10 Of Cramer's Favorites To Buy On Dips

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Includes: AA, BIDU, BJRI, CLF, CMG, DRI, TOT, TXN, WFM, YUM
by: Hawkinvest

Jim Cramer has a huge following thanks to his success with stocks, his Mad Money show on CNBC and, of course, all of his books. Cramer always likes "best in breed" companies that are the leaders in terms of management and consumer demand for products.

Lately, Cramer has also been very focused on stocks that pay strong dividends because they tend to remain relatively stable in all the market volatility we have seen recently. He also has shown more interest in techs stocks due to his belief that the tech sector seasonally bottoms out around late September. Because so many people follow Cramer, when he gives a stock a buy rating, it can often cause the stock to jump in price, so it can pay to be patient and consider buying these Cramer favorites on dips:

Alcoa, Inc. (NYSE:AA) is a leading aluminum company that supplies a number of industries, including aerospace, automobiles, construction, energy, defense, and more. This stock was trading around $15 back in July, and has dropped sharply due to concerns over the economy. Cramer gives Alcoa a buy rating.

Here are some key points for AA:

  • Current share price: $11.24
  • The 52-week range is $11.11 to $18.47
  • Earnings estimates for 2011: $1.16 per share
  • Earnings estimates for 2012: $1.34 per share
  • P/E Ratio: about 8
  • Annual dividend: 12 cents per share, which yields 1%
  • Book value: about $14.66 per share

Texas Instruments, Inc. (NYSE:TXN) is a leading maker of semiconductors. This stock was trading around $31 in July and then dropped sharply to about $25. It has started to rebound and looks a little overbought now, so I would wait for more dips to about $25 before considering an investment. Cramer rates this stock with a buy rating.

Here are some key points for TXN:

  • Current share price: $27.61
  • The 52-week range is $24.34 to $36.71
  • Earnings estimates for 2011: $2.22 per share
  • Earnings estimates for 2012: $2.36 per share
  • P/E Ratio: about 11
  • Annual dividend: 68 cents per share, which yields 2.5%
  • Book value: $9.44 per share

Yum Brands, Inc. (NYSE:YUM) operates a variety of popular restaurants, such as KFC, Taco Bell, Pizza Hut, and others. These brands are seeing strong growth in emerging markets and countries like China. Cramer gives this stock a buy rating.

Here are some key points for YUM:

  • Current share price: $53.78
  • The 52-week range is $45.71 to $57.75
  • Earnings estimates for 2011: $2.85 per share
  • Earnings estimates for 2012: $3.21 per share
  • Annual dividend: $1.14 per share, which yields 2.1%
  • Book value: $3.88

Darden Restaurants, Inc. (NYSE:DRI) operates a number of well-known restaurants, such as Red Lobster and The Olive Garden. With the economy looking like it is entering a recession and consumer confidence down, earnings and guidance could disappoint investors in the future. However, Cramer gives this stock a buy rating.

  • Here are some key points for DRI:
  • Current share price: $45.14
  • The 52-week range is $42.37 to $53.81
  • Earnings estimates for 2011: $3.87 per share
  • Earnings estimates for 2012: $4.36 per share
  • Annual dividend: $1.72 per share, which yields 3.7%
  • Book value: $14.38

Baidu, Inc. (NASDAQ:BIDU) is based in China and is a leading search engine company. This stock has had an incredible run over the past few years. However, due to this run, the valuation is at nosebleed levels and now trades for about 50 times earnings. When you can buy Google (NASDAQ:GOOG) for a much lower price-to-earnings ratio and with top management, it's hard for me to get excited about Baidu at this price. However, the stock continues to show strength, and it is the one Chinese stock I have seen Cramer give a buy rating.

Here are some key points for BIDU:

  • Current share price: $142.38
  • The 52-week range is $89.60 to $165.96
  • Earnings estimates for 2011: $2.91 per share
  • Earnings estimates for 2012: $4.39 per share
  • Annual dividend: none
  • Book value: $5.01 per share

Cliffs Natural Resources (NYSE:CLF) is a major mining and natural resources company. This stock was trading for about $100 per share just a few weeks ago, and has dropped to bargain levels over global recession concerns. Cramer gives this stock a buy rating.

Here are some key points for CLF :

  • Current share price: $64.52
  • The 52-week range is $44.20 to $102.48
  • Earnings estimates for 2011: $13.50 per share
  • Earnings estimates for 2012: $15.14 per share
  • Annual dividend: $1.12 per share, which yields 1.5%
  • Book value: $37.99 per share

BJ's Restaurants (NASDAQ:BJRI) operates a number of casual dining restaurants across the United States. This stock fell from around the $55 level when the market corrected, but it still could fall further due to stretched valuations. With barely over $1 per year in earnings, this stock has a high price-to-earnings ratio of about 40, so I would only consider this stock at lower prices. Cramer gives these shares a buy rating.

Here are some key points for BJRI:

  • Current share price: $45.74
  • The 52-week range is $26.82 to $56.64
  • Earnings estimates for 2011: $1.09 per share
  • Earnings estimates for 2012: $1.33 per share
  • Annual dividend: none
  • Book value: $11.23 per share

Whole Foods Market (NASDAQ:WFM) is a leading food retailer specializing on organic and natural products for health-conscious consumers. I think this stock is overvalued, but it continues to perform, and Cramer gives it a buy rating.

Here are some key points for WFM:

  • Current share price: $72
  • The 52-week range is $34.04 to $73.33
  • Earnings estimates for 2011: $1.91 per share
  • Earnings estimates for 2012: $2.20 per share
  • Annual dividend: 40 cents per share, which yields .6%

Chipotle Mexican Grill (NYSE:CMG) operates a number of restaurants that offer high-quality and affordable Mexican foods. This stock has been a market leader, but the price-to-earnings ratio is about 50, and that is too high for me. Chipotle is planning to expand into Asia, and that recent news has sent the stock even higher. Cramer gives these shares a buy rating.

Here are some key points for CMG:

  • Current share price: $340.55
  • The 52-week range is $164.26 to $346.78
  • Earnings estimates for 2011: $6.82 per share
  • Earnings estimates for 2012: $8.64 per share
  • Annual dividend: none

Total SA (NYSE:TOT) is a major integrated oil company based in France, with operations worldwide, which include refining, exploration, and service stations. Total stock has been declining based on lower oil prices and debt concerns in Europe. It now trades at a very cheap price-to-earnings ratio of about 6, and pays a strong dividend. This stock has a buy rating from Cramer and it looks cheap, when you consider the earnings power and dividend.

Here are some key points for TOT:

  • Current share price: $44.39
  • The 52-week range is $43.18 to $64.44
  • Earnings estimates for 2011: $7.61 per share
  • Earnings estimates for 2012: $8.02 per share
  • Annual dividend: about $3.20 per share, which yields about 6.9%

Data is sourced from Yahoo Finance.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclaimer: No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.