Jim Cramer, the host of Mad Money, recently raised concerns about the current state of the market, particularly highlighting what he perceives as signs of “excess”. He also examined what he referred to as "Trump trades," or stocks that Wall Street has been gravitating towards in anticipation of what President-elect Donald Trump's administration might bring.
He pointed to private prison operators and oil service companies as examples of sectors benefiting from these expectations. Focusing on oil, Cramer noted that a number of smaller oil service stocks have surged this month. He pointed out:
“Now one of the few things that we know for certain about President-elect Trump's economic agenda is that he wants our country to produce even more oil than it's doing. His new pick for treasury secretary, that's Scott Bessent, has advocated for the country to produce an incremental 3 million barrels of oil per day.”
Cramer sees this as positive news for oil service companies involved in the extraction of resources. However, he also warned that this surge in production could exert downward pressure on oil and gas prices, much like what occurred in 2016. Despite this, Cramer highlighted that the major players in oil services have posted impressive gains in November, with some smaller operators making unexpected appearances on the list of the market's hottest stocks. Shifting to the cryptocurrency market, Cramer addressed the significant rise in Bitcoin’s value. He noted:
“Now that rally is taking up practically the whole cryptocurrency ecosystem… Obviously, the gains in crypto, especially the Bitcoin ecosystem, seem excessive, but again, they aren't without reason. We're going from a Biden regime that was pretty antagonistic towards crypto to a second Trump administration that promised to be incredibly crypto-friendly.”
Cramer also pointed out that under the Biden administration, the government had been more paternalistic, aiming to regulate and control crypto, while Trump has promised a much more supportive stance towards Bitcoin. Cramer believes that a Trump administration that actively supports Bitcoin could lead to significant hoarding of the cryptocurrency, especially in the context of a strategic Bitcoin reserve.
This could benefit Bitcoin holders or “hodlers,” as they are often called in the crypto community. He also suggested that owning Bitcoin or an ETF that tracks its performance could serve as a hedge against potential inflation, particularly if the government continues to print money to address its deficit. Cramer voiced his own support for Bitcoin, saying, “call me in favor of owning Bitcoin,” and also recommended purchasing Ethereum, which he owns, despite it lagging behind Bitcoin in recent performance.
“I'm a believer, but these are hedges for me, and if you're hoarding crypto, be ready for the breakdown no one thinks can come.”
Our Methodology
For this article, we compiled a list of 13 stocks that were discussed by Jim Cramer during a recent episode of Mad Money on November 25. 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 talked about Tesla, Inc. (NASDAQ:TSLA) during his episode of Mad Money on Monday and said:
“There are plenty of one-off Trump trades too, like Tesla, which is up 35% for November. This is all thanks to CEO Elon Musk’s special relationship with President-Elect. Of course, if Musk starts getting on Trump's nerves, well you can see a serious pullback but you know what? I'd be a buyer on weakness though because I'm a believer in Musk's leadership.”
Tesla (NASDAQ:TSLA), a leading company in the electric vehicle and energy sector, has experienced a notable surge in its stock price following the U.S. presidential election. The company, founded by Elon Musk, has not only seen financial growth but has also found itself in a more prominent political spotlight. This increase in attention was further amplified when President-elect Donald Trump appointed Musk to a newly established role in November, which focuses on enhancing government efficiency.
Its stock again saw a rise following reports that Trump’s transition team would prioritize creating a federal framework for regulating self-driving vehicles. According to a Bloomberg report on November 17, individuals familiar with the matter indicated that the Trump administration plans to make the regulation of fully autonomous vehicles one of the key focuses of the U.S. Department of Transportation. This move is particularly important for the company, which has heavily invested in autonomous vehicle technology.
At present, federal regulations pose significant challenges to the mass production of fully self-driving cars, a sector in which Tesla (NASDAQ:TSLA) is heavily involved. The current laws prevent the widespread deployment of vehicles without human control. Musk has expressed support for federal rules that would allow the use of self-driving cars across the country and the potential changes to regulatory frameworks under the Trump administration could benefit the company’s ambitions.
Overall, TSLA ranks 1st on Jim Cramer's list of stocks that will benefit from the new administration. While we acknowledge the potential of TSLA 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 TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
