5 Stocks You Should Not Buy According to Jim Cramer

4. Guidewire Software Inc (NYSE:GWRE)

Number of Hedge Fund Investors: 33

While Jim Cramer called the  property and casualty insurance software company Guidewire Software Inc (NYSE:GWRE) “good” in a recent program, he advised investors to not invest in the stock for now because of valuation concerns. Cramer said the stock sells at “90 times earnings.”

“Companies that are selling at anything more than 20 times earnings are getting hurt.”

Cramer recommended investors to wait for a pullback and buy the stock are a “lower price.”

The RiverPark/Next Century Growth Fund stated the following regarding Guidewire Software, Inc. (NYSE:GWRE) in its fourth quarter 2023 investor letter:

“Guidewire Software, Inc. (NYSE:GWRE) provides a software platform for P&C insurance companies to run their businesses (policies, claims, billing, data & analytics). Traditionally, P&C insurance companies have used legacy, on-premise solutions or homegrown systems, which have difficulty scaling as companies grow. GWRE currently has >500 customers and targets the Top 2,000 insurers worldwide. GWRE is a company we owned in the past but sold due to a business model transition which caused some growing pains. They are now mostly through the transition and are experiencing increased adoption of their next generation platform as more and more insurers are moving their core systems to the cloud. Following many years of increased investment in product and go-to-market initiatives, GWRE should be in position to deliver solid revenue growth and improved profit margins and free cash flow.”