We recently published a list of Jim Cramer is Discussing These 10 Stocks Ahead of Q1 Earnings Season. In this article, we are going to take a look at where Reddit Inc (NYSE:RDDT) stands against other stocks that Jim Cramer is discussing ahead of Q1 earnings season.

Jim Cramer in a latest program on CNBC talked about the winning sectors so far this year and said the trends show a “strange” pattern. Cramer specifically mentioned the oil and gas sector which he believed would underperform given President Donald Trump’s plan to keep energy prices lower.

“I thought this group would be down given that the president wants to expand drill and we have a slower economy, but the stocks aren’t expensive and demand for natural gas very strong,” Cramer said.

Cramer also talked about healthcare and other key sectors that performed well. He believes these patterns show that investors are turning to sectors that perform well during recessions. However, Cramer thinks the state of the economy is better than feared.

“The seven stocks that make up the S&P are too big to dismiss. You need at least some of them to put together a really positive tape. But the bottom line, it’s terrific to see such a broad mixture of stocks winning here, from ones that can run in a recession to ones that can rally hard in a robust economy. What it tells me is that the market may be far healthier than we think, and this backdrop simply isn’t as bad as many would have you believe.”

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For this article, we picked 10 stocks Jim Cramer recently talked about during his programs on CNBC. With each company, we have mentioned the number of hedge fund investors. Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Reddit Inc (NYSE:RDDT)

Number of Hedge Fund Investors: 52

Jim Cramer said the following about Reddit Inc (NYSE:RDDT) during a program on CBC:

“Reddit, all right, Steve Huffman did a really good job. People were really—they gunned that stock ahead of the quarter. There was no way you could ever beat the expectations. It’s now come down tremendously, and I think this is a good time to start a position. The stock was up six today. I don’t want to buy up six. If it comes in on Monday or Tuesday, buy a little.”

With about 100 million daily active users, Reddit Inc (NYSE:RDDT) remains one of the fastest-growing social media platforms in the world. While Facebook and Twitter show signs of maturing growth, Reddit Inc (NYSE:RDDT) still has huge upside potential as more and more people flock to Reddit discussion boards for authentic opinions and discussion. User input from millions of people on various topics freely accessible to anyone is Reddit Inc (NYSE:RDDT)’s moat. As of 2023, users posted 16 billion comments on the platform, according to the company. That’s why companies are flocking to pay money to Reddit to use its data to train their AI models.

However, Reddit expects a slowdown in revenue growth for Q1 2025 compared to its Q4 2024 pace. But with the stock already down over 50% from its highs, this concern seems well accounted for in its valuation. Reddit expects Q1 2025 EBITDA margins of about 25.3%.

Munro Global Growth Small & Mid Cap Fund stated the following regarding Reddit, Inc. (NYSE:RDDT) in its Q4 2024 investor letter:

“Key contributors to performance over the quarter were Reddit and AppLovin (see stock story on page 5). Reddit, Inc. (NYSE:RDDT) delivered a strong set of results, demonstrating impressive revenue growth and expanding operating margins. As the world grapples with misinformation and AI-generated content, we continue to view Reddit’s position as a unique platform hosting the largest volume of human conversations globally becoming increasingly valuable.”

Overall, RDDT ranks 4th on our list of stocks that Jim Cramer is discussing ahead of Q1 earnings season. While we acknowledge the potential of RDDT, 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 RDDT 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 is originally published at Insider Monkey.