Expert stock analyst and media personality Jim Cramer has announced his top stock picks for February. He named Tesla Inc. (NASDAQ: TSLA | TSLA Price Prediction), Starbucks Corp. (NASDAQ: SBUX) and Microsoft Corp. (NASDAQ: MSFT) as the top three stocks to buy this month. While mimicking Cramer’s trades may not guarantee profits, it does make sense to keep an eye out for his picks. He has recommended some of the best stocks in the past and his stock picks could generate solid returns for you. However, always do your due diligence before you bet your money. Considering the current situation, these three companies may seem obvious but some interesting catalysts could make them emerge as long-term winners. In this article, we discuss the three companies and how they could grow in the coming years.
Key points in this article:
- Jim Cramer picked three stocks to buy amid the ongoing earnings season.
- These companies have shown resilience in tough times and are worth keeping an eye on.
- If you are looking for more stocks with massive potential, remember to grab a free copy of our “The Next NVIDIA” report.
Tesla Inc.
One of the biggest players in the electric vehicle industry, Tesla is a familiar name today. The company saw tremendous success and held the largest EV market share until competitors caught up. This led to a drop in demand and a dip in revenue. However, Tesla is a lot more than that.
Cramer mentioned it as an “AI ETF” and recommended buying the stock. He adds, “I want you to own a Tesla. Just own it”. Since the election results, Cramer has been in favor of Tesla and believes that nothing can dull the case for owning the stock of this company. Trading at $392 today, the stock was up over 100% in the past year and over 650% in the past five years. If you had invested in Tesla in 2021, you’d be sitting on massive gains today.
Tesla lowered prices on its vehicles in 2024, but despite that, it saw a drop in sales and automotive revenue. The revenue came in at $25.71 billion, and the EPS stood at 73 cents. Its automotive revenue was down 8%, while the operating income dropped 23% year over year.
It plans to launch the first robotaxi in June 2025 and we could also see the company continue lowering prices in competitive markets like China. During the fourth-quarter earnings call, Musk said Tesla will be the world’s most valuable company and worth more than the top five companies combined. Tesla’s current valuation is $1.20 trillion today and to hit $15 trillion is not going to be easy.
However, Musk has brought Tesla where it is today and he can make this happen too. A few years ago, there was no sign of a Cybertruck but he made it possible. While the management did not issue a guidance for the year, the company expects vehicle business to return to growth this year.
Starbucks Corp.
A brand known for marketing and selling coffee, Starbucks offers a wide selection of food items, beverages, and coffee beans at the stores. Jim Cramer has been bullish on Starbucks in the past and he supports the new CEO. He talked about how the stock dropped before a leadership change. He believes in CEO Brian Niccol and his ability to turn around the company. Cramer highlighted Starbucks as one of the best-performing S&P 500 stocks in January.
He added, “While the stock moved a lot since Niccol was announced its new CEO last August, I’d still much rather bet with him than bet against him even up here.”
In the recent quarter, the earnings were still weak, down by 23% but the same-store sales started to improve. This was the first full quarter reported after he overtook the company. The revenue came in at $9.4 billion and earnings stood at $0.69 per share. The company’s results topped analyst expectations.
Niccol plans to double the marketing spend, reduce the discounted offers, and build a new advertising campaign. He is also investing in employees by increasing salary and benefits. Cramer believes in his ability to do the same since he has proved his worth at Chipotle.
Exchanging hands for $109, almost at the 52-week high, the stock has jumped 18% in the year and 48% over the past six months. It is also an attractive option for passive income investors, with a dividend yield of 2.23%. Half a dozen analysts have raised their price target on the stock after the quarterly results. While a complete turnaround may take time, Starbucks is on its way to regain the lost ground.
Microsoft Corp.
Tech giant Microsoft has shown volatility this week. Down 7% over the past five days, the stock is trading for $412 today and Cramer considers the drop a great buying opportunity. Over 250 hedge funds hold Microsoft and it is one tech stock that never stops giving.
Microsoft is down due to the growing AI expenditure that is not leading to higher growth. The company beat expectations in the quarterly results but investors are worried about the company’s ability to generate AI profits and recover the huge expense it has incurred in the sector. Its biggest revenue driver, the cloud segment generated $25.5 billion in revenue, up 19% year-over-year while the total revenue stood at $69.6 billion.
The company has shown an increased spending curve which will impact the short-term earnings and margins. Its revenue and earnings do not increase at the same pace. While investors are worried about the same, Cramer thinks the drop is an opportunity to load up on the stock. He states, ”History shows that significant market drops like this tend to offer great buying opportunities. Microsoft lost $178 billion in market cap on March 16th, 2020, but went on to surge 202%, compared to a 131% gain for the S&P 500 over the same period.”
CMB International Securities analyst has a buy rating with a price target of $503.10, highlighting the strong revenue growth, especially in the cloud services, AI, and Azure AI segment.
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