Jim Cramer is the host of CNBC's Mad Money and 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.
Investment guru Warren Buffett, founder of Berkshire Hathaway (NYSE:BRK.B), initially made his fortune in value stocks and hasn’t looked back since. Professional and regular investors alike watch his every move. Here are the stocks Cramer and Buffett agree on:
Coca-Cola (KO): This perennial favorite of Buffett recently 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. Buffett owns 200M shares of KO worth almost $14 billion. Coca-Cola has a $160 billion market cap, yields 2.7% and trades at 13 times earnings. Louis Navellier of Navellier & Associates recently reduced his position by 4% (see more of Navellier’s picks here).
Sanofi-Aventis (SNY): Cramer continually recommends buying this high-yielding pharmaceutical because of its low valuation. It is among the big pharma companies that yield 5% (primarily due to the stock prices pushed lower), but is trading at a low 6.8 times earnings. Ken Fisher of Fisher Asset Management owns over 14,750,000 shares (see more of Fisher’s picks here).
ConocoPhillips (COP): Buffett increased his position in COP by 27% during the second quarter and Cramer heavily favors the oil company for its 4% yield and potential stock split in the near future. Cramer also likes the stock because it has strong growth. Cramer recently bought Chevron (CVX) for his charitable trust because it has greater production growth. ConocoPhillips has a $91.5 billion market cap and trades at 8.5 times earnings. Bill Miller of Legg Mason Capital Management reduced his position in COP by 29% (Miller’s other holdings can be seen here).
Wells Fargo (WFC): Despite the gloomy outlook on financials, Buffett can’t seem to get enough of Wells Fargo. He owns over 350M shares and the bank represents 18.5% of his portfolio. In regard to long-term growth prospects, Cramer said WFC would be a survivor, but it will still be a long time before owning the stock will be profitable. Wells Fargo has a $133 billion market cap and trades at 10 times earnings. Not everyone shares the sunny outlook on the financial. George Soros of Soros Fund Management has significantly reduced his position by 97% during the second quarter.
Bank of America (BAC): Shares of this bank are among the most affordable in the sector. Does that mean it’s a “buy”? Cramer doesn’t think it‘s a buy right now. His charitable trust, Action Alerts Plus, still owns 6,000 shares of the beleaguered financial. Warren Buffett turned the generally negative consensus of BAC stock on its head when he invested $5 billion in the company. Although the company repeatedly said BAC didn’t need new capital and that BAC had a large deposit base, Cramer feels Buffett’s investment may be enough to silence the noise surrounding Bank of America. This bank has a $77.5 billion dollar market cap. Bruce Berkowitz of Fairholme increased his ownership by 8%.
Exxon Mobil (XOM): Representing less than 1% of his portfolio, Buffett’s position in the oil company isn’t significant while Cramer gave it a hold recommendation. Chevron is still Cramer’s preferred oil stock. Exxon Mobil has a $355 billion market cap, yields 2.5% and trades at 9.7 times earnings. Steve Cohen of SAC Capital Advisors increased his position by 133% during the second quarter.
UPS (UPS): Cramer’s charitable trust owns 600 shares of UPS stock. It’s also a transportation stock that has pricing power (the ability to successfully change or raise prices when necessary) and subsequently offers a 3.3% yield. Buffett owns 1.5M shares of this transportation company that has a $65 billion market cap and trades at 16 times earnings.
Wal-Mart (WMT): Shares of this mega retailer rose 3.88% after a positive earnings report. Wall Street Strategies upgraded the company to hold from sell, believing the retailer is in a position to gain from consumer spending volatility. Cramer thinks that Wal-Mart benefits from pricing power and being the places consumers turn when discretionary income is reduced. WMT represents nearly 4% of Berkshire’s portfolio. Having a $183 billion market cap, this retailer yields 2.8% and trades at 11 times earnings.
American Express (AXP): Cramer’s charitable trust owns 2,700 shares of this charge and credit payment card company and Buffett is its largest institutional shareholder. The company has a $58 billion market cap, trades at 12.6 times earnings and yields 1.5%.
Costco (COST): Buffett owns 4.25M shares of this wholesale retailer’s stock and Cramer’s charitable trust recently initiated a new position of 300 shares. The stock is trading around $6 off its 52-week high and trades at 24 times earnings. The retailer has a $34 billion market cap.
US Bancorp (USB): Although reluctant to own financials, Cramer’s charitable trust (Action Alerts Plus) has 1,000 shares of USB. This bank stock trades at 11 times earnings and yields 2%. USB reported Q2 earnings of $0.60 per share, beating a $0.53 consensus. The Minnesota-based bank represents 3.5% of Berkshire’s portfolio. Berkshire owns close to 70M shares.
Disclosure: I am long COP.