We recently compiled a list titled Jim Cramer's Top 10 Stocks to Track for Potential Growth. In this article, we will look at where Topgolf Callaway Brands Corp. (NYSE:MODG) ranks among Jim Cramer's top stocks to track for potential growth.
In a recent episode of Mad Money, Jim Cramer points out the surprising strength in the market, noting that many companies are performing better than Wall Street recognizes. He argues that people should stop doubting these companies every time there's a negative data point. Cramer highlights the impressive management and execution by CEOs, which often goes unnoticed.
While Cramer acknowledges that some CEOs deserve skepticism, he emphasizes that many are outstanding and deserve recognition for their hard work. He criticizes the focus on short-term economic indicators and emphasizes that great companies aren't distracted by minor fluctuations.
Cramer explains how Kroger CEO Rodney McMullen has led the supermarket chain to success despite challenges, including resistance to its acquisition of Albertsons and a tough economic environment. McMullen has managed to keep food costs down and deliver strong results through effective strategies like a superior loyalty program and regional store improvements. Despite high food prices, the company's stock rose more than 7% following a positive earnings report, showcasing the company's successful turnaround.
Cramer contrasts this with the tech industry, where complex details often lead Wall Street to misunderstand a company's true potential. He believes that in tech, analysts frequently overlook the expertise and capabilities of CEOs who have a deep understanding of their businesses.
Our Methodology
This article reviews a recent episode of Jim Cramer's Mad Money, where he discussed several stocks. We selected and analyzed ten companies from that episode and ranked them by the level of hedge fund ownership, from the least 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).
A group of happy golfers basking in the warm sun on a golf course.
Number of Hedge Fund Investors: 17
Jim Cramer believes that Topgolf Callaway Brands Corp. (NYSE:MODG) has the potential to recover and become a valuable stock once it separates from Topgolf, which he sees as a burden. He admits that his initial optimism about the merger was misplaced and now feels more skeptical. Cramer hopes both businesses can improve after the separation, but he is less confident about Topgolf Callaway Brands Corp. (NYSE:MODG)'s future prospects. He refers to the current situation as a corporate setback, reflecting disappointment in the performance of the combined entities.
Topgolf Callaway Brands Corp. (NYSE:MODG) presents a strong investment opportunity due to its impressive earnings and promising growth potential across its varied portfolio, which includes Topgolf Callaway Brands Corp. (NYSE:MODG), and lifestyle brands. Despite some macroeconomic challenges, the Topgolf segment continues to drive growth, with Q2 2024 revenue up 5% and operating income rising 27.5%, showcasing its resilience and efficiency. While Topgolf Callaway Brands Corp. (NYSE:MODG) saw an 8.2% drop in equipment sales compared to last year's successful Big Bertha launch, the brand's strong reputation and demand for premium gear suggest it will recover.
Topgolf Callaway Brands Corp. (NYSE:MODG)'s $0.42 EPS in Q2 2024 reflects its ability to exceed earnings expectations, boosting investor confidence. Moreover, a strategic review of the Topgolf segment could unlock new growth opportunities through partnerships or investments. With a diverse portfolio that spans entertainment, sports, and lifestyle markets, Topgolf Callaway Brands Corp. (NYSE:MODG) is well-positioned for long-term success, making it an appealing investment even amid short-term economic pressures.
Polen U.S. Small Company Growth Strategy stated the following regarding Topgolf Callaway Brands Corp. (NYSE:MODG) in its fourth quarter 2023 investor letter:
Overall MODG ranks 9th on the list of Jim Cramer's top stocks to track for potential growth. While we acknowledge the potential of MODG as an investment, our conviction lies in the belief that under the radar 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 MODG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.