Jim Cramer is one of the top watched TV personalities on CNBC. He is the host of "Mad Money" and also the co-founder and chairman of TheStreet.com. Nearly two hundred fifty thousand people watch his show daily on TV and most of these are ordinary investors trying to understand what’s going on in the market. Jim Cramer’s bullish and bearish stock picks on his show is the starting point for many investments made by these folks.
During the September 28th show, Cramer discussed the following stocks.
Amazon (AMZN): With the unveiling of their new tablet, the Fire, Amazon made some serious market news. While many analysts expect it to interfere with the Android market, few suspect it of having a serious impact on Apple’s (AAPL) industry leading iPad. Cramer recommending owning both companies with deep-in-the-money calls that are purchased on a market downturn.
Caterpillar (CAT): This earth-mover manufacturer’s stock jumped at the opening, even reaching $79 at one point, but quickly fell back 4 points on European concern. Cramer’s charitable trust owns CAT and he still thinks the stock is worth buying and holding on to through 2012.
eBay (EBAY): Cramer likes eBay, but said while it is inexpensive, the stock doesn’t have the growth prospects that Apple, Amazon and Google (GOOG). eBay has a $40.78 billion market cap and trades at 24.5 times earnings. Bill Miller of Legg Mason Capital Management reduced his position by 32% (see more of Miller’s stocks here).
HSBC Holdings (HBC): Cramer said more discounting in banks that offer debit and credit cards will take place in light of more financial regulation. Cramer has been leery on recommending HBC.
Varian Medical Systems (VAR): Cramer doesn’t think Varian is a buy because it is another medical company that needs the government to spend more on healthcare, which doesn’t happen during tough economic times. Varian trades at 16 times earnings and has a $6.11 billion market cap.
Jabil Circuit (JBL): This contract manufacturer assembles things spanning multiple industries, which makes it a good read into other sectors like technology. Jabil reported a “fantastic quarter”, delivering $0.62 per share, beating estimates by $0.07. Shares of Jabil shot up 10% on the news, but Cramer thinks market expectations are too low. Paired with the company’s upside guidance and trading at 7.6 times next year’s earnings, Cramer thinks now is the time to own Jabil Circuit. Jabil has a $4.12 billion market cap, yields 1.6% and trades at 11.7 times earnings.
Whiting Petroleum (WLL): Whiting Petroleum engages in the acquisition, production, transportation and refining of oil and gas. They also have a significant position in the famed Bakken Shale. The stock has fallen 38% since missing their quarter, although they only missed earnings by a penny. Cramer thinks the decline in oil may have contributed to the stock’s decline. However, with a net asset value of $70, double the current stock price, Cramer thinks Whiting is worth considering. Whiting has a $4.16 billion market cap and trades at 15.5 times earnings.
Potash (POT): A viewer asked Cramer if Potash is worth owning for returns in 6-12 months, to which Cramer blessed. However, Cramer said owning Potash is not going to make an investor any money in less than that timeframe. This fertilizer company has a $38.92 billion market cap and trades at 17.5 times earnings.
Google: Cramer gave a buy recommendation to the search-engine giant for high growth and recommended buying deep-in-the-money calls on the next downturn. Google trades at 19.4 times earnings and has a market cap of $170.76 billion market cap. Ken Fisher of Fisher Asset Management owns close to 700,000 shares (see more of Fisher’s holdings here).
KKR Financial (KFN): Cramer continued to stand by KKR Financial, stating it was inexpensive and the company seems as though they’ll be able to maintain the dividend. It’s an accidental high yielder due to the stock’s decline, currently yielding 9.6%. KKR Financial has a $1.3 billion market cap and trades at 3.7 times earnings.
Microsoft (MSFT): Cramer said Microsoft is okay to sit with and compound the dividend until they get their mojo back. While the company offers no significant growth, they have repeatedly raised the dividend, which Cramer can’t ignore. Microsoft has a $214.27 billion market cap and yields 2.5%. David Einhorn of Greenlight Capital owns over 650,000 shares (See David Einhorn’s portfolio).
Annaly Capital (NLY): Although Cramer-favorite Annaly Capital has cut the dividend Cramer loves, which naturally made investors nervous, Cramer said the stock remains a “buy”, as CEO Michael Farrell has returned billions to shareholders in the past and still has faith in the company. Annaly Capital has a $16.17 billion market cap and trades at 5.8 times earnings.
American Electric Power (AEP): One of the largest electric utilities in the U.S., American Electric offers a 4.9% yield. Despite regulatory headwinds from the Environmental Protection Agency, Cramer thinks the dividend will be safe as long as they can pass on the increased costs to the consumer. American Electric trades at 12.7 times earnings and has a market cap of $18.18 billion.
Darden Restaurants (DRI): Cramer changed course and gave Darden a sell recommendation after Olive Garden announced a 2.9% decline in same-store sales. Despite the 3.9% yield and continued promises to turn the corner, Cramer said owning this stock may not be worth the wait. Darden trades at 13.9 times earnings and has a $5.96 billion market cap.
Paychex (PAYX): Cramer advised owning this payroll management and human resources company instead of Darden Restaurants. Paychex is levered to hiring and job creation, which would lead investors to believe that the stock would get pummeled. Cramer said instead of making excuses, Paychex implements strategic changes in order to deliver 13% growth and a 4.6% yield.
Disclosure: I am long MSFT.