Jim Cramer is the host of CNBC's "Mad Money" and the 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.
Cramer has been advising investors to look for bargains and purchase stocks with a low price-to-earnings ratio. Here are 25 stocks with a PE ratio of 14 or lower that Cramer has recommended:
Walter Energy (WLT): This stock has been making headlines, but Cramer said its rise is due to potential takeover, and not the news out of China. The energy company has a $5.5 billion market cap and trades at 12 times earnings.
Alcoa (AA): This aluminum producer received a buy recommendation from Cramer as he said the cash flow is bountiful, CEO Klaus Kleinfeld is the real deal, and that “Alcoa is back and will be bigger than ever”. John Paulson of Paulson & Co. increased (AA) stock ownership by 59%.
Chevron (CVX): Cramer’s preferred oil company for its greater production growth. Although he personally hopes for a fall in the price of oil, Cramer doesn’t believe it will happen drastically enough to hurt earnings. Cramer’s charitable trust owns Chevron. Chevron trades at 7.9 times earnings.
Caterpillar (CAT): This Cramer-favorite has experienced trouble in China since the country’s inflation fears became widespread. The heavy-equipment maker has a $48 billion market cap and the stock yields 2%. Louis Navellier of Navellier & Associates owns over 400,000 shares. Caterpillar has a PE ratio of 12.2.
Darden Restaurants (DRI): Featuring a 3% yield, Darden’s CEO, Clarence Otis, Jr., said earnings are set to go higher because high gas prices (which he states acts like a tax on the consumer) are coming down. Darden trades at 13 times earnings.
International Paper (IP): Although the paper industry is typically cyclical, Cramer gave International Paper a buy recommendation because of the 3.85% yield, its acquisition of Temple-Inland for $4.3 billion and consolidation in the industry as a whole, giving IP more control of pricing and larger profit margins. This paper company has a $12.07 billion market cap and trades at 9.5 times earnings.
Mercer International (MERC): This pulp company received a buy recommendation from Cramer. “I like Kraft. I like International Paper. How could I not like Mercer?” said Cramer. “This isn‘t the kind of company you throw away in this market.” Mercer has a PE ratio of 2.5.
Sunrise Senior Living (SRZ): CEO Mark Ordan took over this company when the stock was trading at $0.27. The stock was hit hard during the credit crisis and fell from $12 in March to current levels of $6.80. Recapitalization is almost complete, and the company is poised to do well going forward. This firm takes advantage of our aging population and is far less dependent upon Medicare than similar companies. Currently, only 3% of our residents pay through Medicare. Sunrise trades at 5.2 times earnings.
Deere (DE): Cramer feels this company is conservative to a fault. While 3Q net income rose 15% year-over-year, executives have such a gloomy outlook on things that it hurts the company's stock. It currently trades at 11.3 times earnings and yields 2.2%.
Covidien (COV): Cramer gave Covidien a buy recommendation as it is one of the cheapest healthcare companies around. The stock currently trades at 12 times earnings and yields 1.5%.
DuPont (DD): Cramer’s charitable trust owns this renowned chemical company, which trades at 11.6 times earnings and yields 3.5%.
BP (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 5.6 times earnings, but yields 4.2%.
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, as it trades at 12.6 times earnings and yields 2.7%
Honeywell (HON): The stock fell 3 points because of a downgrade to market perform from Sanford-Bernstein, although Cramer thought it resulted more from macroeconomic concerns than the company itself. The stock finally hit Cramer’s recommended levels to buy. Honeywell has a PE ratio of 12.4.
American Science and Engineering (ASEI): This company works within the prevention and protection area of homeland security and produces X-ray scanners (in a variety of formats). Cramer gives this stock a buy recommendation, but only when it goes lower in order to get a good entry point. ASEI currently trades at 13 times earnings and yields 1.9%
Halliburton (HAL): Cramer thinks the stock’s recent hammering took place because the price of oil has fallen, and that it is a mistake. Cramer recommends buying this second largest oil service and equipment company. Its engineering capabilities actually make it a tech play (in the oil industry) that has helped create a 75% increase in production. T. Boone Pickens of BP Capital reduced his position in the stock by 3%, but it still represents 4% of his portfolio. Halliburton trades at 12.5 times earnings.
Travelers (TRV): Cramer thinks this stock is the cheapest in the DJIA, and CEO Jay Fishman is the best in insurance. He gave Travelers a buy recommendation. The company has a $20 billion market cap, only trades at 9.3 times earnings and yields 3.4%. George Soros of Soros Fund Management reduced his position by 23%.
Pier One Imports (PIR): This home décor company is up 7,000% from its 2009 low, as it executed big improvement plans that generated tremendous gains for shareholders. Cramer said the company has restructured its brand for 4 years and still has room to grow. Pier One has a PE ratio of 11.
Cummins (CMI): This engine-maker does a lot of business in China, but the stock has been hammered ever since China has been aggressively raising rates. Cummins has a $17.7 billion market cap and the stock is trading $10 above its 52-week low of $79 per share. Cummins trades at 11.2 times earnings.
Walgreen (WAG): With over 7,700 locations, Walgreen has been restructuring its business model to ensure future growth. Walgreen purchased Duane Reade for $1 billion and purchased Drugstore.com, both of which will advance president and CEO Greg Wasson’s multi-channel offering strategy. Walgreen has a $32.5 billion market cap and yields 2.5%. The stock trades at 13.8 times earnings.
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. Southern Copper trades at 10.9 times earnings.
United Technologies (UTX): United Technologies agreed to buy Goodrich (GR) and Cramer thinks UTX will improve sales and profit margins. United Technologies has a $68.65 billion market cap, trades at 13.2 times earnings and yields 2.5%.
Prudential (PRU): While not keen on owning financials, Cramer’s charitable trust owns Prudential and is the only insurance play Cramer said he would make, citing the company’s limited to exposure to day-to-day financial worries. Prudential trades at 7.6 times earnings, has a $24.1 billion market cap and provides a 2.3% yield.
Barrick Gold Corporation (ABX): Cramer said Barrick Gold is a consistent winner and doesn’t foresee any changes in the near future. Barrick has a $53.4 billion market cap and trades at 12.5 times earnings.
Freeport-McMoRan (FCX): This accidental high-yielder is still a favorite of Cramer’s. While the chart is bad and analysts are down on copper all of a sudden, Cramer thinks the stock should be bought with discipline on the way down. Cramer’s charitable trust owns FCX. Freeport-McMoran has a $36.54 billion market cap, yields 3.9% and trades at 9 times earnings. Ken Fisher of Fisher Asset Management reduced his position by 41%.