Jim Cramer's Halloween Stock Picks

by: Insider Monkey

Jim Cramer is one of the top watched TV personalities on CNBC. He is the host of mad Money and also the co-founder and chairman of TheStreet.com (NASDAQ:TST). Nearly 250,000 people watch his show daily on TV and most of these are ordinary investors trying to understand what’s going on in the market. Jim Cramer’s bullish and bearish stock picks on his show is the starting point for many investments made by these folks.

During the October 31st show, Cramer discussed the following stocks:

Gold miners like Yamana Gold (NYSE:AUY), Agnico-Eagle Mines (NYSE:AEM), Goldcorp (NYSE:GG) and NovaGold Resources (NYSEMKT:NG) have proven to Cramer that gold mining is simply too difficult, dangerous and expensive. That, paired with the precious metal being hard to find, reinforces Cramer’s conviction in the SPDR Gold Trust ETF (NYSEARCA:GLD), which trades directly on the price of the bullion without other business risks.

Supermarket stocks have plagued Cramer over the years, primarily due to heavy competition and issues with the business model. Cramer advised investors to stay away from stocks like Kroger (NYSE:KR), Supervalu (NYSE:SVU) and Safeway (NYSE:SWY). Whole Foods Market (WFM) is the only supermarket stock Cramer will recommend because of its pricing power and role as more of a healthy-living play than a supermarket one. Whole Foods Market has a $12.78 billion market cap and trades at 40 times earnings.

Cramer regards Advanced Micro (NASDAQ:AMD) and Micron (NASDAQ:MU) as perennial “single-digit midgets” that have only been good for brief trades. Advanced Micro is up against the low-cost producer Intel (NASDAQ:INTC) and Micron, maker of commodity chips, is always undercut by a company in Asia on low prices. Advanced Micro trades at 4.2 times earnings and has a $4.03 billion market cap. Micron has a $5.52 billion market cap and trades at 34.6 times earnings.

Eastman Chemical (NYSE:EMN): Cramer gave Eastman Chemical a sell recommendation. He said the easy money has been made after the split from Eastman Kodak (EK) and it had a good run. Cramer doesn’t like the chemical stocks and feels investors will get another chance to get in, but not now. Eastman Chemical yields 5.3%, trades at 10 times earnings and has a $5.52 billion market cap.

Ancestry.com (NASDAQ:ACOM): Cramer advised getting into Ancestry.com before it became public in November 2009. The genealogy website reported 2 consecutive disappointing quarters and hit a wall with adding new subscribers. Executives increased monthly subscription fees in a failed attempt to get more subscribers on an annual plan. Ancestry.com has a $1.03 billion market cap and trades at 23.7 times earnings.

Netflix (NASDAQ:NFLX): Cramer regrets not telling investors to get out of their positions after the company announced plans to raise subscription prices in July. Cramer said he stuck with Netflix because management had defied skeptics time-and-time again. Netflix trades at 19 times earnings and has a $4.31 billion market cap.

Lufkin Industries (NASDAQ:LUFK): Operating in the Bakken oil shale, Cramer thought the oil field and power transmission products maker would get hit with a wave of new orders. However, Lufkin lowered earnings and sales forecasts when it reported on October 5th. Lufkin Industries is experiencing the same execution issues as the previous quarter. Lufkin has a $1.8 billion market cap and trades at 31.4 times earnings.

Baidu (NASDAQ:BIDU): The Chinese search engine company is the only Chinese stock Cramer will recommend. This is primarily because China has blocked Google (NASDAQ:GOOG) from operating in the country. Baidu has a $48.91 billion market cap and trades at 45.6 times earnings.

DangDang (NYSE:DANG): Acting as the Chinese version of Amazon (NASDAQ:AMZN), Cramer recommended staying away from DangDang due to significant competition and worries over secure online purchases. DangDang has a $551.66 million market cap. Cramer recommended avoiding buying Chinese “look-a-like” stocks that would more than likely do more harm than good to your portfolio. Companies like Youku.com (NYSE:YOKU), acting as China‘s YouTube, QIHOO 360 (NYSE:QIHU), a web security firm, Renren (NYSE:RENN), China’s Facebook, Jiayuan.com (NASDAQ:DATE), China’s Match.com, Tudou (NASDAQ:TUDO), a similar YouTube site and Sohu.com (NASDAQ:SOHU) have unreliable reporting practices and suffer from the government’s crackdown on expression and social media sites.

Brasil Telecom (BTM): Cramer gave this telecommunication stock a buy recommendation, as Brazil has been cutting rates and this dividend play’s great upside potential. Brasil Telecom yields 3.8%, trades at 3.5 times earnings and has a $4.04 billion market cap.

Provident Energy (PVX): This Canadian gas company received a buy recommendation from Cramer. Yielding close to 6%, Cramer thinks this company is worth the wait. Provident Energy trades at 38.3 times earnings and has a $2.47 billion market cap.

SodaStream (NASDAQ:SODA): Cramer said they once hit the ball out of the park with SodaStream, but advised viewers to stay away as it has become a battleground stock. Trading at 28 times earnings, SodaStream has a $629.3 million market cap.

Activision (NASDAQ:ATVI): Cramer recommended taking profits, as gaming is too tough of a market. Cramer noted that he liked Electronic Arts (ERTS) and even it didn’t have a blowout quarter. Activision yields 1.2%, trades at 24 times earnings and has a $15.3 billion market cap. Jeffrey Tannenbaum of Fir Tree owns over 6.6M shares of Activision.

Microsoft (NASDAQ:MSFT): Cramer told viewers not to buy this low-risk, low-reward stock. Microsoft yields 2.4%, trades at 9.8 times earnings and has a $224 billion market cap. David Einhorn of Greenlight Capital increased his position by 63%.

Johnson & Johnson (NYSE:JNJ): Although the stock has a nice yield, there is not a lot of growth and Cramer said it was “okay”, but told viewers not to buy. Johnson & Johnson is trading 4 points below its 52-week high of $68.05. Yielding 3.5%, Johnson & Johnson trades at 16 times earnings and has a $176.45 billion market cap. Warren Buffett of Berkshire Hathaway (NYSE:BRK.A) owns over 42.6M shares.

Cheniere Energy (NYSEMKT:LNG): Cramer recommended taking profits from Cheniere’s recent run-up and letting the price fall back down before buying more shares. Cheniere Energy has a $948 million market cap.

Metro PCS (PCS): Based on too much competition in the market, Cramer gave Metro PCS a sell recommendation. MetroPCS trades at 15.2 times earnings and has a $3.08 billion market cap.

Kirby (NYSE:KEX): Cramer thinks the stock has gone too high and advised investors not to be greedy and take some profits. Kirby trades at 21.7 times earnings and has a $3.42 billion market cap.

Nuance Communications (NASDAQ:NUAN): Closing $0.49 below its 52-week high, Cramer told viewers to ring the register and take some profits from this communications company. Nuance has a $8.09 billion market cap and trades at 191 times earnings.

Xilinx (NASDAQ:XLNX): This semiconductor makes programmable logic devices (PLDs) which are flexible chips that can be reprogrammed to fit customers’ needs. Yielding 2.27%, Xilinx rallied 22% when it reported on October 19th. Although Xilinx has been losing some share to its main competitor, Altera (NASDAQ:ALTR), it still controls 50% of the growing PLD market. Cramer said this inexpensive stock is the way to play a fast-growing market. Xilinx trades at 15 times earnings and has a $8.87 billion market cap.

Avon Products (NYSE:AVP): Cramer used Avon Products to reinforce the importance of never getting behind a stock if you can’t get behind the management. The stock fell 20% after reporting a dismal quarter. Cramer pins the company’s poor results on CEO Andrea Jung.

Cramer is comfortable in attributing the company’s woes to Jung because other direct-selling companies like Tupperware Brands (NYSE:TUP) and Herbalife (NYSE:HLF) are reporting great quarters. Cramer knows it‘s not specific to the beauty industry because cosmetic companies Estee Lauder (NYSE:EL) and Revlon (NYSE:REV) are trading near 52-week highs. Avon Products yields 5%, trades at 11 times earnings and has a $7.87 billion market cap.

Disclosure: I am long MSFT.