We recently compiled a list of the Jim Cramer’s Latest Game Plan: 15 Stocks to Watch. In this article, we are going to take a look at where Constellation Energy Corporation (NASDAQ:CEG) stands against the other stocks in Jim Cramer’s latest game plan.
Jim Cramer, host of Mad Money, recently weighed in on the factors that will shape market movements this week, pointing to the Federal Reserve’s upcoming meeting and a slew of corporate earnings reports as key developments. However, despite the importance of these earnings, Cramer believes that the presidential election will take center stage and dominate the market’s attention.
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While acknowledging the significance of the election, Cramer emphasized that the Federal Reserve’s next decision is perhaps even more crucial for the markets. He noted that the bond market has been moving in an unfavorable direction, with the situation further complicated by a disappointing non-farm payroll report.
Though this report was skewed by hurricanes and labor strikes, it initially sparked a positive reaction in the bond market, pushing rates lower. Cramer had hoped that this would signal a positive shift, but the optimism was short-lived, as bond sellers quickly drove rates back up to their highest levels since early July.
“In my opinion, the Fed needs to cut rates again. In the last couple weeks, we’ve heard from too many businesses that have made it clear that we have a real slowdown on our hands. Economy’s a little shaky.”
Cramer also reflected on the Fed’s decision to reduce rates in September. He acknowledged that the bond market reacted negatively to the rate cuts at the time despite an economy that appeared relatively strong and a healthy labor market. Cramer discussed the possibility that if the Fed were to cut rates again, the market could see another unfavorable response. However, he remained unconcerned about this potential backlash, arguing that a rate cut could help to generate optimism in certain sectors.
“At this point in my view, if the Fed cuts rates next week, psychologically there’s some hope that we could see a pickup, particularly in housing and autos, two industries that seem to be losing strength by the day.”
Cramer highlighted that both presidential candidates appear willing to expand the federal budget. His main concern, however, was whether either candidate would be able to push their proposed agendas through Congress, a process he described as extremely difficult. Cramer noted that, in his opinion, presidential candidate Trump would likely be a bigger proponent of increasing the budget deficit than presidential candidate Harris, particularly due to the tax cuts Trump favors, which tend to result in larger deficits.
Stating his bottom line, Cramer said:
“… At the end of the day, the market’s still going to be hostage to the election, and perhaps more important, to the Fed meeting.”
Our Methodology
For this article, we compiled a list of 15 stocks that were discussed by Jim Cramer during the episode of Mad Money on November 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).
A close up of a wind turbine producing electricity as the sun sets.
Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 71
Cramer mentioned his love for nuclear power and also called Constellation Energy Corporation (NASDAQ:CEG) a cult stock.
“We’ve all fallen in love with nuclear power and that means we like Constellation Energy. I’ve been recommending this stock for years, but I think it’s become a cult stock and it doesn’t matter what they have to say.”
Constellation Energy (NASDAQ:CEG) operates in the U.S. energy sector, focusing on generating and selling electricity. The company offers a range of products, including natural gas and various energy-related solutions, while also emphasizing sustainable practices. Its generating capacity includes a mix of nuclear, wind, solar, natural gas, and hydroelectric resources, catering to a broad customer base that includes distribution utilities, municipalities, cooperatives, and a wide range of commercial, industrial, governmental, and residential clients.
In the third quarter, the company reported a significant increase in its GAAP net income, achieving $3.82 per share, compared to $2.26 per share during the same period the previous year. The company’s focus on reliable and carbon-free generation was evident as it produced over 41 million megawatt-hours from its nuclear facilities, achieving an impressive capacity factor of 95%. Similarly, the performance of its renewable and natural gas assets was noteworthy, with a 96% capture rate for renewable energy and a power dispatch matching rate of 98.2%.
A highlight of the quarter was Constellation Energy’s (NASDAQ:CEG) announcement of a 20-year power purchase agreement with Microsoft, aimed at facilitating the launch of the Crane Clean Energy Center. Through this agreement, Microsoft plans to procure the output from the renewable plant to help power its data centers within the PJM interconnection, aligning with its commitment to clean energy.
Furthermore, management commented that the Crane facility is expected to qualify for the technology-neutral clean electricity production tax credit (PTC), which is part of the Inflation Reduction Act, for its initial ten years of operation.
Overall CEG ranks 3rd on our list of the stocks in Jim Cramer’s latest game plan. While we acknowledge the potential of CEG 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 CEG 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.