Jim Cramer talked on Thursday’s Mad Money about the economic situation and the way it is affecting the US markets. People are “waiting for Europe to resolve itself… for the United States to accelerate… for the safe completion of China’s soft landing.” Cramer explained that these reasons are why he placed such emphasis on high dividend yielding stocks – they pay investors to wait. Cramer discussed several stocks on the show last night. Here they are with a brief explanation of Cramer’s position:
Transocean (RIG): When a viewer called about this offshore driller, Cramer asked why he didn‘t want to consider a driller whose stock was beaten down and had room to rebound, like Ensco (ESV). Transocean has a $16.96 billion market cap and yields 3%. John Paulson of Paulson & Co reduced his position by 23%. (See more of Paulson’s holdings).
BB&T Corp (BBT): Cramer likes BBT. He likes that it delivered one of the best quarters in the banking industry and he likes its focus on rewarding investors with dividends. Cramer also thinks that BBT is very cheap right now (BBT closed trading Thursday at $22.53 up 1.03% on the day), but he cautions that “bank stocks are very tough to own.” Jean-Marie Eveillard’s First Eagle Investment Management has a $274 million position in the company.
Nucor Steel (NUE): NUE finished trading Thursday at $35.91 a share, up 2.92%. The stock also has a 4% dividend yield. Cramer says that he behind this stock because it pays investors to wait but also because it has raised its dividend every year for the last 37 years and he thinks the stock is undervalued in general. Jeffrey Vinik is also a fan. He has almost $27 million of his Vinik Asset Management invested in NUE (see Jeffrey Vinik’s favorite stocks).
Honeywell International (HON): Cramer is expecting HON to “deliver a real good quarter when it reports earnings before Friday’s opening bell.” He thinks the stock will bump $1-$2 on the news. It finished trading yesterday at $48.46. Cramer also thinks that people could push the price of HOM down as low as $43 a share, so when the increase comes, it might only be to $45 or so.
Life Time Fitness (LTM): Cramer likes LTM. He calls it the “Whole Foods of the fitness business.” It closed yesterday at $40.67. Cramer likes it for revenue that was stronger than expected, a higher-than-average revenue per member and the low attrition rate. In other words, members come, spend more than most and rarely leave. Cramer has been behind the stock for months. It has lost less than one percent YTD (-0.78%).
Tupperware Brands Corporation (TUP): Cramer thinks this stock deserves a little trust. Sure, it has been hammered lately but it delivers consistently and resin costs are going down. Cramer calls TUP a buy. TUP finished yesterday at $55.67. Cliff Asness’ AQR Capital Management has more than $40.5 million invested in TUP.
Carrizo Oil & Gas (CRZO): CRZO is a hold for Cramer. Specifically, he advises to take “a quarter off the table… and let the rest run.” The company is inexpensive and he thinks it is a likely takeover target, especially since its business fairly diversified, but he isn’t sure enough at this price to recommend a buy wholeheartedly. CRZO closed Thursday at $25.21 a share.
EastGroup Properties (EGP): Cramer likes this stock. It has a 5.2% dividend yield and is one of the best real estate investment trusts on the market right now. He says the quarter is sound and despite its dividend yield it is still trading with its group. It’s a low volume play and Cramer is confident on it. EGP closed yesterday at $39.27.
Green Mountain Coffee Roasters (GMCR): Cramer does not like GMCR. He says that even after its 25% decline following David Einhorn’s presentation at the Value Investing Congress, it is still expensive. He thinks it will be worth buying when “the shorts have to cover.” Then, he will be back in. GMCR closed Thursday at $68.09.
J.C. Penney (JCP): Cramer likes this stock. He says that the 2.5% dividend is covered and he is confident Ron Johnson, the new JCP CEO who came from Apple (AAPL) will do a great job, but for the time being he sees 10-15% growth max. He is recommending buy until that point. JCP closed yesterday at $31.93 a share.
Barnes & Noble (BKS): Cramer is a fan of BKS, but not its stocks. He loves the stores and its products but he thinks the competition from Amazon is too great. BKS closed Thursday at $10.72. Peter J. Eichler Jr. Has $25.7 million of his Aletheia Research and Management invested in BKS.
Amazon (AMZN): Cramer called AMZN “a great destroyer,” saying that it “destroys all” and just “keeps going higher.” He recommends buy. AMZN closed Thursday at $233.61 a share. Ken Fisher agrees. His Fisher Asset Management has more than $516 million in AMZN after increasing its position by 3% in the second quarter.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.