We recently published a list of Jim Cramer November Portfolio: Top 10 Stocks. In this article, we are going to take a look at where Hewlett Packard Enterprise Company (NYSE:HPE) stands against the other stocks in Jim Cramer’s November Portfolio.
Stock markets are roaring amid Donald Trump’s victory. Jim Cramer, who has long believed that Trump’s presidency would bode well for the stock market, earlier this week discussed the market’s reaction when chances of a Kamala Harris win were apparently rising. Looking back at Cramer’s analysis in hindsight gives us a nice overview of what groups of stocks could rise in the coming weeks and months.
Jim Cramer on Monday evening analyzed what caused the market to dip as of the closing session. Cramer believed the chances of Iowa turning blue spooked some market circles on various assumptions:
“Let’s start with the most incredible reactions, the bond market. Interest rates went sharply lower today. Now, see, I’m so used to higher, to interest rates going higher in a Democratic win, that this took me by surprise. It’s completely out of character. But the bond market is steep, and its judgment is not made on a whim. There had to be billions of dollars invested today on rates going lower if Harris wins the election. I find that astonishing.”
Cramer then talked about different groups of stocks that moved based on the sentiment that Harris could win this election. Housing stocks rose because the market is bullish based on potential subsidies if Harris wins. Tech stocks, however, fell, and Cramer explained the reason behind that:
“(hyper scalers and tech stocks) traded horribly today. What does it say? It says the traders are betting that Harris will stand by Biden’s FTC and antitrust appointments who are known to be anti-the hyper scalers,” Cramer added.
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Our Methodology
For this article we watched some latest programs of Jim Cramer and picked 10 stocks he’s talking about. With each company we have mentioned its hedge fund sentiment.
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 woman programmer in a modern office working with multiple computer servers.
Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Investors: 58
Talking about data centers in a recent program, Jim Cramer said Hewlett Packard Enterprise Company (NYSE:HPE) shares should be bought aggressively.
“I will say that when I look at data centers in general, I did like HPE, especially with the news of Supermicro. I think HPE should be bought and bought aggressively.”
Hewlett Packard Enterprise Company (NYSE:HPE) shares recently jumped after rival Super Micro plunged following the unexpected resignation of its auditing firm, Ernst & Young LLP.
Hewlett Packard Enterprise Company (NYSE:HPE) conducted its AI day last month with several new products unveiled.
Hewlett Packard Enterprise Company (NYSE:HPE) has a strong moat in the IT industry amid high switching costs, achieving a customer retention rate of over 96%. Hewlett Packard Enterprise Company (NYSE:HPE)’s bundled solutions offer customers up to 30–40% in Total Cost of Ownership (TCO) savings, helping clients avoid overprovisioning—an advantage difficult for rivals to match.
Another key catalyst is Hewlett Packard Enterprise Company (NYSE:HPE)’s plan to acquire Juniper for $14 billion by early 2025. This acquisition will allow the company to deliver secure, AI-native, end-to-end solutions in networking, with Juniper addressing Hewlett Packard Enterprise Company (NYSE:HPE)’s wide-area and cloud networking gaps. The deal is expected to expand HPE’s higher-margin networking revenue from 18% to around 31% of its total revenue.
Hewlett Packard Enterprise Company (NYSE:HPE) is focusing on hyperscalers and AI service providers as its key target markets, both projected to grow at an annual rate of 29–30% through FY27. Much of this expansion is expected to stem from strong demand for liquid-cooled server solutions and networking, backed by significant capital expenditure from these clients. Networking, in particular, represents a high-growth area, with Hewlett Packard Enterprise Company (NYSE:HPE)’s management calling it “one of the biggest opportunities beyond servers” and projecting a combined market size of $135 billion by 2027.
Overall, HPE ranks 10th on our list of the stocks in Jim Cramer’s November Portfolio. While we acknowledge the potential of HPE, our conviction lies in the belief that under the radar 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 HPE 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.