Jim Cramer's 5 Stock Picks with Low P/E Ratios

Includes: AA, APA, COP, FCX, PRU
by: Insider Monkey

Jim Cramer is a former hedge fund manager. Today he is the host of Mad Money, a popular TV show on CNBC. Cramer shares his opinions on investments and helps ordinary investors make their own investment decisions. Cramer also has a charitable trust and purchases some of the stocks that he recommends on TV for his trust.

We believe that by focusing on Cramer’s stock picks for his trust, especially stocks with low P/E ratios, investors are more likely to beat the market. Below we compiled a list of low P/E stocks in Cramer’s charitable trust as of January 5, 2012. All companies have P/E ratios of lower than 12. The market data is sourced from Finviz.









Prudential Financial, Inc.




Apache Corp.








Alcoa, Inc.




The biggest low P/E position in Cramer’s charitable trust is Prudential Financial Inc (NYSE:PRU). The trust owned 2100 shares of PRU, which are worth about $110,000 in total. Prudential has a market cap of $24.3 billion and a P/E ratio of 8.11. Prudential was up 2.75% so far this year, versus 1.75% for the SPY. The stock is quite popular among hedge funds we track. As of September 30, there are 21 hedge funds reported to own Prudential shares in their 13F portfolios. Among them, Ric Dillon’s Diamond Hill Capital had the largest Prudential position. The fund invested $126 million in Prudential at the end of the third quarter.

Another large position with low P/E ratio is Apache Corp (NYSE:APA), in which Cramer’s charitable trust had around $77,000 invested. The stock has a market cap of $37B and a P/E ratio of 9.36. Apache gained 6.45% so far since the beginning of 2012, beating the market by over 3 percentage points in less than one week. The stock is also very popular among hedge funds we track. For example, Jean-Marie Eveillard’s First Eagle Investment Management had $147 million invested in Apache at the end of September. Ric Dillon’s Diamond Hill Capital and Boykin Curry’s Eagle Capital Management also had $100+ million invested in this stock.

ConocoPhillips (NYSE:COP) is another low P/E stock in Cramer’s charitable trust. However, the trust owned only 300 shares of the stock. ConocoPhillips has a market cap of $98B and a P/E ratio of 9.45. It returned 1.30% since the beginning of this year. Warren Buffett’s Berkshire Hathaway and 31 other hedge funds reported they own ConocoPhillips in their portfolios. Buffett had $1.8 billion invested in ConocoPhillips as of September 30.

Other low P/E stocks that Cramer likes include Freeport McMoRan Copper & Gold Inc (NYSE:FCX) and Alcoa Inc (NYSE:AA). Stocks with low P/E ratios are generally undervalued compared with stocks with higher P/E ratios. They have more potential to grow in the future and are therefore welcomed by the investors. We like Cramer and his stock picks with low P/E ratios. We encourage investors to do some deep research on these stocks for their own portfolios.

Disclosure: I am long COP.

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