We recently published a list of Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell. Since AES Corp (NYSE:AES) ranks 6th on the list, it deserves a deeper look.
Commenting on the aggressive rate cut by the Federal Reserve, Jim Cramer said in a latest program on CNBC that the “double” rate cut was needed for the economy and it would help the housing market, industrials and companies catering to the “less well-off” households.
“There really are two economies in this country. There is the one that needs lower interest rates because business is slowing and it’s harder to find a job and then there is one that says we don’t really care about where the stinking rates are. That’s who we can get a double rate cut today and still going lower.”
Cramer said he is currently in Silicon Valley and after talking to many companies, he feels tech companies do not care about interest rates since they are selling to businesses. Cramer said these technology companies are focused on innovation.
For this article, we picked 10 stocks Jim Cramer recently talked about during his latest programs on CNBC. With each company we have mentioned the number of hedge fund investors. 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).
AES Corp (NYSE:AES)
Number of Hedge Fund Investors: 46
Jim Cramer was recently asked about the utility and power generation company AES Corp (NYSE:AES). Here is what he said:
“I think it’s good. At 4% yield, I am surprised it is this low. It is very inexpensive. Let’s go for it.”
Jefferies recently started covering AES Corp (NYSE:AES) shares with a Buy rating and a $20 price target, as the firm sees the company as “a way to gain exposure to U.S. renewables with a quality improvement twist at a discounted price.”
AES Corp (NYSE:AES) is selling power in 15 countries and employs about 10,000 people. As a Fortune 500 company, AES positions itself as a key player in the renewable energy sector, with plans to expand its solar power portfolio to 25-30 GW by 2027. The company expects a 10% annualized base growth rate, one of the highest in the U.S. utility sector, making it an attractive investment.
AES Corp (NYSE:AES) has a 66 GW development pipeline, with 12.7 GW in backlog and nearly 35 GW already in operation, of which 54% is renewable. So far this year, it has added over half a gigawatt and aims to add 3.6 GW by year-end. For 2024, 92% of the necessary equipment for construction is already on-site.
Much of AES Corp (NYSE:AES) future demand will come from data centers, with major tech companies—many of which are committed to CO2-neutral operations by 2030—accounting for over 40% of its backlog. This sector is likely to fuel AES’s growth.
AES Corp (NYSE:AES) talked in detail about its data center projects in its latest earnings call:
“We have further expanded our partnership with Google, signing a 15-year PPA for 727 megawatts in Texas to power its datacenter growth.
The agreement includes a combination of wind and solar to further Google’s 24-7 carbon-free energy goals. These projects are expected to come online in 2026 and 2027. We also recently signed a retail supply agreement with Google for 310 megawatts to support their Ohio datacenters. This agreement demonstrates the strong trust and collaboration between our companies, which began with our original 2021 partnership to provide 24-7 renewable power in Virginia. We see further opportunities to add renewables to support Google’s datacenter growth in Ohio. Turning to slide seven, with these major announcements today on our collaborations with hyperscalers, we have now signed a total of 8.1 gigawatts directly with technology companies, which is clearly a leading market position.”
Overall, AES Corp (NYSE:AES) ranks 6th on Insider Monkey’s list titled Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell. While we acknowledge the potential of AES Corp (NYSE:AES), 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 AES but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
Hedge Fund Resource Center