Cramer's Mad Money - 12 Stocks to Buy at Their 52-Week Highs (5/26/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday May 26.

Alaska Air (NYSE:ALK), Dollar General (NYSE:DG), Dollar Tree (NASDAQ:DLTR), Family Dollar (NYSE:FDO), AutoZone (NYSE:AZO), O'Reilly Automotive (NASDAQ:ORLY), Advance Auto Parts (NYSE:AAP), American Medical System Holdings (NASDAQ:AMMD), Chemed (NYSE:CHE), Acme Packet (NASDAQ:APKT), SanDisk (SNDK), VMware (NYSE:VMW), EMC (EMC), (NYSE:CRM), Skyworks (SKWS)

With the Dow Rising 133 points and then trading down 69 points on Wednesday, Cramer repeated his comment that stocks will not be stable unless there is some kind of solution in Europe. However, those who want to get ahead of a European recovery, or at least renewed optimism from reforms, Cramer suggested 12 stocks currently at their 52 week highs. Why buy so high? To be at a high level is a sign of strength when the market is this difficult.

  1. Alaska Air (ALK)
  2. Dollar General (DG)
  3. Dollar Tree (DLTR)
  4. Family Dollar (FDO)
  5. AutoZone (AZO)
  6. O'Reilly Automotive (ORLY)
  7. Advance Auto Parts (AAP)
  8. American Medical System Holdings (AMMD)
  9. Chemed (CHE)
  10. Acme Packet (APKT)
  11. SanDisk (SNDK)
  12. VMware (VMW)

From this list, Cramer said one could eliminate the airlines, since he tends not to be bullish on the sector and Chemed, because the healthcare industry is "filled with landmines" right now. Investors who want an option to VMware or SanDisk should consider EMC (EMC), (CRM), Skyworks (NASDAQ:SWKS) instead. (CRM), Philips Van Heusen (NYSE:PVH), Macy's (NYSE:M) and Philips Van Heusen (PVH) provide two tangible examples of why one should never trade according to headlines, but should only buy or sell a stock after doing homework. While the headlines made it seem as if both companies gave lackluster guidance, investors who read the fine print realized this was due to the necessary expenses involved in both companies' acquisitions and not because of any weakness in Salesforce or PVH. However, the stocks were unfairly punished with Salesforce declining as much as $7 in after hours trading.

“When earnings are depressed from an acquisition,” Cramer said, “that’s a rearview look. Not something that gives you much insight about the future."

What should have clued investors in were the outstanding fundamentals. Salesforce reported a 24% rise in revenue growth, 40% more cash, and its biggest jump in number of customers since the fourth quarter 2008. PVH's earnings per share jumped 54% year over year, a revenue acceleration of 11% and gross margins growing by 230 basis points. Inventory growth was contained and PVH continued to take market share in Macy's (M).

Cramer added yet another way to make money doing homework on stocks while others don't; “You could end up making money off the morons who take action without facts,” Cramer said, “who panic out when they should be buying in.”

Buy a British Stock? Vodafone (NASDAQ:VOD), Verizon (NYSE:VZ), Apple (NASDAQ:AAPL)

Could one of the safest investments out there be a British stock? Aside from the fact that Vodafone (VOD) receives money in British pounds rather than euros, it is still 67% levered to Europe, so isn't this a dangerous move?

Cramer is urging viewers to buy American stocks, but he is making an exception in the case of Vodafone, because it is a "serial dividend raiser" and is planning to cut $3 billion worth of continent-based costs. The company plans to raise its dividend to 7% by 2013, and Cramer doesn't think Vodafone would make such a target if it didn't feel good about business.

Perhaps even more interesting is Vodafone's 45% stake in Verizon Wireless which could be worth anywhere from $32 billion to $52 billion compared to Vodafone's $100 billion market cap. Analysts haven't included this factor into VOD's valuation because it still is paying off debt to Verizon, but its payments should be completed by the end of the year.

In addition, Verizon Wireless has a good chance to get Apple (AAPL) iPhone. Vodafone has great exposure to international markets in Africa, India and China that went right to cellular. With the stock down 19% on Europe's woes, Cramer would buy.


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