In this article, we’ll explore Jim Cramer’s 10 Handpicked Stocks to Watch.

In a recent episode of Mad Money, Jim Cramer expressed concern that there’s too much negativity in the market despite recent movements. He pointed out that while the Dow gained 38 points on Wednesday, the S&P fell 1.16%, and the NASDAQ dropped 3%, people seemed overly focused on what was going wrong. Although he’s not calling it a market bottom, he suggests it’s worth paying attention to what’s going right.

“On a day when the Dow inched up 38 points, the S&P dipped 1.16%, and the NASDAQ declined 3%, I’m willing to declare that there’s too much doom and gloom out there. Look, I’m not trying to call a bottom, let’s make that crystal clear, but I think it’s worth taking a hard look at what’s actually going right—not just what’s going wrong.”

Cramer emphasized that even though the market has been strong this year, heading into a historically tough election season and the worst month of the year means it’s not the time to declare everything is fine. He noted that according to his trusted S&P oscillator, which measures overbought or oversold conditions, the market isn’t oversold yet, so it’s risky to go all-in.

“Sure, the market’s up a lot this year as we head into a tricky election period and historically the worst month of the year. So, only a fool would ring the all-clear bell. Plus, we aren’t even oversold yet—at least not according to the S&P oscillator I swear by, which gauges whether there’s too much buying or selling compared to normal times. You don’t go all-in when the market is overbought like it is now; that rarely works.”

Cramer also countered the idea that a recession is inevitable due to the Federal Reserve’s struggle to control the economy. He agreed the economy is slowing, which is why consumer packaged goods and utility stocks are rallying while more sensitive sectors are struggling.

“At the risk of sounding too bullish, let me refute some of the biggest and baddest stories out there. First, let’s tackle the popular narrative that the economy is slowing at a faster pace than the Federal Reserve can control, leading to an inevitable recession. That’s why consumer packaged goods stocks and utilities are rallying while economically sensitive stocks have been crushed. I won’t deny that the economy is weakening.”

However, he stressed that a Fed rate cut is meant to counter economic weakness, not strength, and hoping for a rate cut while ignoring the downturn is unrealistic. He added that if the upcoming labor report is weak, recession-proof stocks may surge, but if it’s strong, hopes for a rate cut will fade.

“But let’s be realistic: You can’t hope for a Fed rate cut without acknowledging that there’s going to be some economic fallout. The Fed doesn’t cut rates when business is booming. That’s foolish thinking. Rate cuts are meant to combat economic weakness, not strength. If Friday’s labor report is weak, sure, we might see a huge rally in the so-called “recession-proof” stocks. But if the non-farm payroll number is too strong, forget about any rate cut hopes. You can’t have it both ways.”

Our Methodology

The article summarizes a recent episode of Jim Cramer’s Mad Money, where he discussed and recommended several stocks. This article focuses on ten companies that Cramer highlighted and examines how hedge funds perceive these stocks. The companies are ranked based on their level of hedge fund ownership, starting with the least owned and moving to the most 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).

Jim Cramer’s 10 Handpicked Stocks to Watch

10. AeroVironment Inc. (NASDAQ:AVAV)

Number of Hedge Fund Investors: 24

Last week, AeroVironment Inc. (NASDAQ:AVAV), the defense contractor known for its Switchblade drones used by Ukraine, secured a nearly $1 billion contract to supply these drones to the U.S. Army. This significant deal led to a sharp rise in AeroVironment Inc. (NASDAQ:AVAV)’s stock price, which jumped from $177 to $203 in a few days. Despite this positive development, AeroVironment Inc. (NASDAQ:AVAV) experienced a decline in after-hours trading recently. According to Jim Cramer, the drop is partly due to Wall Street’s reaction to AeroVironment Inc. (NASDAQ:AVAV)’s earnings report, which did not meet analysts’ expectations for an upgraded forecast.

“Last week, we got some great news from AeroVironment, the defense contractor best known for its Switchblade suicide drones, which have played a major role in helping Ukraine fend off the Russian invasion. These guys won a nearly $1 billion contract to supply those same drones to the U.S. Army. In response, the stock surged from $177 to $203 over the next couple of days.

That’s something to keep in mind when you see the stock getting slammed in after-hours trading today because Wall Street doesn’t seem to love the numbers AeroVironment reported after the close. The actual results were fantastic, but the company only reiterated its previous full-year forecast rather than raising it, which analysts were expecting. Then again, that forecast doesn’t include the big U.S. Army contract they just won last week, which makes the whole situation a little confusing. We’ll clear that up.”

AeroVironment Inc. (NASDAQ:AVAV) presents a strong investment opportunity due to its impressive financial performance and increasing demand for its defense products. In fiscal Q1 2024, AeroVironment Inc. (NASDAQ:AVAV) saw a 40% increase in revenue, reaching $152.3 million, and achieved a net income of $11.9 million, reversing a $3.4 million loss from the previous year. AeroVironment Inc. (NASDAQ:AVAV) has also raised its revenue forecast for fiscal 2024 to $645–$675 million, highlighting its growth prospects.

This positive outlook is driven by high demand for its UAVs and tactical missile systems, including the Puma, Raven, and Switchblade models, which are critical for modern defense. Recent contracts for the Switchblade 300 and expanding partnerships with the U.S. and NATO further underscore AeroVironment Inc. (NASDAQ:AVAV)’s key role in global military operations. With rising defense budgets worldwide, AeroVironment Inc. (NASDAQ:AVAV) is well-positioned for long-term growth, making it a promising investment choice.

9. Celsius Holdings Inc. (NASDAQ:CELH)

Number of Hedge Fund Investors: 27

Jim Cramer has expressed concerns about Celsius Holdings Inc. (NASDAQ:CELH), suggesting that the company’s partnership with PepsiCo, Inc. (NYSE:PEP) does not seem to be benefiting it as expected. Although Celsius Holdings Inc. (NASDAQ:CELH) was once a high-flying stock, it has recently fallen back. Cramer prefers to wait until a company stabilizes before considering it for investment, and he views Celsius Holdings Inc. (NASDAQ:CELH) as still struggling.

“I think there’s something wrong with Celsius Holdings, Inc. (NASDAQ:CELH). Whatever that relationship is with PepsiCo, Inc. (NYSE:PEP), it sure isn’t helping them. The stock had been a rocket ship, but it’s come back down. I like to wait until companies have some sort of footing. This one is still in free fall. A lot of it is the belief that perhaps they’re selling it at lower prices than they thought, or maybe the convenience stores aren’t selling it as well. I don’t trust it.”

Celsius Holdings Inc. (NASDAQ:CELH) is quickly becoming a major force in the energy drink market by focusing on fitness-oriented products and meeting the growing demand for healthier beverages. In Q2 2024, Celsius Holdings Inc. (NASDAQ:CELH) achieved impressive results, with revenue climbing 112% year-over-year to $325.9 million, driven by a 143% increase in sales across North America. Its gross profit rose to $168.7 million, and net income jumped to $37.3 million, up from $9.4 million a year earlier.

This strong financial performance is supported by Celsius Holdings Inc. (NASDAQ:CELH)’s partnership with PepsiCo, Inc. (NYSE:PEP), which boosts distribution through Pepsi’s vast network and accelerates the company’s growth. Celsius Holdings Inc. (NASDAQ:CELH) is also expanding internationally, particularly into European and Asian markets, which will further fuel its growth. Recent marketing efforts, such as influencer collaborations, are expected to enhance brand visibility and attract younger consumers. These combined factors position Celsius Holdings Inc. (NASDAQ:CELH) for continued success and make it a promising growth stock in the energy drink sector.