Jim Cramer is getting bearish about the stock market. He wasn’t even bullish about Apple which was trading below $375. Here are the stocks that Jim Cramer discussed during his October 3rd show:
Morgan Stanley (MS): Since 2008, Morgan Stanley has shrunk its balance sheet, raised billions in cash, and brought in Smith Barney for a nice source of consistent income. It also corralled a big-time investor in Mitsubishi (owning more than 20%) which is capable of writing a check to finance Morgan Stanley’s needs. However, Cramer said he still will not recommend the stock and pleads with investors to not go bottom-fishing in financials. Morgan Stanley has a $24 billion market cap and trades at 25.5 times earnings.
Dow Chemical (DOW): Cramer said he isn’t going to focus much on the upcoming earnings season, and focus on dividends instead by looking for companies like Dow Chemical to yield 5%. Dow Chemical has a $25.4 billion market cap, trades at 10 times earnings and currently yields 4.4%.
First Energy (FE): Cramer has consistently recommended utilities with strong dividends such as American Electric Power (AEP), which yields 4.8%. However, Cramer recommended First Energy because it stands to benefit from the EPA’s Cross-State Air Pollution Rule (CSAPR). The new regulation will force First Energy’s competitors to shut down plants in locations where First Energy operates centers that currently meet regulations. In fact, 90% of First Energy’s energy is derived from nuclear or scrubbed coal, which is already acceptable by the EPA. First Energy has a $18.25 billion market cap and trades at 25 times earnings. The 5% yield pays investors to wait on a market recovery.
Microchip (MCHP): This semiconductor manufacturer has a 4.5% yield, which is the highest in the semiconductor space. Cramer told investors to do the homework on this stock and not to buy just yet. The company is secure because the semiconductors they make are considered “low-tech” and can be found in everyday items that are still being sold in this market.
Cramer recommends waiting for it to drop to a 5% yield before buying, warning investors that the stock is barely a point above the 52-week low and will go lower. Microchip has a $5.8 billion market cap and trades at 14.3 times earnings.
Yahoo! (YHOO): Rumors of Alibaba’s offer to buy out Yahoo had a viewer questioning if he should buy more Yahoo shares to add to those he already owns. Cramer said he can’t recommend any stock on buyout rumors if the fundamentals are declining, which is the case for Yahoo. Yahoo trades at 15 times earnings and has a $17 billion market cap.
Oracle (ORCL): Oracle unveiled a new computer system to compete with IBM (IBM) and Cramer recommends buying Oracle if it goes back to $25.60. Cramer’s charitable trust owns Oracle. Oracle trades at 16 times earnings and has a $140 billion market cap. Jeffrey Tannenbaum of Fir Tree owns close to 1.25 million shares.
Qualcomm (QCOM): This tech company is positioned for strong revenue growth and has contracts with Apple’s iPhone 5 and iPad 2. However, Cramer recommends using deep-in-the-money calls to purchase the stock because there is no dividend to protect investors. Qualcomm has an $80 billion market cap and trades at 20 times earnings. Ken Fisher of Fisher Asset Management owns 5.5 million shares.
Apple (AAPL): According to Cramer, now is not the time to buy Apple stock. He recommends stepping aside and letting the high-multiple stocks go lower. Apple is currently trading 50 points off its 52-week high of $422 per share. Apple trades at 15 times earnings. David Einhorn’s Greenlight Capital increased its position in Apple by 29%.
Visteon Corporation (VC): Regardless of the company’s restructuring, Cramer said the stock is going to go back down and gave it a sell recommendation. Visteon designs and manufactures automotive interior components, among other related items. Visteon has a $2.1 billion market cap and trades at 4.2 times earnings.
Frontier Communications (FTR): Cramer told investors not to buy Frontier Communications because he doesn’t think the business is strong enough to maintain the high yield, which is currently 13.25%. This communications company has a $5.63 billion market cap and trades at 38 times earnings.
EMC Corp. (EMC): Cramer’s charitable trust owns EMC Corp and while it is still going down, Cramer recommends buying a position at these levels. This information technology company trades at 22 times earnings and has a $42 billion market cap.
Sandridge Energy (SD): No matter how many times CEO Tom Ward comes out and says fundamentals and growth prospects at Sandridge are fine, Cramer thinks people aren’t going to touch it if the price of oil keeps falling. Cramer, however, thinks the company is okay. Sandridge has a $2.07 billion market cap.
Ralcorp Holdings (RAH): Cramer advised investors not to buy Ralcorp, stating it delayed the inevitable and should have accepted the $4.9 billion offer from ConAgra (CAG). Ralcorp has a $4.18 billion market cap and trades at 19 times earnings.
Veolia Environ (VE): Intrigued by the 12% yield, a viewer inquired about Cramer’s opinion on this international provider of environmental services. Cramer gave Veolia Environ a sell recommendation because analysts can’t agree on the company’s future. Veolia has been an endless restructuring story and announced that it will only be returning 50-60% of earnings to investors. Cramer said there is no way they can maintain the high dividend. Veolia Environ $6.85 billion market cap and trades at 9 times earnings.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.