Jim Cramer’s Charitable Trust recently purchased 200 shares of Nextracker at around $34.20, increasing its total ownership to 1,150 shares and its weighting to 1.2% from 1%. The decision to make this small buy was influenced by the significant drop in the market since the Morning Meeting, with September traditionally being a challenging month for investors. However, with sufficient cash reserves, it was deemed appropriate to select specific stocks for investment opportunities. Despite this, the Trust does not plan to make substantial purchases until the S&P Short Range Oscillator enters oversold territory, which has not yet occurred as of the recent market close.
Nextracker, a provider of solar tracking solutions for large utility-scale projects, has faced a decline in its stock price from the high $50s in late June to approximately $34 on Friday. Some of this can be attributed to policy risk related to the upcoming presidential election, with a potential shift in support for renewable energy depending on the outcome. Additionally, there has been general weakness in stocks within the electricity power generation sector, partially due to concerns about the artificial intelligence data center rollout. Despite these challenges, the initial thesis for investing in Nextracker was based on the growing demand for electricity to support data centers in the U.S. However, the company’s second quarter earnings report in early August led to a further decline in the stock price.
The market reacted negatively to Nextracker’s earnings report despite surpassing revenue and earnings estimates, citing management’s cautious outlook and project delays as reasons for concern. The backlog for the company grew in the second quarter but was not enough to alleviate worries about slowing growth. Nevertheless, there are reasons to believe that Nextracker’s management is maintaining a conservative approach, and the pace of new projects may pick up towards the end of the year with potential interest rate cuts and increased clarity in the White House. The stock is currently trading at a relatively low multiple based on earnings estimates, indicating the potential for a higher valuation if certain factors align positively for the company.
As a subscriber to the CNBC Investing Club with Jim Cramer, members receive trade alerts before Jim makes any trades. There is a waiting period of 45 minutes after an alert is issued before a stock is bought or sold in the charitable trust’s portfolio, or 72 hours if Jim has discussed the stock on CNBC TV. It is important for members to review the terms and conditions, privacy policy, and disclaimer related to the Investing Club, as there is no fiduciary obligation or guaranteed outcome or profit associated with the information provided. The decision to invest in Nextracker reflects a strategic approach to identifying opportunities in the market despite challenges and uncertainties, with a focus on long-term potential and value. Members can track the Trust’s holdings and decisions through comprehensive updates and analysis provided by Jim Cramer and the CNBC Investing Club.
