Jim Cramer is one of the top watched TV personalities on CNBC. He is the host of Mad Money and also the co-founder and chairman of TheStreet.com. Nearly two hundred fifty thousand people watch his show daily on TV and most of these are ordinary investors trying to understand what’s going on in the market. Jim Cramer’s bullish and bearish stock picks on his show are a starting point for many investments made by these folks.
During the show August 18, Cramer discussed the following stocks.
Bank of America (BAC): Cramer said BAC is a stock that “must be sold.” It fell another $0.45 cents today as there is no support under this next level and regulators are worried about the exposure. Cramer is bearish about BAC over the short term but has a small position in BAC in his charitable trust. He thinks the stock can appreciate considerably if things normalize over the long term. Unfortunately, in the short term, BAC is losing a lot of support among hedge fund managers. John Paulson sold half of his nearly $1.5 Billion stake during the second quarter (see Paulson’s latest transactions here).
NetApp (NTAP): This tech stock operates in data centers, one of the biggest trends in tech. NTAP is the biggest player in the business because it has the hardware and storage solutions companies seek. Many investors believed the stock was immune to the slowdown because the stock had secular growth.
However, NetApp’s cautious commentary took investors by surprise since the data storage system business had been seen as a major growth area. NTAP reported first quarter revenue of $1.46B, below analysts’ expectations of $1.51B. Executives said the hardest hit was their financial group of clients that were scaling back.
Cramer asked his viewers to stay away from the financials and technology sectors. Cramer said Apple (AAPL), Amazon (AMZN) and Salesforce (CRM) are three exceptions to the rule and can break the gravitational pull by growing their earnings strongly during this period.
CRM is a cloud computing service that is still working because it can save companies money. The stock has gone up 300% since November 2008. Cramer thinks the stock won’t remain this low for long. CEO Mark Benioff reported a solid quarter with earnings coming in at $0.34 cents per share (a $0.04 cent beat) and stronger-than- expected revenue at 38% year over year. The company added 6,300 new customers throughout the year. Matthew Iorio of White Elm Capital had a 4.98% of his 13F portfolio in Salesforce (see more of Iorio’s picks here).
BP Plc (BP): Cramer gave BP a buy recommendation citing the company being able to raise its dividend over time. Under $40, Cramer said he’d be willing to buy half the position at once (while waiting for it to go down a few points before buying the rest). The stock only trades at 6.4 times earnings, but yields 4.2%.
ConocoPhillips (COP): Cramer also gave this high-yielding oil company a buy recommendation after mentioning that it could initiate a stock split. Again, at $63, Cramer said he would be willing to buy half the position at once. COP is yielding just under 4%. Warren Buffett is extremely bullish about COP too. During the second quarter, Buffett invested around $600 Million in COP and increased his holdings to $2.8 Billion at the end of June (check out Warren Buffett’s new transactions).
Coca-Cola (KO): Coca-Cola announced it would invest another $4B in China in an effort to further expand operations. Cramer gives this stock a buy recommendation and said if it weren’t for the banks and techs pulling down the market, he thought KO would have taken out its all-time high. The stock closed at $67.76.
Honeywell (HON): The stock fell 3 points because of a downgrade to market perform from Sanford-Bernstein. Cramer thought it resulted more from macroeconomic concerns than the company itself. The stock finally hit Cramer’s recommended levels to buy. Adage Capital Management is among the hedge funds with HON positions.
A viewer called in to see why retailers Limited Brands (LTD) and TJX Companies (TJX) reported good quarters and positive guidance while Urban Outfitters (URBN) reported a bad quarter and a horrible outlook. Cramer reiterated that the difference simply comes down to management. Cramer said URBN CEO Glen Senk has truly lost a step.
Sodastream (SODA): CEO Daniel Birnbaum came on the show to clear up the riffraff about the company‘s conference call and the degradation of the stock price. Birnbaum said, “I obviously didn’t do a good enough job explaining the business during the conference call.” The ‘deceleration’ that people saw was the natural seasonality of the product cycle. 20% of sales come from the U.S. (currently experiencing triple-digit growth) with the remaining 80% coming from Europe.
Sodastream’s peak selling season in the U.S. is during Q4 and in Europe in the 1st half of the year. SODA offers a value proposition to customers. In an attempt to clear up the Costco (COST) misunderstanding, Birnbaum said the company was invited to a sample (a distribution through about 12 stores). Sodastream is being tested through Costco after only 2 years of having a product on the market while the Keurig machine (from Green Mountain Coffee Roasters (GMCR) entered Costco after 5 years.
Sanofi-Aventis (SNY): Cramer again recommended buying this high-yielding pharmaceutical with a low valuation. The stock currently yields 3.8%. This is one of the stocks Cramer has in his charitable trust’s portfolio. Ken Fisher’s Fisher Asset Management also owns over 13M shares.
Bk of Montreal (BMO): Advising viewers to stay away from American financials, Cramer gave this Canadian bank a buy recommendation. The stock is yielding 4.9%.
Aeropostale (ARO): Cramer said teen retailers are way too risky for his tastes and gave the stock a sell recommendation. The stock fell below its 52-week low.
EOG Resources (EOG): Down 7 points on the day, Cramer suggested buying 100 shares of this stock (with 25 being purchased at the next opening). Follow that up using a 2-point scale-down to get in the rest of the position at $79. EOG closed at $87.63. Legendary oilman T. Boone Pickens is also a favorite of EOG. EOG was one of his top 5 holdings in his 13F portfolio at the end of first quarter. He marginally reduced his holdings during the second quarter but it is still one of top holdings.
Disclosure: I am long COP.