We recently compiled a list of the Jim Cramer's Game Plan: 23 Stocks to Watch.In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against the other stocks to watch according to Jim Cramer.
As Wall Street dives into the heart of earnings season, Jim Cramer has provided insights into market trends and earnings reports to watch in the upcoming week. Cramer remarked,
“It’s hard to believe, but this market’s now been up for six straight weeks. That’s right, despite interest rates running higher since mid-September, despite being on the verge of an election where both candidates want to pile on trillions of dollars of debt to an already unfathomable amount of borrowing, this market seems like it can’t help itself from going higher.”
Cramer highlighted the influence of the Federal Reserve, noting that ever since the rate cut on September 18, the market has largely trended upward. He emphasized that it is not solely the Fed driving this bullish sentiment, the earnings season has brought some remarkable quarterly results. With strong performance from banks kicking off the earnings cycle, Cramer posed the question of whether the rally could extend into a seventh consecutive week, suggesting following his game plan to assess this possibility.
On a separate note, addressing economic indicators, Cramer warned that if the economy continues to produce solid numbers, the likelihood of substantial rate cuts will diminish. While he believes that rates will eventually decline, he cautioned those shorting Treasurys, suggesting that they may be making a mistake.
Cramer noted a significant caveat, which is the upcoming election, and pointed out that both candidates are advocating potentially inflationary policies.
“Both candidates have pushed potentially inflationary policies. As I said at the top, if Trump can win enough of a majority to pass his huge tariffs, or Harris expands housing tax credits and de facto subsidy, they could push home prices higher. Then inflation might stage a comeback. But I'm not betting on that. I think both parties are terrified of being blamed for inflation, which almost single-handedly sunk Joe Biden's presidency. No matter what the candidates campaign on, I don't see their allies in Congress taking any chances with inflation beyond the usual unwillingness to balance the budget.”
He concluded that those betting against Treasurys have overreached, suggesting that their efforts to counter the Fed's policies are unlikely to end well. Cramer observed that when a large number of investors align on one side of a trade, as seen currently, that group often ends up being incorrect.
Our Methodology
For this article, we compiled a list of 23 stocks that were discussed by Jim Cramer during his episode of Mad Money on October 18. 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).
Cramer recently talked about Tesla, Inc. (NASDAQ:TSLA) and mentioned that he would not bet against Elon Musk, adding that Musk will figure it out.
“After the close Wednesday, it's mega MAGA man, Musk and the Tesla show. People didn't like his recent self-driving presentation, so I think he's going to try harder to deliver a really good set of Tesla numbers because they have been lowered and lowered and lowered so you can beat them. That's when Elon Musk does his best work.”
Tesla (NASDAQ:TSLA), known for its electric vehicles, is currently navigating a challenging environment in the automotive market. Demand for electric vehicles has softened as consumers increasingly opt for more affordable gas-powered cars, influenced by economic factors such as elevated interest rates.
On October 15, Reuters reported a significant development for the company, as it moved closer to its goal of doubling production capacity at its Berlin facility. The local environment ministry granted approval for the initial phase of this expansion, which includes plans for storage facilities, a battery cell testing laboratory, and logistics areas. The construction will occur on land already owned by the company, with the company having submitted its application for expansion in July 2023.
The first changes are expected to be operational in the first half of 2024. However, the plant's director, Andre Thierig, expressed in August that the company would hold off on further investments until there are signs that demand for electric vehicles in Europe is recovering.
Despite some negative feedback surrounding Tesla’s (NASDAQ:TSLA) recent 'We, Robot' event, there were also encouraging reactions from certain stakeholders, according to Barron’s. Tasha Keeney, the director of investment analysis at ARK Invest, expressed optimism about comments made by CEO Elon Musk regarding the costs of robotaxis. Musk stated that these costs could be as low as 20 cents per mile, significantly cheaper than the expenses associated with owning and operating a traditional vehicle. Keeney believes that the company can meet its timeline for launching these services in 2025.
Keeney noted that Tesla’s (NASDAQ:TSLA) extensive data collection from its customer vehicles provides a competitive advantage over rivals like Waymo, which lack similar data scale and manufacturing capabilities. Keeney also added that while the company may not have been the first to introduce an autonomous driving platform, research suggests it is likely to be the first to scale such technology effectively.
Overall TSLA ranks 3rd on Jim Cramer's list of stocks to watch. 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 timeframe. 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.
