Jim Cramer is the host of CNBC's Mad Money and the chairman of TheStreet.com. In 1987 Cramer started his own hedge fund and returned an average of 24% per year between 1987 and 2001. Cramer also authored six money management books.
During the last 30 days his favorite buy recommendations (based on number of days the stocks were mentioned) on Mad Money were as follows:
Company | No. Of Times Picked | First Date* | Return (%)** | Excess Return (%) (wrt S&P500) |
Chipotle Mexican Grill (CMG) | 4 | 4/29/11 | 18.4% | 27.5% |
Alcoa (AA) | 3 | 10/11/10 | 26.8% | 15.7% |
Baidu.com (BIDU) | 3 | 7/15/10 | 89.5% | 61.7% |
EMC (EMC) | 3 | 8/2/10 | 36.4% | 19.6% |
Verizon (VZ) | 3 | 8/3/10 | 33.2% | 16.3% |
Average | 40.9% | 28.1% |
* Represents latest recommendation change from sell to buy. The study interval includes only past one year.
** Includes the duration from first date till July 01.
Cramer's favorite stock recommendations returned 40.9% on average since they have been recommended. The average relative performance of these stocks against the S&P500 is 28.1%. All of his favorite stocks have managed to beat the market.
1. Chipotle Mexican Grill: Cramer's most favorite stock during last 30 days was Chipotle Mexican Grill. Chipotle Mexican Grill, Inc. operates fast-casual, fresh Mexican food restaurants in the United States. He repeated his buy recommendation of CMG four times during the last 30 days. CMG has a market cap of $9.8 billion and P/E ratio of 53.4. CMG recently traded at $315.7 and has gained 18.4% since April 29, 2011, beating the SPY by 27.5 percentage points. In the First quarter, CMG opened 12 new restaurants. CMG plans to open 135 to 145 new restaurants in 2011, bringing total restaurant count to roughly 1220. CMG’s revenue for the first quarter was $509.4 million, up 24.3% from the prior year period. Net income for the first quarter of 2011 was $46.4 million, compared to $37.8 million in the first quarter of 2010.
On 27 June, Cramer stated that “The relationship is simple ... When gas prices go down, restaurant stocks go up. But you don't want to own just any restaurants. You want the best of the bunch and, in this environment, that's Darden for consistent, conservative growth and Chipotle to shoot the lights out for all you risk takers.”
Mark Broach’s Manatuck Hill Partners and Jim Simons’ Renaissance Technologies had the largest positions in CMG. Manatuck Hill Partners was the second best performing hedge fund during second quarter (See the top 25 hedge funds in Q2 2011).
2. Alcoa (AA): Alcoa, another most favorite stock of Cramer, provides aluminum, fabricated aluminum and alumina. Cramer repeated his buy recommendation of AA three times during last 30 days. AA has gained 26.8% since October 11, 2010, beating the SPY by 15.7 percentage points. The stock has a market cap of $17.3 billion, P/E ratio of 22.7 and dividend yield of 0.8%.
In the first quarter of 2011, Alcoa reported revenue of over $5.9 billion, an increase of 22% compared to first quarter of 2010. Alcoa also reported adjusted EBITDA of $955 million, up 22% from the fourth quarter 2010 and up 60% from first quarter 2010. John Paulson’s Paulson & Co and Steven Cohen’s SAC Capital Advisors had the largest positions in this stock at the end of March (See John Paulson’s top positions here)
On June 11, Cramer said that “Alright, Alcoa. Look, I'm a believer in what Klaus Kleinfeld is doing. He's the CEO of Alcoa. I know that the stock acts absolutely terribly, as do all the metals stocks. I remain a buyer. buy, buy, buy! My charitable trust owns it. It is an awful-acting stock, but I am a buyer and a believer.” On 28 June he repeated his buy recommendation.
3. Baidu.com (BIDU): Baidu.com has gained 89.5% since July 15, 2010, outperforming the SPY by 61.7 percentage points. The stock has a market cap of $50 billion and P/E ratio of 78.6. On May 25, Cramer said that "I've got that Baidu.com that I'm recommending. I don't want to recommend any other Chinese companies." On June 20, he added “We are not recommending any Chinese stock other than Baidu.com and I am proud of that.” Ken Fisher's Fisher Asset Management had $492 Million in BIDU at the end of March.
4. EMC (EMC): EMC operates as a Data Storage Devices company worldwide. Cramer repeated his buy recommendation of EMC three times during last 30 days. EMC has gained 36.4% since August 2, 2010, beating the SPY by 19.6 percentage points. The stock has a market cap of $57.3 billion and P/E ratio of 30.4. Ken Fisher’s Fisher Asset Management andreas Halvorsen’s Viking Global and Brookside Capital had the largest positions in this stock at the end of March. On June 11 (When the stock traded at $26.65), Jim Cramer stated that “I've been buying that stock every time it comes down for the charitable trust. Buy, buy, buy! Awful chart. Good stock. I'm willing to bet that the fundamentals trump the chart. Sometimes it does happen.”
5. Verizon (VZ): Verizon has gained 33.2% since August 3, 2010, beating the SPY by 16.3 percentage points. The stock has a market cap of $107 billion, P/E ratio of 30 and dividend yield of 5.2%. On June 22, Cramer said "Alright, Verizon happens to be what I think should be a core position for people's portfolios. You've got that 5% yield, you've got growth... and don't forget, when AT&T gets to buy T-Mobile, I know that this isn't fashionable to say, but I think that the competition will be done and there will be a peace treaty. And your phone bill will go up, but so will Verizon.” Leon Cooperman’s Omega Advisors had $78 Million in Verizon at the end of March (Check out billionaire Leon Cooperman’s top stock picks).
Cramer recently added AT&T (T) to his charitable trust as well. This shows that he really has conviction about T and VZ which is also in his charitable trust's portfolio. We believe investors can beat the market by imitating Cramer's favorite stock picks.
Disclosure: I am long SPY, T.
