Jim Cramer is on vacation this week so CNBC is airing his classic episodes where Jim Cramer talks about intricacies of investing. In one of the most interesting episodes of this week Cramer discussed long-term investing and said that buy-and-hold is dead. “It’s an easy way to lose, not make, money” he added. He urged his viewers to take control of their portfolios, do their homework, and follow his four rules of long-term investing.
Here are Jim Cramer’s 9 long-term stock picks that he discussed on his show:
Cramer emphasized the importance of understanding a company’s operations and how it brings in revenue. Heinz (HNZ) was used an example of a company that is clear on how earnings are derived. Companies like Western Digital (WDC), Synopsys (SNPS) and Verisign (VRSN) are the types of companies Cramer said that need to be understood before being invested in.
Heinz has a $17 billion market cap and yields 3.65%. It trades at 17.5 times earnings. Ken Fisher of Fisher of Fisher Asset Management reduced his position in the consumer staple by 4% (see more of Fisher’s picks here).
Western Digital (WDC)
Western Digital is a designer, manufacturer and seller of hard drives. The tech company has a $6.9 billion market share and trades at 9.5 times earnings. Western Digital posted quarterly earnings of $0.81 per share, beating $0.67 estimate.
Synopsys is a tech company that specializes in the electronic design automation (EDA) software to aid semiconductor design companies. The company has a $3.8 billion market share and closed $3 off its 52-week high of $29.35.
VeriSign’s logo can be seen on numerous websites throughout the internet, which aligns with its mission to bring trust to the internet. They develop products and services that generate confidence among internet users. The company has a $5.18 billion market cap and trades 7 times earnings.
Cramer praised Apple as being an innovation machine and the best-run company in America. As a leader of the mobile-internet revolution, Cramer said listening to conference calls (to find out that Apple is short in the memory space, for instance) is a way to find other companies in the sector poised to benefit from Apple.
Cramer’s charitable trust owns AAPL. To many investors’ solace, the stock hasn’t fallen as much as initially expected upon the news of Steve Jobs’ resignation. Apple is cheap relative to earnings, having a $357 billion market cap and only trading at 15 times earnings. Bill Miller of Legg Mason Capital Management has 2.3% of his portfolio in Apple (find more of Miller’s holdings here).
Research in Motion (RIMM)
Although the BlackBerry maker has been struggling to hold position in the smartphone space, the device’s impact on other companies that produce components has been wide-felt. Research in Motion has a $17 billion market cap and trades at 5 times earnings. The struggling stock is trading around $40 below its 52-week high of $70.54.
This mega retailer has successfully forged forward in the mobile internet space with its Kindle e-Reader. The company has a $98 billion market cap and trades at 93 times earnings. Louis Navellier of Navellier and Associates reduced his position by 5% (click here to see more of Navellier’s stocks).
Kinder Morgan Energy Partners (KMP)
Cramer loves this master-limited partnership because of its strong dividend and low exposure to swings in the price of oil. Kinder Morgan has a $16 billion market cap and yields 6.5%.
Enterprise Product Partners (EPD)
Cramer said companies like Enterprise Product Partners act as toll-road operators and can offer consistent high dividends because they place the majority of profits back into the hands of shareholders; thus avoiding corporate taxes. EPD has a market cap of $35.85 billion and yields 5.7%. “These are companies with bountiful dividends that you can reinvest so they compound for years and years” Cramer said about high dividend yielding stocks.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.