Jim Cramer’s Top 10 Stock Picks for December: Riding the November Wave

CNBC’s Jim Cramer has unveiled his top ten stock picks for December, leveraging a historical trend he’s observed over two decades in the market. He notes that **November’s winning stocks often maintain their momentum into December**, a pattern he attributes to market conditions and investor behavior. Cramer’s selections span diverse sectors, reflecting his assessment of both short-term market trends and longer-term growth potential under the incoming Trump administration. His analysis includes considerations of company performance, regulatory changes, and political dynamics.

Key Takeaways: Cramer’s December Stock Picks

• November’s top performers are likely to continue their success in December. This is a key principle guiding Cramer’s picks.
• A range of sectors are represented, highlighting diverse opportunities. Cramer isn’t solely focusing on one particular industry.
• Political considerations play a role in some selections. The anticipated policies of the incoming Trump administration factor into certain choices.
• Strong company performance and positive developments are emphasized. Several picks are based on recent successes and promising future prospects.
• Potential risks are acknowledged, particularly in the energy sector. Cramer cautions about the volatility of the oil market, despite anticipating some gains.

Cramer’s Methodology: Mimicking November’s Winners

Cramer’s strategy is rooted in his extensive experience managing a hedge fund before establishing his charitable trust. He explains that one of the most consistent patterns he identified was the tendency of November’s strongest performers to continue their positive trajectory in December. This isn’t a guaranteed outcome, he emphasizes, but a statistically significant trend he believes is worth considering for investors.

“Before I started my charitable trust more than two decades ago, I ran a hedge fund,” he said. “I was always looking for an edge, and one of the most reliable patterns I found is that, when December rolls around, you mimic the biggest winners of November.”

This approach suggests that the market momentum established in November carries over into the following month, potentially due to sustained investor confidence, continued positive news flow, or a combination of factors. This, however, shouldn’t be perceived as a foolproof strategy, but rather as a strategic consideration for investors seeking to capitalize on existing momentum as they formulate their December investment strategies.

The Top 10: A Sectoral Analysis

Cramer’s list is not presented in any particular order of preference. Instead, each company is considered individually based on its recent performance, its expected reaction to the changing political landscape, and potential market trends. Below is a detailed examination of each company and the rationale behind its inclusion on his list:

Technology and Software

• Palantir (PLTR): The software company’s impressive third-quarter results, showcasing a 20% surge in shares, are a major factor in Cramer’s recommendation. He particularly highlighted the strength of its defense business and its work with the Pentagon. “The third quarter was one of the best of the year,” he noted, praising the company’s management team.
• Axon (AXON): This law enforcement equipment manufacturer is predicted to benefit from increased police funding anticipated under a Republican-controlled government. Coupled with better-than-expected quarterly earnings and the integration of artificial intelligence into its software, Axon positioned itself as a strong contender in Cramer’s viewpoint.
• EPAM Systems (EPAM): Cramer views this enterprise software company’s resurgence as a sign of the shifting emphasis from hardware to software. Therefore, this investment is strongly posited as part of a larger industry trend.

Automotive and Energy

• Tesla (TSLA): Positioning the stock as a politically motivated pick, Cramer suggests that CEO Elon Musk’s close relationship with President-elect Trump might translate into positive outcomes for the company, particularly in its autonomous vehicle sector. “His loyalty will probably lead to rewards for the company,” Cramer stated.
• Texas Pacific Land (TPL): This newcomer to the S&P 500 owns substantial land in the Permian Basin and is expected to benefit from increased oil and gas activity. However, Cramer offered a word of caution, reminding investors that during Trump’s previous term, oil stocks did not perform as well as predicted after periods of extensive drilling. A note of caution is added here to manage expectations and avoid overconfidence.
• EQT (EQT): A significant natural gas company, EQT is expected to thrive as the incoming administration is tipped to revoke the pause on new LNG export projects, which is a testament to potential political influence on energy investment opportunities.
• Vistra (VST): In the changing energy landscape, Vistra is being favoured for its involvement in meeting the growing demand for power from data centers, in conjunction with the rising requirement for cleaner energy solutions. The success of Vistra will hinge on its responsiveness to this dynamic shift.

Consumer Goods and Media

• Tapestry (TPR): After the Federal Trade Commission blocked its acquisition of Capri, Tapestry’s stock has rebounded. Cramer sees this as a sign of resilience and labels the company a “rebounding apparel company.”
• Warner Bros. Discovery (WBD): Cramer believes this media conglomerate’s assets are undervalued, and the company’s improved balance sheet plus the possibility of higher ratings for CNN under the new administration create an attractive investment opportunity. Regulatory changes might also favour the company and increase potential mergers.

Healthcare

• McKesson (MCK): This healthcare distributor acts as a middleman between pharmaceutical companies and drugstores and could potentially benefit from the changing regulatory environment under the new administration which is poised to have less stringent control.

Considerations and Cautions

While Cramer’s picks are based on his analysis of market trends and political factors, it’s crucial to remember that **investing always involves risk**. The predictions made are not guarantees of future performance. Investors should conduct their own thorough research before making any investment decisions. Cramer’s historical pattern recognition is valuable information but shouldn’t be the sole basis for an investment strategy.

Specifically, the energy sector, although promising for some companies like EQT and Texas Pacific Land, remains inherently volatile. Over-reliance on oil-related investments should be managed cautiously, given the unpredictable nature of the market and the uncertainty associated with drilling levels under a new administration.

Finally, remember that this list represents only one expert’s opinion. Diverse investment portfolios are typically advised to mitigate risks. Investors should always consider their personal risk tolerance and financial goals when making investment decisions. Diversification and thorough due diligence are key to any successful investment strategy.