We recently compiled a list of the Jim Cramer’s Top 10 Bullish Stock Picks. In this article, we are going to take a look at where United Rentals Inc. (NYSE:URI) stands against Jim Cramer’s other bullish stock picks.
In a recent episode of Mad Money, Jim Cramer expressed his enthusiasm for the current market, highlighting a significant 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 thrilled by this initial gain, looking back, it was a major missed opportunity. The stock has since delivered a 7,736% return, far exceeding the S&P 500’s return of just over 600%. This example illustrates the potential wealth individual stocks can offer compared to broader indices, especially if you choose wisely.
“Twenty years ago today, Google went public at a split-unadjusted price of $85 per share. On its first day, the stock closed up 18%. Many traders, thrilled by this initial gain, took the profit. In retrospect, this was one of the greatest mistakes of all time. It has since delivered a 7,736% return, compared to the S&P 500’s return of slightly more than 600% with dividends. This serves as a reminder of the wealth that individual stocks can generate compared to indices when you choose wisely. And I’m telling you, it’s not that hard if you know how to research. So, I think it’s time to reconsider the average approach, at least for today.”
Cramer noted that, despite a strong recent performance—with the Dow gaining 237 points, the S&P 500 up 0.97%, and the NASDAQ increasing by 1.39%—the short-term market outlook is more complex. The market is currently on its longest winning streak since November of last year, with 93% of S&P 500 stocks showing gains.
However, he cautioned that the market might be “overbought,” as indicated by the Market Edge oscillator, a tool Cramer has relied on since 1987. When the oscillator reaches plus five or higher, it signals that it might be time to sell. Conversely, readings of minus five or lower indicate oversold conditions, suggesting it’s a good time to buy.
“Even though it was another good day for the markets. we need to consider both the short-term and long-term outlooks. The short-term setup isn’t as favorable. We’re currently on a significant winning streak, with the market having risen for straight days, the longest streak since November of last year. Impressively, 93% of the S&P 500 stocks are up. “
This follows a Monday when the market dropped sharply due to the Yen carry trade imploding, which led to a wave of forced selling and subsequent panic.
“As I’ve often said, panic is not a strategy. Since that panic, the market has mostly been trending upward.”
Jim Cramer has also expressed concern about the upcoming Justice Department case challenging the search engine giant’s role in the advertising exchange market. This legal issue could have a significant negative impact on it, a company that has greatly benefited from this setup. A victory for the Justice Department could be even more damaging than the previous issue with Apple over default search engine payments, which contributed to its monopoly concerns.
According to Cramer, the resilience of tech giants is evident, with strong recoveries even after short-term dips. (see 33 Most Important AI Companies You Should Pay Attention To).
Jim Cramer emphasizes that investing in truly exceptional companies, rather than merely following market indices, usually leads to the best returns. Cramer advises investors to avoid panicking during market fluctuations and to maintain their focus on holding strong companies for long-term success.
“As we move forward, it’s important to remember that investing in truly great companies, rather than just following the index, often yields the best returns. The substantial gain from Google over 20 years exemplifies this. Avoiding panic during market turbulence and sticking with strong companies is crucial for long-term success.”
Our Methodology
In this article, we reviewed a recent episode of Jim Cramer’s Mad Money and highlighted ten stocks that he is optimistic about. We also included information on hedge fund sentiment for each stock and ranked them based on how many hedge funds own each one, starting with the least owned.
At Insider Monkey we are obsessed with 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 construction crew working in the field with earthmoving equipment illuminated by a setting sun.
United Rentals Inc. (NYSE:URI)
Number of Hedge Fund Investors: 41
United Rentals Inc. (NYSE:URI) is the largest equipment rental company in the world, giving it a major edge in both scale and market reach. United Rentals Inc. (NYSE:URI) performs well 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) benefits from higher equipment use and rental prices.
Jim Cramer shared his thoughts on United Rentals Inc. (NYSE:URI) when asked by a viewer. He noted that while United Rentals Inc. (NYSE:URI) is currently below its previous highs, it has still increased by 25% per year. Cramer explained that United Rentals Inc. (NYSE:URI) is performing well because of the significant infrastructure projects happening in the country, which increase the demand for rented equipment.
“First of all, it’s significantly off its high, though it’s up 25% per year. The reason this company is performing well is because of all the infrastructure work happening in the country. Not everyone can go out and buy things; a lot of stuff is rented instead. This company is involved everywhere. I used to like the stock back in 2003; they used to come on air, and I thought they were brilliant. I haven’t seen them in a long time, but they’re still very impressive. You’ve got a winner there.”
Recent acquisitions, such as Ahern Rentals, have boosted United Rentals Inc. (NYSE:URI)’s market presence and fleet size, creating more opportunities for revenue and growth. United Rentals Inc. (NYSE:URI)’s use of technology and data analytics improves fleet management, customer service, and overall efficiency. Its solid financial performance, including significant revenue growth, healthy profit margins, and strong free cash flow, highlights its financial stability. Additionally, trends like increased equipment outsourcing by construction firms and a preference for renting over owning equipment support the industry’s growth, positioning United Rentals Inc. (NYSE:URI) for ongoing success and leadership in the market.
ClearBridge SMID Cap Growth Strategy stated the following regarding United Rentals, Inc. (NYSE:URI) in its fourth quarter 2023 investor letter:
“We exited our position in United Rentals, Inc. (NYSE:URI), in the industrials sector, an equipment rental company for general construction and industrial equipment. Despite being a long-term holding and having a history of strong stock price performance, we sold the stock because the company’s market capitalization exceeded a level that we judged appropriate for a SMID strategy.”
Overall URI ranks 8th on our list of Jim Cramer’s top bullish stock picks. While we acknowledge the potential of URI as an investment, our conviction lies in the belief that under the radar 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 URI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.