We recently published a list of Jim Cramer’s Top 10 Most Optimistic Stock PicksIn this article, we’ll take a look at how United Rentals Inc. (NYSE:URI) stacks up against Jim Cramer’s other bullish stock recommendations.
On a recent episode of Mad Money, Jim Cramer expressed his excitement about the current market while highlighting an important historical perspective. He reminded viewers that 20 years ago, Google went public at $85 per share and closed its first day up 18%. While many traders were excited by that initial gain, looking back, it was a huge missed opportunity. The stock has since returned 7,736%, far outperforming the S&P 500’s return of just over 600%. This example illustrates the potential wealth that individual stocks can offer compared to broader indexes, especially if you choose wisely.
“Twenty years ago today, Google went public at a split-adjusted price of $85 per share. The stock closed up 18 percent on the first day. Many traders were excited by that initial gain and took the profit. In retrospect, this was one of the biggest mistakes of all time. Since then, the company has returned 7,736 percent, compared to the S&P 500’s return of just over 600 percent with dividends. This reminds us how much wealth individual stocks can generate compared to indexes if you choose wisely. And I’m telling you, it’s not that hard if you know how to do your research. So I think it’s time to rethink the average approach, at least for today.”
Cramer noted that despite strong recent performance — the Dow gained 237 points, the S&P 500 gained 0.97 percent and the NASDAQ gained 1.39 percent — the near-term market outlook is more complex. The market is currently on its longest winning streak since November of last year, with 93 percent of S&P 500 stocks posting gains.
However, he warned that the market could be “overbought,” as indicated by the Market Edge oscillator, a tool Cramer has relied on since 1987. When the oscillator hits plus five or more, it signals it may be time to sell. Conversely, readings of minus five or less indicate oversold conditions, suggesting it’s a good time to buy.
“While it was another good day for the markets, we must consider both the short-term and long-term outlook. The short-term backdrop is not so favorable. We are currently on a clear winning streak, with the market up for several days in a row, the longest streak since November of last year. Impressively, 93% of S&P 500 stocks are up.”
This came after a Monday when the market fell sharply due to the collapse of the yen carry trade, leading to a wave of forced selling and subsequent panic.
“As I have said many times, panic is not a strategy. Since that panic, the market has been mostly up.”
Jim Cramer has also expressed concern about the upcoming Justice Department case challenging the search engine giant’s role in the ad exchange market. This litigation could have a significant negative impact on the company, which has profited greatly from this system. A Justice Department victory could be even more damaging than the previous dispute with Apple over search engine defaults, which contributed to the company’s monopoly concerns.
According to Cramer, the resilience of the tech giants is evident, with strong recoveries occurring even after short-term dips. (see Top 33 AI companies to watch out for).
Jim Cramer emphasizes that investing in truly exceptional companies, rather than just tracking market indexes, usually yields the best returns. Cramer advises investors not to panic when markets fluctuate and to focus on strong companies for long-term success.
“As we look to the future, it’s important to remember that investing in truly great companies, rather than simply following the index, often yields the best returns. Google’s significant gains over 20 years are one example. Avoiding panic during market turbulence and holding on to strong companies is critical to long-term success.”
Our methodology
In this article, we discussed a recent episode of Jim Cramer’s Mad Money and highlighted ten stocks he is bullish on. We also included information on hedge fund sentiment for each stock and ranked them by how many hedge funds own them, starting with the least owned stock.
At Insider Monkey, we are obsessed with the stocks that hedge funds invest in. The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (Further details can be found here).
A construction crew works in a field with earthmoving machinery, illuminated by the setting sun.
United Rentals Inc. (NYSE:URI)
Number of hedge fund investors: 41
United Rentals Inc. (NYSE:URI) is the largest construction equipment rental company in the world, giving it a large lead in terms of size and market reach. United Rentals Inc. (NYSE:URI) is seeing strong results due to strong demand from the expanding construction and industrial sectors, which are driven by infrastructure investments and rising construction activity. United Rentals Inc. (NYSE:URI) is benefiting from higher utilization of construction equipment and higher rental rates.
Jim Cramer shared his thoughts on United Rentals Inc. (NYSE:URI) in response to a viewer’s question. He noted that while United Rentals Inc. (NYSE:URI) is currently below its previous highs, it has still grown 25% annually. Cramer explained that United Rentals Inc. (NYSE:URI) is doing well because of the significant infrastructure projects in the country that are increasing demand for rental equipment.
“First of all, it’s well off its peak, even though it’s up 25% a year. The reason this company is doing so well is because of all the infrastructure work that’s going on in the country. Not everyone can go out and buy things; a lot of stuff is rented instead. This company is involved everywhere. I liked the stock in 2003; it was on TV and I thought it was brilliant. I haven’t seen it in a long time, but they’re still very impressive. You’ve got a winner there.”
Recent acquisitions such as Ahern Rentals have increased United Rentals Inc.’s (NYSE:URI) market presence and fleet size, creating more opportunities for revenue and growth. United Rentals Inc.’s (NYSE:URI) use of technology and data analytics improves fleet management, customer service, and overall efficiency. Solid financials, including significant revenue growth, healthy profit margins, and strong free cash flow, underscore the company’s financial stability. In addition, trends such as increased outsourcing of equipment by construction companies and the preference for renting over purchasing equipment support industry growth and position United Rentals Inc. (NYSE:URI) for continued success and market leadership.
ClearBridge SMID Cap Growth Strategy stated the following about United Rentals, Inc. (NYSE:URI) in its fourth quarter 2023 investor letter:
“We have strengthened our position in United Rentals, Inc. (NYSE:URI), in the industrial sector, an equipment rental company for general construction and industrial equipment. Although this is a long-term holding and the stock has had strong price performance in the past, we sold the stock because the company’s market capitalization exceeded a level that we considered appropriate for a SMID strategy.”
Total URI takes 8th place on our list of Jim Cramer’s best stock picks. While we recognize URI’s potential as an investment, we believe AI stocks that fly under the radar promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than URI but trades at less than five times its earnings, read our report on the cheapest AI stock.
READ MORE: $30 trillion opportunity: The 15 best humanoid robot stocks to buy, according to Morgan Stanley And According to Jim Cramer, NVIDIA has “become a wasteland”.
Disclosure: None. This article was originally published on Insider Monkey.
