBIT between $1.45 billion and $1.85 billion.
Overall ZIM ranks 13th on our list of stocks Jim Cramer is talking about. While we acknowledge the potential of ZIM 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 ZIM 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.