Jim Cramer is still cautious about the stock market. The host of CNBC’s Mad Money said all stocks are highly correlated with S&P 500 index right now and even the ones with good fundamentals go down with the declines in the marketplace. He believes once the European crisis is resolved the company news will start to matter again.
During the September 9th show, Cramer discussed the following stocks.
Best Buy (BBY): Although the stock has been hit hard as of late, it is still one of the best ways to see how well the consumer is doing. The retailer is scheduled to report its 2Q ‘11 earnings before the bell on Tuesday. Cramer said Best Buy is a supermarket of gadgets; not food. No one shops there if they don’t want to. Unless they announce a clear plan of viability, this will remain a sell. The stock offers a 2.6% yield and trades at 8 times earnings.
Pier One (PIR): Due to fears of what may happen in Europe, what Pier One has to report on Thursday might not matter. The stock rose 7,000% since the market collapse in 2008. Cramer thinks Pier One may be a great speculation play, as they are still in the midst of a multi-year turnaround.
Research in Motion (RIMM): Cramer said Research in Motion is dying a slow death at the hands of the iPhone. They report earnings on Thursday. Cramer expects to hear an “everything is fine” speech due to new phones, which may present a buying opportunity for Apple (AAPL).
Diamond Foods (DMND): This phenomenal performer continues to outperform expectations. Cramer’s going to be listening to see how their acquisition of Pringles is going. This food company has a $1.65 billion market cap.
Cummins (CMI): Cramer’s charitable trust owns the best-of-breed engine makers. Cramer is expecting an earnings beat when their quarter is reported. Cummins has a $17.2 billion market cap and offers a 1.8% yield.
United Parcel (UPS): Cramer reiterated that the stock has been solid and offers a good dividend, especially for this market. UPS is a good way to gauge the state of the economy. Cramer’s charitable trust owns the stock. UPS has a $63 billion market cap, trades at 15.8 times earnings and yields 3.2%. Jason Capello of Merchant’s Gate Capital owns 3.5 million shares (see more of Capello’s picks here).
Caterpillar (CAT): Cramer doesn’t think Caterpillar is going to be a positive 2011 story, but will see the impact of China spending and Obama’s stimulus in 2012. Owners of Caterpillar stock may have to sit through some suffering before seeing some upside. Cramer’s charitable trust owns CAT. This maker of earth-moving equipment has a $54.25 billion market cap, trades at 14 times earnings and offers a 2.2% yield.
Google (GOOG): Cramer’s not concerned about the company’s recent anti-trust issues. They have positions in mobile, social and cloud services. The company is currently a part of the broader market sell-off. Cramer thinks the fundamentals are solid. Google has a $170 billion market cap and trades at 19 times earnings.
Lufkin Industries (LUFK): Lufkin Industries is a large player in the artificial lift technology (various kinds of oil pumps) and Cramer thinks it is a speculative buy. Cramer thinks this company will soon get hit with a strong demand for its products with all of the recent shale discoveries.
There are very few competitors in the space with Weatherford Intl. (WFT) being the only one of significance. Lufkin has a great valuation, with the stock trading at less than 12 times next year’s earnings. 79% of their revenue comes from artificial lift products and services (which is an $8 billion market). Cramer thinks this can be a takeover target for large companies which aren’t currently in this space.
Hyperdynamics (HDY): Cramer thinks this oil company is the ultimate speculative play. They have a single oil field in Equatorial Guinea and if the stock hits, it will double. If not, Cramer doesn’t think it’s where investors should be. Hyperdynamics has a $659 million market cap.
Southern Copper (SCCO): Cramer gave this copper miner a buy recommendation. China accounts for 40% of the world’s copper demand (up from 10% 12 years ago). Southern Copper can only stand to benefit from China getting a grip on inflation. Cramer thinks this is a speculation play with a 7% yield and already does business in Peru and gets 73% of sales from copper. Cramer’s charitable trust owns Freeport McMoRan (FCX), another copper miner.
Mako Surgical (MAKO): Cramer is worried about this high-flying stock and advised a viewer to take any profits and let the rest of the position run. Mako Surgical has a $1.48 billion market cap.
Insituform Tech (INSU): This sewer, water, and pipe technology company is always too risky of a play that never seems to work in Cramer’s opinion. Cramer advised a viewer to stay away from it on the temptation of owning it because of the floods in the Northeast U.S. The company has a $612 million market cap.
Broadridge Financial Solutions (BR): Cramer gave this technological outsourcing company a buy recommendation. The company has a $2.47 billion market cap, trades at 15 times earnings and yields 3.2%.
Eastman Kodak (EK): While a lot of people want to take advantage of the patent play, Cramer doesn’t like the stock and still thinks it is over-valued. The embattled company has a $772 million market cap.
Alcoa (AA): Cramer defended his support of this mining company because it is dirt cheap and will go back up when the economy turns around Cramer’s charitable trust owns Alcoa. The miner has a $12.3 billion market cap, trades at 13.5 times earnings and yields a little over 1%. John Paulson of Paulson & Co. has 1.5% of his portfolio in the stock. (See more of Paulson’s holdings).
Coach (COH): Cramer likes this leather goods maker and thinks it needs to be bought on the way down. Coach is also a major China-play. Coach has a $15.5 billion market cap, trades at 18 times earnings and yields 1.6%.
iShares Silver Trust (SLV): A viewer wanted to know if Cramer thought silver was going to rise sharply again. Cramer thinks owners of the iShares Silver Trust had a good trade, but prefers owning gold through the SPDR Gold Trust ETF (GLD).
NVIDIA (NVDA): This dominant graphic chip maker is everywhere, literally. Their chips are seen in cars, movie production, Times Square, Android cell phones, non-Apple tablets, PlayStation 3 and so much more. Cramer thinks this is the time to buy NVIDIA, which is experiencing robust business and sees China as a great growth market for the company.
NVIDIA has a $8.4 billion market cap and trades at 15.3 times earnings. George Soros of Soros Fund Management owns over 250,000 shares (see more of Soros’ portfolio here).
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.