We recently compiled a list of the Jim Cramer's Latest Lightning Round: 8 Stocks in Focus. In this article, we are going to take a look at where CSX Corporation (NASDAQ:CSX) stands against the other stocks that Jim Cramer's focused on.
Jim Cramer, the host of Mad Money, expressed strong views regarding day trading on Friday, urging novice investors to avoid the temptation of risky market practices. His warning followed an article from The Wall Street Journal, titled “More Men Are Addicted to the ‘Crack Cocaine’ of the Stock Market,” which discussed how an increasing number of investors are developing serious gambling addictions through speculative trading. Cramer emphasized:
“Unless you're a professional, I'm dead set against day trading, particularly the kind that is based on zero-days-to-expire or zero DTE options. These are options that expire the same day.”
He compared these trades to gambling, urging that they be stopped, as they serve no purpose other than to hook people on the addictive nature of the stock market. Cramer, who highlighted that he has moved away from day trading since retiring, stressed the importance of a more cautious and informed approach. He now advocates for “buy and homework,” his version of buy-and-hold investing, which reflects his belief that things can change with a company and require continuous evaluation.
Cramer called for self-regulation within the industry and said:
“There's no reason to push people into zero day options other than pure greed. The industry's encouraging bad behavior, that's just plain wrong.”
Cramer further pointed out that day trading is not limited to options but extends to other high-risk investments, such as cryptocurrencies, uranium stocks, and emerging technologies like quantum computing, commercial space, and future mobility stocks. While he expressed confusion over who creates these stocks, he noted that their volatility and high trading volumes indicate they are often used as vehicles for speculative trading rather than sound investments.
Cramer questioned whether the markets could eliminate this behavior, but he firmly believes that a collective value judgment can be made. He particularly criticized the brokerage houses that profit from encouraging risky behavior, stating that these firms must be held accountable for promoting an environment that feeds into people's gambling instincts.
“After all the markets were created for investing, not day trading on the direction of stocks. There's a big difference between making an informed investment and pure gambling.”
He called for stronger measures to protect individuals from the dangers of day trading, suggesting that, while it may be impossible to completely eliminate high-risk trades, at the very least, these products should come with warning labels. He condemned those who continue to push these high-risk options, asking whether they truly need the money so badly, and saying, “Shame on you.”
Jim Cramer Says You Should Not Sell Eaton (ETN)
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 20. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 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).
Cramer likes CSX Corporation (NASDAQ:CSX) and mentioned that stocks like it should be bought when it is low.
“Oh, I couldn't believe that CSX fell this well. And by the way, I'm gonna give you a twofer, I think that Union Pacific is great right here too. These are all worried about tariffs. I'm not worried. These are really good companies. You have to buy them when they're low.”
CSX (NASDAQ:CSX) provides rail-based freight transportation services through a network of terminals. When President-elect Donald Trump takes office, there is a possibility that there is an increase in tariffs, potentially altering trade patterns. In its annual 10-K regulatory filing, the company acknowledged that the anticipated increase in tariffs could potentially reduce import and export volumes.
Despite these concerns, CEO Joe Hinrichs has expressed confidence in the company’s ability to adapt. During an interview with Cramer in November, Hinrichs noted that regardless of changes to tariffs or trade dynamics, the company’s diverse operations position it to remain successful. He emphasized that as long as goods are entering the U.S., it will continue to play a vital role in transporting them to various destinations across its network.
Hinrichs also pointed to the potential benefits of increased domestic manufacturing, which could be influenced by the Trump administration's tariff policies. He highlighted that many companies are considering large projects in the southeastern U.S., an area where CSX (NASDAQ:CSX) holds a dominant position. The company is currently involved in 500 industrial development projects and has identified over a thousand additional potential sites. As Hinrichs put it, if products are made in America, the company will ensure they are moved by rail.
Overall, CSX ranks 6th on our list of stocks that Jim Cramer's focused on. While we acknowledge the potential of CSX 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 time frame. If you are looking for an AI stock that is more promising than CSX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
