General Electric (GE)
Cramer likes GE because he believes it is cheap.
- Recently raised dividend by 13.3% to 3.7%
- 11.7 times forward earnings
- 13.4% long term growth rate
My Thoughts on GE:
GE is highly leveraged to the global economy. Some of GE's largest business include aerospace, financial services, energy, and infrastructure. Essentially, so goes the global economy so goes GE. For this reason, I do not think there is any real reason to own GE. If one is bullish on the global growth trade, there are better ways to make the trade.
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The chart seems to agree with Cramer's bullish thesis. GE is trading above the 50 day moving average which is above the 200 day moving average. This means GE is finding some momentum that will likely carry shares higher.
Kraft Foods (KFT)
Cramer likes the stock because of the coming break up of the company.
- 3.1% dividend
- Split into SnackCo & GroceryCo by end of year
My Thoughts on KFT:
I agree with Cramer in believing that the break up will be bullish for KFT because the deal will allow both SnackCo & GroceryCo to be fully valued. In its current form, KFT is neither a growth stock nor a dividend stock. In its now form, dividend investors will flock to GroveryCo while growth investors will flock to SnackCo. This split is similar to the split of Altria (MO) when its faster growing Philip Morris International (PM) division was spun off from the slower growing Philip Morris USA business that is still owned by (MO).
(cnbc)
Again, the chart agrees with Cramer. The stock is breaking out to new highs, while the 50 day moving average is well above the 200 day moving average. KFT looks like the perfect chart for investors who make decisions based on technicals.
AT&T (T)
Cramer likes AT&T because it is cheap and pays a good dividend.
- 5.93% dividend
- shares a near-duopoly with Verizon (VZ)
- 15 times earnings
My Thoughts on AT&T:
While T does sport a nice dividend, poor management makes it hard to get behind T. The 4 billion dollar break up fee that T was forced to pay Deutsche Telekom is emblematic of the poor management at T. Why would anyone ever agree to a 4 billion dollar break up fee if they thought there was any chance a deal would be blocked? If management was capable of making a mistake like this, why should investors believe they are capable of making the right choices for T?
(cnbc)
T's chart is neither bullish nor bearish. The stock is trading above the 200 day moving average and the 50 day moving average, but the 200 day moving average is above the 50 day moving average. The technicals of GE & KFT are much better than T.
Boeing (BA)
Cramer likes BA because it is benefiting from the plane upgrade cycle and pays a healthy dividend.
- 2.38 % dividend
- backlog of 3,771 planes
- 15 times earnings
- 13.4 % long term growth rate
My Thoughts on BA:
BA looks to have solid upside if the global economy does well. However, if the global economy does not do well then BA will go down. BA's Dreamliner 787 has finally started gaining momentum and the company looks well positioned to benefit from the airline up-grade cycle.
(cnbc)
BA's chart is about to become very bullish. The 50 day moving average will soon cross the 200 day moving average and the stock will be above both averages. This situation constitutes a "golden cross."
Chart Rankings
#1 KFT
#2 BA
#3 GE
#4 T
Conclusion
If you believe the chart is the most important factor when buying a stock then KFT is the best buy. If you believe the global economy will be stronger then you should buy BA not GE. If investors believe the economy will be weak then investors should buy KFT not T.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
