Jim Cramer’s stock picks beat the market on the average according to an academic study by two Northeastern University professors. On Wednesday’s show, Jim Cramer talked a lot about the debt crises in Europe. On the one hand, the uncertainty is lowering the cost of raw materials so smart companies are able to reduce their overhead and preserve profit margins even if sales have declined somewhat. On the other hand, the Eurozone debt crisis is causing some investors to be bearish, shorting stock and taking losses for doing so in some cases. Further, these “bears” may lower their earnings estimates for companies. As a result, a company like Pepsico (PEP) that may be reporting lower earnings than it estimated for itself is still able to beat the lowered bar set for it by the “bears”. In turn, its stock goes up and the bears lose money.
Jim Cramer’s opinion is that the economy isn’t home free just yet and there is a lot to be worried about because the EU is linked to US market performance in general. Some companies exist apart from that influence but more realistically, “there may be too many bears out there worrying about the same thing for it to become a reality.”
Here are Jim Cramer’s stock picks during Wednesday night’s show:
Avon (AVP): After putting Avon CEO Andrea Jung on the Wall of Shame in April, only to remove her later, and advising viewers to wait on investing in AVP until Jung was left the company, Jim Cramer is now recommending the stock. Jung may still be at the helm, but Cramer thinks AVP is simply too cheap to pass it. It was trading at $21.88 at the close of trading Wednesday and offers a 4.2% dividend yield.
Ford (F): With consumer confidence on the rise and the cost of raw materials down, Jim Cramer thinks it is a perfect time to buy a car company like Ford. Ford closed Wednesday up 1.25% on the day, finishing up at $11.38 a share.
AT&T (T): Cramer is extremely bullish on AT&T. It was up 0.76% on the day, trading at $28.99 a share. It also offers a dividend yield of 6.00, but Cramer has another reason for liking AT&T – its upcoming deal with Deutsche Telekom’s T-Mobile. The way Cramer sees it is, if the deal goes through, AT&T’s profit margins will soar and, if not, the company saves money. It’s a win-win. Jim Cramer has T in his charitable trust’s portfolio. Jim Simons has a large position in T too.
InterDigital (IDCC): Jim Cramer is no longer behind this stock. It lost 6.95% on the day yesterday, to close trading at $48.46 a share. He says he just doesn’t understand how to value its patents. He liked it, then he thought it overinflated, and now he just isn’t interested.
Chevron Corp (CVX): Cramer is a fan of CVX, calling it a “winner” for its mid-quarter update and estimates of production growth. CVX closed yesterday at $97.78 a share, up 0.18% on the day.
Molycorp (MCP): MCP is a rare earths company and Cramer is not so keen on that industry right now. He calls it a “cult stock” and recommends viewers sell. MCP was up 3.76% to close trading on Wednesday at $37.21 a share.
Freeport-McMoRan (FCX): Cramer likes FCX. It is a copper mining company with what Jim Cramer calls “genuine earnings power.” He also thinks that the demand for copper will go up soon, making FCX a definite buy. FCX closed Wednesday up 1.96% on the day, to end at $35.89 a share.
Piedmont Office Realty Trust (PDM): PDM was up 2.64%, closing the day at $16.35 a share, but if Jim Cramer had to pick a stock in PDM’s industry, real estate investment trusts, Cramer prefers Annaly by far. He admits he could stand to do more research on PDM though, so it is a pass for now.
Annaly Capital Management (NLY): Even though NLY was down .25% on the day, trading at $15.80 a share, Cramer likes the management in NLY.
Cisco Systems (CSCO): Jim Cramer thinks that CSCO is a buy after watching an interview with its CEO John Chambers. He sees only upside. The stock rose 1.53% on Wednesday to close at $17.25 a share.
Manitowoc (MTW): MTW was up 2.17%, to end trading Wednesday at $8.46 a share. Jim Cramer had recommended MTW recently based on the reconstruction of Japan but then “The orders did not come through and Europe slowed down dramatically.” Cramer said he “screwed up on that one.” “That said,” he continued. “This stock has been left for dead, and yet I think there is a pulse, and at $8, yes indeed, I would double down.”