Jim Cramer, host of Mad Money, recently shared his thoughts following his interview with President-elect Donald Trump on the floor of the New York Stock Exchange. One of the key takeaways for Cramer was Trump’s comments about China. During the conversation, Trump emphasized his positive relationship with President Xi, which in itself was noteworthy.

However, Trump also remarked that China has not always been a responsible global actor and that this dynamic must change. Cramer highlighted that this is crucial for a number of reasons, particularly the need to protect Taiwan, which he sees as vital to safeguarding Taiwan Semiconductor, a company that plays a critical role in U.S. national security. Cramer also noted that the challenge lies in shifting China’s role from a long-standing adversary to a more balanced trading partner, a task he feels could be difficult given the longstanding trade issues between the two countries.

Cramer further pointed out the complexities of dealing with a country that has exploited U.S. trade policies for years. He said:

“But let me tell you what I think can happen, I believe President Xi needs the U.S. much more than people realize. The Chinese economy is more deeply indebted.”

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When it comes to the stock market, Cramer found Trump’s approach to be refreshingly straightforward, without any unnecessary bravado. He also observed that Trump’s openness toward cryptocurrency could have significant implications for the future of the U.S. dollar.

“I also thought the President-Elect had no bluster when it came to the stock market, that was a very good thing… The president-elect’s affinity for crypto will ultimately give the dollar a strange bedfellow. I want our country to be the capital of finance and that means being the capital of crypto too.”

He added that for this relationship to develop positively, Washington would need to address the growing national deficit, which he believes could diminish some of the speculative appeal of cryptocurrency.

“I want to believe that the White House’s attitude toward business is important to the direction of stocks. The current president is often going way out of his way to show his disdain for any business people. But what’s more important is profits so it certainly doesn’t hurt that Trump talked about wanting to cut corporate taxes once again to let more money fall to you, the shareholder. Love him or hate him, you gotta admit that’s good for your portfolio, which by the way, is still the true north of Mad Money.”

Our Methodology

For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 13. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.

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).

Jim Cramer’s Lightning Round: 7 Stocks to Watch

7. indie Semiconductor, Inc. (NASDAQ:INDI)

Number of Hedge Fund Holders: 12

A caller asked about indie Semiconductor, Inc. (NASDAQ:INDI) and highlighted its revenue growth, $7.1 billion backlog, and CEO targeting over $700 million in revenue by 2028. In response, Cramer said:

“I think he may be a tad too bullish because the auto business is really much worse than people realize right now. So I’m going to have to take a pause on that one. I am sorry, you made a nice brief for it, but I can’t go there.”

indie Semiconductor (NASDAQ:INDI) specializes in automotive semiconductors and software solutions for applications in advanced driver assistance systems, autonomous vehicles, connected cars, and electrification. According to a newsletter, titled ‘Fuel for Thought: Tariffs, Taxes, and EVs: The Road Ahead for the Global Auto Industry’ by S&P Global Mobility, the potential second Trump administration poses significant uncertainty for the global automotive industry, particularly in relation to electric vehicles (EVs), tariffs, taxes, and trade relations.

Proposed policies, such as tax cuts, deregulation, and changes to EV incentives, could impact vehicle affordability and sales. Tax cuts may stimulate short-term economic growth but could lead to higher borrowing costs, affecting vehicle affordability, especially for EVs. Trade barriers, particularly proposed tariffs on imported vehicles, could disrupt the North American supply chain, raising production costs and consumer prices.

The newsletter highlighted that deregulation, including relaxed fuel economy standards, could slow the shift towards electric vehicles, potentially reducing BEV sales projections for the US. As a result, the automotive industry faces a challenging global environment, with trade disruptions, regulatory rollbacks, and changing market dynamics influencing the future of EV adoption.

During indie Semiconductor’s (NASDAQ:INDI) third-quarter earnings call, Donald McClymont, Co-Founder, and CEO, discussed several factors negatively affecting the automotive industry, such as the high cost of credit impacting consumer purchasing decisions and the ongoing surplus of vehicle and semiconductor inventory.

He noted that management had previously anticipated these challenges to continue into the second half of 2024, which has proven to be the case. However, he emphasized that claims of the automotive industry’s decline were greatly exaggerated, and while some uncertainty persists, the long-term market drivers of in-cabin experience, safety, and electrification remain robust.

6. Paychex, Inc. (NASDAQ:PAYX)

Number of Hedge Fund Holders: 20

Cramer said to wait for Paychex, Inc.’s (NASDAQ:PAYX) yield to climb to 3% as it has proven to be a successful strategy before.

“Okay, Paychex reports next week and I think this is on hold. Like a lot of people feel that if the Fed stops cutting rates or says, listen, we can’t cut anytime soon, the stock’s going to fall. Let’s wait to see. It yields 2.7%. I like to buy this stock at 3%. That’s been the right thing to do. Let’s employ that strategy.”

Paychex (NASDAQ:PAYX) offers integrated human capital management solutions, including payroll, HR, benefits, insurance services, and retirement plan administration for small to medium-sized businesses. As per the company’s guidance for the fiscal year ending May 31, 2025, it has maintained its forecasts across most categories, with the exception of some adjustments related to interest rate assumptions.

The company now anticipates a total of 125 basis points in cuts to short-term interest rates for the remainder of the fiscal year. This change is expected to directly affect the interest income on funds held for clients, as well as other income. Despite these adjustments, it continues to project total revenue growth between 4% and 5.5% for the fiscal year.

For its management solutions segment, Paychex (NASDAQ:PAYX) expects growth in the range of 3% to 4%, and its PEO and insurance business is still forecasted to grow between 7% and 9%. However, the company revised its projections for interest income on funds held for clients, now expecting it to be in the range of $145 million to $155 million, down from the previous estimate of $150 million to $160 million.

Additionally, other income, net is now anticipated to be between $30 million and $35 million, lower than the previous guidance of $35 million to $40 million. Despite these changes, the company has not altered its operating income margin guidance, which remains in the range of 42% to 43%. Adjusted diluted earnings per share are still expected to grow between 5% and 7% for the year.

5. Applied Digital Corporation (NASDAQ:APLD)

Number of Hedge Fund Holders: 26

When a caller asked about Applied Digital Corporation (NASDAQ:APLD), Cramer said:

“Yes, you know, look, this [is] high-performance computing and you know, when I see high-performance computing, I think about a stock that everybody suddenly hates again and that’s the stock of Nvidia. And I’m not backing away from Nvidia. It’s actually been very good to my Charitable Trust and everybody else in the world.”

Applied Digital (NASDAQ:APLD) designs, develops, and operates digital infrastructure solutions, providing cloud services and high-performance computing for industries such as AI, machine learning, and crypto mining. With the rapid expansion of AI technologies, the company believes it is in a favorable position to provide advanced data center solutions and GPU cloud services to meet the growing demand.

In September, it raised $160 million through a private placement, a transaction in which shares are sold directly to investors instead of being offered on the open market. According to the company, it issued 49.38 million shares, and among the investors were Nvidia Corp. and Related Companies LP, a prominent real estate developer.

In addition to the lease agreement with a U.S.-based hyperscaler for its 100 MW facility that it highlighted during the first quarter of fiscal 2025 earnings call, Applied Digital (NASDAQ:APLD) management indicated that interest in the company’s data center offerings has significantly increased, with three additional hyperscalers expressing strong interest in securing capacity for 2025 and 2026.

This uptick in demand has driven the company to focus on expanding its capacity for these two years, and they noted that the 2025 capacity is essentially sold out. The company’s 100 MW facility in Ellendale, North Dakota, is expected to fulfill much of the demand for 2025, with additional efforts underway to secure a lease for another location, likely in the Dakotas, through a Letter of Intent.

4. Devon Energy Corporation (NYSE:DVN)

Number of Hedge Fund Holders: 41

Cramer said to hold off when it comes to Devon Energy Corporation (NYSE:DVN), at least ahead of the Federal Open Market Committee meeting on December 18.

“I don’t know, Rick Muncrief just left it. He built the company. The stock is at its 52-week low, it’s at $33. People expect oil to go down 10 bucks. We heard it from President-elect Trump yesterday. I say to start buying some and I almost put it in the bullpen today for my Charitable Trust in preparation for next Wednesday’s meeting. I’m holding off for now because oil is so weak.”

Devon Energy (NYSE:DVN) is an independent energy company that specializes in the exploration, development, and production of oil, natural gas, and natural gas liquids across the United States. Recently, the company announced that CEO Rick Muncrief, a veteran of the U.S. shale industry, will step down on March 1.

Under Muncrief’s guidance, Devon Energy (NYSE:DVN) saw significant growth in production, reaching a total of 728,000 barrels of oil equivalent per day (BOE/d) in the third quarter, up from 499,000 BOE/d at the end of the first quarter of 2021. Additionally, according to Reuters, the incoming team of President Donald Trump is already working on an energy package aimed at expanding domestic oil and gas drilling on federal lands, along with offshore lease sales and streamlining LNG export permits.

During an August campaign rally in Asheville, North Carolina, Trump emphasized his commitment to reducing energy prices, vowing to push back against what he described as the “Biden-Harris war on American energy.” He further stated that his administration would focus on drilling and aimed to slash energy prices by half within 12 months, a central part of his plan to control inflation.

3. Alcoa Corporation (NYSE:AA)

Number of Hedge Fund Holders: 42

When asked about Alcoa Corporation (NYSE:AA), Cramer expressed worries about China with regard to material stocks.

“Now here’s the problem with Alcoa, in the end, it’s a material stock. The material stocks are linked with China and therefore nobody wants them, even though Alcoa had a great quarter. So I have to go with the crowd and say, not now.”

Alcoa (NYSE:AA) produces and sells bauxite, alumina, and aluminum products, while also operating hydropower plants that generate and sell electricity to various industrial and wholesale markets. Appearing on the Bloomberg: The China Show in November, Bill Oplinger, President and CEO discussed various aspects of the aluminum industry, including the current commodity market.

He explained that global aluminum demand remains strong, with tight supply across the system, particularly in bauxite and alumina. Oplinger noted that supply constraints from China, including a cap on aluminum production, contribute to the market’s tightness, with high prices for bauxite and alumina. He emphasized that the company’s global presence, with operations in nine countries, allows it to manage within existing tariff structures, particularly those related to U.S. steel and aluminum tariffs from the Trump administration.

On inorganic growth, Oplinger highlighted the recent acquisition of Alumina Limited and a transaction in Saudi Arabia as part of the company’s growth strategy, which remains focused on the aluminum supply chain from mining to smelting. He said that Alcoa (NYSE:AA) is not looking to diversify into other metals but continues to focus on improving operations and reducing costs within the aluminum market. Finally, Oplinger stressed that the company’s geographic diversification, with assets spread across Australia, Africa, and Brazil, provides a competitive advantage in the face of geopolitical risks and supply chain challenges.

2. Dollar General Corporation (NYSE:DG)

Number of Hedge Fund Holders: 45

When a caller asked about Dollar General Corporation (NYSE:DG), Cramer responded and said:

“Dollar General yields 3%. I like my Dollar General… Here’s the problem, there’s another company, it’s called Walmart and they are crushing it. And I think you gotta buy Walmart over them even though Walmart’s at its high.”

Dollar General (NYSE:DG) is a discount retailer with a significant presence across various regions in the United States. The company’s second-quarter results were weaker than expected and CEO Todd Vasos attributed the softer sales to a core customer base that is feeling financially constrained. This trend continued into the third quarter, where the company reported a 5% increase in sales year-over-year, largely driven by the opening of new stores.

Same-store sales only grew slightly by just over 1%. The retailer also faced a sharp decline in earnings, with operating profit falling by more than 25% and earnings per share dropping by over 29%. Despite these challenges, Vasos noted that the company was able to deliver same-store sales near the top end of its expectations for the quarter. He attributed this to the company’s ongoing efforts to improve store execution and enhance the customer experience, which he referred to as part of its “Back to Basics” strategy.

To further improve the customer experience, Dollar General (NYSE:DG) has focused on several initiatives, including expanding its store network and exploring new product formats. One example of this is the pOpshelf concept, which aims to provide a differentiated shopping experience. The company has also launched Project Elevate, an initiative aimed at revitalizing older stores to improve customer satisfaction and drive sales growth. This project is part of its broader reinvestment strategy, which includes ambitious plans for 2025. These plans feature the opening of 575 new stores across the U.S. and the debut of 15 locations in Mexico.

1. International Business Machines Corporation (NYSE:IBM)

Number of Hedge Fund Holders: 56

Cramer called International Business Machines Corporation (NYSE:IBM) stock episodic and said that he is on board.

“I like IBM. I like IBM. It’s still an inexpensive stock. It’s still got upside. It’s a little more episodic than I like. But you know, had that down trip but at 22 times earnings, I am on board.”

International Business Machines (NYSE:IBM) offers integrated solutions and services, including hybrid cloud and AI platforms and server and storage solutions for hybrid cloud deployments. The third quarter marked the five-year anniversary of its acquisition of Red Hat, its open-source software subsidiary. Since the acquisition, Red Hat’s revenue has grown significantly, reaching around $6.5 billion and doubling in size.

This growth has been driven by a compound annual growth rate in the mid-teens. Additionally, the OpenShift platform, which was valued at approximately $100 million in annual recurring revenue (ARR) at the time of acquisition, has now expanded more than tenfold, reaching $1.3 billion in ARR. Red Hat has also broadened its global presence, entering new markets worldwide, and continues to drive innovation with new offerings like Ansible 2.5, RHEL AI, and OpenShift AI.

In Q3, International Business Machines (NYSE:IBM) reported a strong 10% growth in Software revenue, which includes a 14% increase from Red Hat alone. Another key development for the company came in 2023 with the introduction of the Watsonx generative AI platform. Shortly after its launch, Watsonx secured over $2 billion in contracts, positioning itself as a significant growth driver for IBM in the years ahead.

IBM’s Chief Financial Officer, Jim Kavanaugh, expressed confidence in the company’s growth trajectory heading into 2025. Kavanaugh highlighted the acceleration in Software revenue, opportunities for further growth with Red Hat, the new mainframe cycle, and IBM’s strong position in generative AI, alongside contributions from acquisitions, as key factors driving future success.

While we acknowledge the potential of International Business Machines Corporation (NYSE:IBM) as an investment, 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 IBM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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