Former hedge fund manager and host of the CNBC show “Mad Money,” Jim Cramer, strives to help people think like professional investors and, in early July, named several companies that can reach a market capitalisation of $1 trillion.
Cramer nominated pharma giant (1) Eli Lilly (NYSE: LLY) and (2) EV maker Tesla (NASDAQ: TSLA) as top contenders for a trillion-dollar valuation. He cited Eli Lilly’s range of high-demand drugs, from GLP-1s for diabetes and weight loss that can also potentially treat cardiovascular and liver diseases to its new Alzheimer’s drug. The company has a market cap of $739.4 billion. Meanwhile, Cramer thinks Tesla’s market cap could overtake Eli Lilly’s and reach a $1 trillion valuation. “To me, it’s going to be Lilly up next,” he said. “But the sheer popularity of Tesla might allow Musk to sneak back into the top rung, turning the Super Six back once again into the Magnificent Seven.”
While Tesla share prices fell 12% Wednesday after the company posted a fall in Q2 auto revenues, Cramer said Tesla is viewed as more of a tech firm than an auto manufacturer and should focus on growing the Tesla Energy vertical. The company’s energy storage business posted a record 9.4 GWh of deployments during the quarter.
Cramer Names More Companies From Diverse Industries
3. Broadcom (NASDAQ: AVGO)
Cramer believes that an AI player like Broadcom is vital for data centres. The company’s revenue jumped 43% year-over-year to $12.48 billion for the quarter ended May 5 on demand for its AI products, semiconductor solutions, and contribution from its recently acquired VMWare. With a record revenue of $3.1 billion from AI products alone amid favourable business conditions, the company announced a quarterly dividend of $5.25 per share, raised its FY2024 revenue guidance to $51 billion, and executed a 10-for-1 stock split this month. Analysts believe Broadcom is catching up fast with Nvidia in terms of bullish sentiment.
4. JPMorgan (NYSE: JPM)
Meanwhile, Cramer thinks JPMorgan is the only bank capable of reaching a market cap of $1 trillion, adding that the company “could undergo some huge multiple expansion” if the US Federal Reserve starts trimming interest rates. JPMorgan’s Q2 revenue across business segments like consumer banking, commercial and investment banking, and asset management jumped quarter-over-quarter. The bank acquired 2.4 million new customers, and the wealth management business witnessed net client asset inflows of $79 billion during the quarter. JPMorgan intends to increase the common dividend for the second time in 2024, supported by its fortress of a balance sheet.
5. Walmart (NYSE: WMT)
Coming to Walmart, Cramer highlighted that the retailer could double in value in the next few years, citing its strong loyalty programs and e-commerce business. The company’s consolidated revenue for Q1 increased by 6% to $161.5 billion. The advertising and global eCommerce businesses also grew 20% as store-fulfilled pickup and delivery led to higher market penetration. For Q2, Walmart management forecast net sales to grow between 3.5% and 4.5%. The company’s return on investment (ROI) increased YoY to 15% for the trailing 12 months ended April 2024 from 12.7%, implying that Walmart has been efficiently deploying its assets. The ROI jump can also be attributed to rising operating income, improvement in business performance, and organisational restructuring.
6. Exxon Mobil (NYSE: XOM)
According to Cramer, Exxon Mobil could witness massive gains if oil prices jump, which may occur in the next two years. Exxon Mobil’s Q1 earnings fell YoY on lower refining margins and cooling natural gas prices. Upstream revenues and sales of energy products also declined due to a fall in natural gas realisations and lower margins, but earnings from chemical products increased significantly. Factors like Exxon Mobil’s quarterly gross production of over 600,000 oil-equivalent barrels per day (bpd) in Guyana, growing structural cost savings, and the Beaumont refinery expansion have helped it partly offset lower base volumes. The company also completed its $59.5 billion merger with Pioneer Natural Resources in May and made an investment decision for the Whiptail development in Guyana, expected to add almost 250,000 oil-equivalent bpd of gross capacity starting in 2027. The company continues to reduce methane emissions and invest in technology for advanced recycling and direct air capture of carbon dioxide.
How Successful Was Jim Cramer As A Hedge Fund Manager?
Cramer graduated from Harvard Law School in 1984 but was already investing and promoting his stock picks while in school. Later, he became a stockbroker with Goldman Sachs. However, in 1987, he started his hedge fund, which recorded annual average earnings of over $10 million and returns of 24% over the next 14 years. According to MoneyINC, Cramer has a net worth of $150 million as of 2024, and most of his wealth came from his success as a hedge fund manager.
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