We recently compiled a list of the Jim Cramer's Latest Lightning Round: 10 Stocks to Watch.In this article, we are going to take a look at where SiTime Corporation (NASDAQ:SITM) stands against the other stocks to watch according to Jim Cramer.
The host of Mad Money, Jim Cramer, shared his insights on the persistent issue of inflation. He emphasized that companies need to lower their prices to entice consumers in today’s economic climate. Cramer pointed out the hesitation many companies exhibit in reducing prices.
Cramer said:
“Companies are so reluctant to take prices down because they don't want to hurt their treasured gross margins but I think it may be time for a giant reset.”
While prices may have stabilized and no longer surged as they once did, Cramer warned that this does not imply they are decreasing. He believes many companies are failing to recognize the necessity for price rollbacks.
He gave a few examples from the liquor industry, where some producers have said that declining sales shifts are because of consumer preferences toward healthier lifestyles rather than acknowledging high prices.
Cramer went on to say:
“Funny enough, if you keep prices low, you can indeed make it up in volume because the consumer is a lot smarter than some of these companies are ever willing to admit.”
Cramer mentioned that both consumers and Wall Street are responding positively to companies that have opted for discounts or price reductions. He talked about the decision by McDonald's to extend its $5 value meal, which has successfully attracted lower-income customers, and it led to an increase in its stock value.
Cramer mentioned that giants like Amazon, Costco, and Walmart have seen substantial stock gains this year. Cramer believes that businesses willing to reduce prices can compensate for their margins through increased sales volume.
Cramer speculated:
“I think we'll look back on 2024 as the year when consumers took matters in their own hands and actually said no to inflated prices.”
He warned that companies that fail to adapt may face dire consequences, including leadership changes and plummeting stock prices. Talking about the consequences, he said:
“The result? Fired CEOs and crushed stock prices for all those who refused to heed the thunder, the thunder of those angry consumers who finally just said no to the scourge of inflation.”
Our Methodology
For this article, we compiled a list of 10 stocks that Jim Cramer talked about during the lightning rounds of his Mad Money episodes on October 1 and 2. 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 series of industrial production lines, radiating silicon timing solutions to the world.
SiTime Corporation (NASDAQ:SITM) is engaged in designing, developing, and marketing silicon timing solutions. It offers its products across various global markets, including Taiwan, Hong Kong, the United States, Singapore, and internationally.
The company's product portfolio includes resonators, clock integrated circuits, and a range of oscillators, which cater to various sectors such as communications, data centers, automotive, industrial applications, the Internet of Things (IoT), mobile technology, consumer electronics, and aerospace and defense.
When asked about the company during the lightning round, Cramer said “Just hold it...Let’s hold on to it, it’s a good story”.
SiTime’s (NASDAQ:SITM) timing solutions are integral to emerging technologies, addressing the needs of artificial intelligence, data centers, automated driving, IoT applications, and 5G networks.
Management has commented that the company is in the nascent stages of transforming the estimated $10 billion timing market, which signals significant potential for growth and innovation.
In the second quarter, it reported revenue of $43.9 million, which surpassed management’s guidance of $40 million to $42 million.
Additionally, both operating profit and earnings per share exceeded expectations. Additionally, every end market served by the company saw growth in the second quarter, with increases in both sequential and year-over-year metrics reaching double digits.
SiTime’s (NASDAQ:SITM) management forecasts that bookings for the latter half of 2024 appear strong. They expect continued sequential growth for both the third and fourth quarters. Geographically, revenue projections for 2024 signal strong performance across all major regions, with expectations for double-digit growth in revenues from Greater China, North America, and Europe.
“SiTime Corporation (NASDAQ:SITM) also contributed to strategy performance during the quarter. The company develops silicon-based timing components, which are superior to less-expensive quartz-based components. SiTime’s components have many applications in advanced computing. The stock was down early in the year when SiTime lowered earnings guidance based on temporarily weak consumer demand and bloated inventories. But we visited the company in Santa Clara, California, and came away from our visit even more optimistic that consumer demand could rebound. Additionally, we gained confidence in SiTime’s product differentiation and long-term competitive advantages over legacy quartz-based timing solutions. As a result, we bought more shares and increased our position size. During the second quarter, the stock was up based on exceptionally strong earnings and news that SiTime expects to see consistent demand from Apple, Inc. and other companies involved in the proliferation of AI.”
Overall SITM ranks 9th on our list of the stocks to watch according to Jim Cramer. While we acknowledge the potential of SITM 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 SITM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
