CNBC host Jim Cramer on Thursday's "Mad Money" endorsed Reddit and Rocket Lab while declining to recommend SiTime, signaling a strategic shift toward stocks that have declined over those priced for growth amid Federal Reserve rate increases.
The endorsements span different sectors—social media, aerospace, and semiconductors—but share a common thread: all three stocks have faced pressure this year. Cramer explained his rationale centers on valuations in a period of elevated interest rates.
Reddit and Rocket Lab Find Favor
Cramer expressed interest in purchasing Reddit following its decline of more than 12% over the last three months. He acknowledged investor concerns about the platform's dependence on Google search referrals, though CEO Steve Huffman characterized referral patterns as "choppy" in July even as revenue grew 61%.
Rocket Lab also received Cramer's backing despite recent setbacks. The company delayed the debut of its Neutron medium-lift rocket to 2027, according to Bloomberg reporting. However, Rocket Lab reported a record $2.36 billion backlog in the second quarter, representing a 137% year-over-year increase, though the company has not yet achieved profitability.
SiTime Rejected on Valuation Grounds
Cramer drew a clear distinction with SiTime, which manufactures silicon timing chips. "It's expensive, and I'm not recommending expensive stocks in tech or out of tech," he stated, applying what he described as a "rate test" to investment decisions.
Cramer suggested the valuation scrutiny could extend to other asset classes, including cryptocurrency, if the Federal Reserve continues raising rates. The Fed is scheduled to meet October 27-28, with futures pricing approximately a 27% probability of an additional rate increase.
