Jim Cramer On GE Vernova Inc. (GEV): ‘Ugly Duckling Into Dynamite Squad’
We recently published an article titled, Jim Cramer’s Best Performers List: Top 10 Picks. In this article, we are going to take a look at where GE Vernova Inc. (NYSE:GEV) stands against other stocks in Jim Cramer’s best performers list.
During Mad Money’s episode on October 1, host Jim Cramer urged investors to remember the market’s strong performance over the past quarter, making note of the rising tensions in the Middle East, which led to a decline in major stock indices on Tuesday.
He pointed out that the landscape has shifted beyond just the major technology companies, and shed light on the top performers of the S&P 500. Cramer observed that the last three months have witnessed what he described as “the revenge of the little guy companies.” He said:
“When you look at the 10 best performers of the third quarter, we discover that this formerly narrow market has totally changed its stripes.”
Cramer emphasized that the current market rally is driven by companies that are often overlooked. He said:
“It is a remarkable list that represents a real broadening out of the winners. Some would say it’s a sign of where we’re headed. I might not go that far, but clearly, we need to start digging a lot deeper to find winners going forward.”
In his recent commentary, Cramer highlighted that the major winners of the third quarter were unexpectedly obscure, primarily comprising a group of ten stocks focused on power generation and interest rate cuts.
He pointed out that these stocks diverged from the well-known Magnificent Seven and traditional FAANG names, with an absence of fast-growing medical or cybersecurity companies, many of which have faced challenges recently.
Cramer suggested that investors look to the bottom of the S&P 500 for insights into market trends. He noted that Super Micro finished last for the quarter, plummeting 49%. It serves as a reminder that backing the wrong AI investment can lead to significant losses. Despite this, Cramer emphasized the need for the market to focus on new stocks for long-term growth rather than relying on past leaders.
Our Methodology
For this article, we compiled a list of 10 stocks that Jim Cramer mentioned during his episode of Mad Money on October 1. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 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).
Cramer On GE Vernova Inc. (NYSE:GEV): ‘Ugly Duckling Into Dynamite Squad’
GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders: 92
GE Vernova Inc. (NYSE:GEV) offers a broad spectrum of offerings related to electricity generation, transmission, orchestration, conversion, and storage. The company emerged from the integration of General Electric’s divisions focused on power, wind, and electrification.
Cramer was originally worried about General Electric’s spin-off into 3 parts, which led to the formation of GE Vernova. However, he described the company’s transformation as “ugly duckling into dynamite squad”.
The company has a global footprint and an impressive installed base of over 55,000 units, which contributes to a consistent stream of service revenue. The firm’s current portfolio includes a substantial and expanding backlog of onshore and offshore wind development projects, anticipated to fuel steady progress in the coming years.
A clear sign of the company’s operational efficiency was seen in the offshore segment alone, as nearly $800 million from the backlog was successfully converted to revenue in the first half of the year. Cramer commented:
“Turns out, GE Vernova had nothing to worry about. In fact, the spin-off came at the perfect time. [The] stock was a home run, zooming 48.7% in the third quarter as power generation’s become a phenomenal growth story.”
GE Vernova (NYSE:GEV) has ambitious plans for its Power segment, aiming to ramp up production. It is pushing to deliver between 70 to 80 heavy-duty gas turbine units annually starting in 2026. It is a significant increase from the current output of about 55 units per year.
In the second quarter, the company’s Power orders surged by 30%, with equipment orders more than doubling compared to the same quarter last year. The quarter emerged as one of the most significant in terms of orders over the past three years, evidence of strong market interest and the company’s competitive positioning.
Furthermore, GE Vernova (NYSE:GEV) sees substantial growth in its Electrification segment. The company forecasts that its backlog of electrification equipment will exceed significantly by the end of 2024 from the $6.4 billion reported at the end of 2022. It is expected to be driven by a surge in demand for grid-related technologies.
Carillon Tower Advisers stated the following regarding GE Vernova Inc. (NYSE:GEV) in its Q2 2024 investor letter:
“GE Vernova Inc. (NYSE:GEV) is a global electric power company that was recently spun out of a much larger industrial conglomerate. The company’s shares performed well in their first quarter as a standalone company, primarily as a result of the increasing outlook for power demand growth, both domestically and abroad. We believe GE Vernova is well positioned to capitalize on this growing trend across its various products and services, but most notably within its large-scale gas turbine equipment and related services, as well as in its high-voltage electrical transmission products.”
Overall, GEV ranks 1st on our list of Jim Cramer’s best performers. While we acknowledge the potential of GEV 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 GEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.