This article examines five stocks from Jim Cramer's charitable trust to determine their future potential as outstanding investments. Please use the analysis below as a starting point for your own research:
United Parcel Service (NYSE:UPS)
United Parcel Service has a market cap of $66.10 billion, with a price to earnings ratio of 16.60. The stock has traded in a 52 week range of between $60.74 and $77.00. The current stock price is $67.39. On July 26th, the company reported second quarter revenues of $13.2 billion, compared to the $12.2 billion in revenues that it reported in the second quarter of 2010. Second quarter net income increased to $1.06 billion up from the $845 million that it reported in the second quarter of 2010. The company also increased annual 2010 net income to $3.49 billion compared to $2.15 billion in 2009.
United Parcel Service had a successful second quarter as its revenues were up by 25% and net income was up by 62%. This company has been able to produce steady earnings for years in spite of tumultuous economic conditions. This is a stock for investors that want a reasonable return on income with minimal risk. The stock dividend is $2.08 with a yield of 3.1%. Over the last 52 weeks, the stock price has moved up 1.81%. CNBC stock analyst Jim Cramer likes this stock and his charitable trust recently purchased 600 shares.
I do not agree with Jim Cramer on this stock. I believe that investors can find other safe stocks, with lower valuations and higher dividend yields. I rate United Parcel Service as a hold.
UBS AG (NYSE:UBS)
UBS AG has a market cap of $54.56 billion with a price to earnings ratio of 7.41. The stock has traded in a 52 week range of between $13.17 and $20.08. The current stock price is $14.48. UBS AG reported second quarter revenues of $12.6 billion with net income of $1.52 billion. In the second quarter of 2010, the company reported revenues of $8.86 billion with net income of $1.86 billion. The company’s year over year earnings improved from $-2.65 billion in 2009 to $8.08 billion in 2010.
One of UBS AG's competitors is Citigroup Inc. (NYSE:C), which is trading at $31.05. Citigroup Inc. has a market cap of $90.60 billion with a price to earnings ratio of 9.60.
UBS AG is one of the poorest performing stocks in the banking industry, which is one of the poorest performing industries. Over the last 52 weeks, the stock is down by 17.21%. One reason for the poor stock performance is because in the last quarter, the company’s earnings per share dropped by 35%. The company is currently in the midst of a restructuring project in hopes of turning thing around.
However, since the company does not pay a dividend, there is no incentive to purchase this stock in hopes that the restructuring will work. Jim Cramer’s comment about UBS AG was “UBS has stumbled and has to get its house in order” I agree Jim Cramer and rate UBS AG as a hold.
Stryker Corporation (NYSE:SYK)
Stryker Corporation has a market cap of $718.25 million with a price to earnings ratio of 33.78. The stock has traded in a 52 week range of between $42.87 and $65.21. The current stock price is $48.84. On July 19th, the company reported that second quarter revenues were $2.05 billion, up 16% from the second quarter of 2010 revenues which were $1.76 billion. Second quarter net income was $309 million compared to net income of $319 million in the second quarter of 2010.
Stryker Corporation recently reiterated its forecast that annual earnings per share will increase by 10 to 13 percent. Stock analyst Jim Cramer sees a positive future for this stock and recently purchased 1000 shares for his charitable trust. The management of Stryker Corporation also had a positive outlook for the company, and have raised the dividend by 80% since 2009. Some of Stryker Corporations key products are hip and knee replacement parts, which we think offers better products than Zimmer (ZMH) and Smith and Nephew (NYSE:SNN).
With the graying of America, management expects that there will be strong demand for these products. I agree with Jim Cramer about this stock and rate Stryker Corporation as a buy.
Savanna Energy Services Corp. (NYSE:SNY)
Savanna Energy Services Corp. has a market cap of $718.25 million with a price to earnings ratio of 33.78. The stock has traded in a 52 week range of between $5.06 and $10.80. The current stock price is $8.48. On August 11th, the company reported second quarter revenues of $94.5 million, compared to revenues of $67.9 million in the second quarter of 2010. Second quarter net income was $-956 thousand compared to $-7.74 million in 2010. The company had net income of $8.31 million for the year of 2010.
Savanna Energy is a Canadian based oil drilling and service company that has not benefited from the recent high gasoline prices. In the last quarter, the company’s earnings fell from $15.6 million in the first quarter to $-956 thousand.
This is a company that has not been able to produce consistent earnings or pay a dividend. Jim Cramer has not commented on this stock, but I rate Savanna Energy Services Corp as a hold.
Unilever NV (NYSE:UN)
Unilever NV has a market cap of $95.71 billion with a price to earnings ratio of 15.31. The stock has traded in a 52 week range of between $26.97 and $34.27. The current stock price is $34.00. Unilever is a Netherland based conglomerate which sales consumer goods around the world. The company is considered to be recession proof as it sales products from food to detergents to Vaseline.
Unilever has been able to consistently grow earnings and pay dividends. The company’s earnings per share grew by 27% last quarter. Its dividends which vary from quarter to quarter are currently yielding 3.8%. Investors like this company’s consistency and as a result the stock has performed extremely well. The stock price is up by 23.73% over the last 52 weeks, and at $34.00 it is just off of its 52 week high of $34.27.
Jim Cramer likes this stock and recently purchased 700 shares for his charitable trust. I agree with Jim Cramer and rate Unilever NV as a buy.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.