We recently compiled a list of the Jim Cramer’s Latest Lightning Round: 11 Stocks to Watch. In this article, we are going to take a look at where NextEra Energy Partners, LP (NYSE:NEP) stands against the other stocks in Jim Cramer’s watchlist.
Jim Cramer, the host of Mad Money, urged investors to refrain from making any investments in high-value stocks, particularly in the Big Tech sector, ahead of upcoming earnings reports, which will attract considerable scrutiny. Cramer expressed concern over significant price movements in various stocks leading into earnings, stating, “you can’t make up these moves.”
READ ALSO Jim Cramer on Tesla and Other Stocks and Jim Cramer is Talking About These 12 Stocks
He emphasized that these surges create heightened risks for those looking to purchase stocks before a company’s earnings announcement. He pointed out that there is underlying volatility affecting nearly every major company. He noted that the stocks that he mentioned on Friday were trading erratically high on October 28. You can read which stocks Cramer discussed on Friday in our article, Jim Cramer’s Latest Game Plan: 20 Stocks to Watch.
He went on to highlight that:
“First you need to understand that no one knows these earnings numbers ahead of time except the CEO, the CFO, and a very small group of very important people at each company, and they are tight-lipped.”
Cramer criticized analysts for their attempts to predict earnings, stating, “We’ve seen how wrong they can be over and over again.” According to Cramer, when a stock spikes before earnings, it does not indicate insider knowledge but rather excessive enthusiasm. He further cautioned that these price increases are occurring without any solid basis, making it perilous for investors. He said, “In other words, these stocks are going up on nothing and that I think makes it very dangerous.”
Cramer reiterated his advice and said:
“I am indeed trying to discourage you from trading these stocks ahead of the quarters. It’s just a roulette game based on nothing. Often the game feels rigged, you just don’t know which way it’s rigged because companies really and truly do not let this stuff drip out.”
Concluding his remarks, he said:
“Bottom line, no one on Wall Street knows what any of the quarters will look like, except for the principals. So don’t bother to follow the money that you see trading right now in anticipation. You know why? It’s a fool’s errand.”
Our Methodology
For this article, we compiled a list of 11 stocks that were discussed by Jim Cramer during the lightning round of his episodes of Mad Money on October 25 and 28. 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 wind turbine silhouetted against an idyllic sunset, representing clean energy projects.
NextEra Energy Partners, LP (NYSE:NEP)
Number of Hedge Fund Holders: 20
When a caller asked about NextEra Energy Partners, LP’s (NYSE:NEP) dividends, Cramer said:
“I’m warning you about the dividend again. I mean, I think, dividend, when you get those yields 15, 20%, you know, it is trouble. There will be people who don’t know that it’s trouble and they will sell when they cut the dividend and then we’ll look at it.”
NextEra Energy (NYSE:NEP) focuses on acquiring, owning, and managing contracted clean energy projects. The company has a diverse portfolio that includes renewable generation assets such as wind, solar, and battery storage projects, as well as contracted natural gas pipeline assets. Currently, the company offers a substantial dividend yield, appealing to income-focused investors. However, as of October 29, its forward payout ratio is 150%.
During the third quarter earnings call, management adjusted expectations and indicated that dividends per share are anticipated to grow at roughly 10% annually through at least 2026, based on a 2024 base.
Recently, NextEra Energy (NYSE:NEP) declared a quarterly distribution of $0.9175 per common unit, which corresponds to an annualized rate of $3.67 per common unit. This represents an increase of nearly 6% from the previous year and will be payable on November 14, 2024, to unitholders of record as of November 6.
Overall NEP ranks 7th on Jim Cramer’s stock watchlist. While we acknowledge the potential of NEP 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 NEP 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.