CNBC host Jim Cramer outlined a rate-sensitive investment framework on Thursday's episode of "Mad Money," favoring beaten-down equities like Reddit (RDDT) and Rocket Lab (RKLB) over high-valuation growth stocks like SiTime (SITM) following the Federal Reserve's September interest rate hike.
Valuation Focus: Reddit and Rocket Lab
Cramer highlighted Reddit (RDDT) after a sell-off that saw the stock decline by over 12% in the past three months. While a caller noted that market participants penalized lost, unprofitable Google search traffic while ignoring revenue from direct users, CEO Steve Huffman previously characterized Google search referrals as "choppy" in July, even as company revenue expanded 61%.
For Rocket Lab (RKLB), Cramer observed that recent setbacks impacted share performance less than anticipated. Bloomberg reported on Wednesday that Rocket Lab delayed the debut of its Neutron medium-lift rocket to 2027. Despite failing to turn a profit yet, the firm reported a record $2.36 billion backlog in the second quarter, marking a 137% year-over-year increase, with the Neutron project serving as the anchor for its future profitability plans.
Energy Bets and SiTime Rejection
In the energy sector, Cramer expressed a preference for Chevron over Exxon (unless tax complications arise from a swap) and noted that Enterprise Products Partners generates revenue from natural gas liquids such as ethane and propane rather than crude oil. He also framed Valero (VLO) as a binary bet on the crack spread—the spread between crude oil costs and refined fuel prices—which he linked directly to risks surrounding the Iran war.
Cramer took a hard stance against SiTime (SITM) due to its elevated valuation, stating: "It's expensive, and I'm not recommending expensive stocks in tech or out of tech."
This valuation scrutiny comes as broader macroeconomic factors weigh on risk assets, echoing trends seen across traditional stock market sell-offs. The Fed is scheduled to meet on Oct. 27-28, with futures markets pricing in approximately a 27% probability of an additional rate hike. Grayscale's rate hike outlook similarly notes that elevated borrowing costs impact risk assets unevenly across tech and digital asset sectors.
Key Takeaways
- Reddit (RDDT) shares dropped over 12% in three months despite reporting 61% revenue growth.
- Rocket Lab (RKLB) delayed its Neutron rocket to 2027 while maintaining a record $2.36 billion backlog (up 137% YoY).
- Jim Cramer rejected SiTime (SITM) over high valuations ahead of the Oct. 27-28 Fed meeting, where futures price a 27% chance of a rate hike.
Why It Matters
Cramer's emphasis on valuation multiples during monetary tightening cycles highlights a broader shift in investor risk tolerance from speculative growth toward beat-down fundamentals. As interest rates remain high following the September Fed increase, premium tech stocks face increased vulnerability to market repricing. For crypto and equity investors alike, tracking the upcoming October Fed decision will be critical in determining liquidity conditions across high-beta asset classes.
