Jim Cramer’s latest stock picks are relatively more conservative. Recently Jim Cramer became a little bearish about the stock market and has been urging his viewers to go for the high dividend yielding stocks. He is staying away from the financials and tech companies in general.
Here are Jim Cramer’s latest stock picks during the August 22nd show:
JP Morgan Chase (JPM): Cramer said, as he often does, that JP Morgan represents the best of the banks while Bank of America (BAC) represents the worst. However, Cramer said they both need to reverse and go higher because they’re heavily owned by individuals and mutual funds alike.
Cramer said, “I know bank declines are related to unemployment, but as long as this sector is in freefall, the S&P will be pulled down with it.” As a large part of the S&P, Cramer thinks banks are almost entirely inadvisable.
Ameresco (AMRC): A viewer wanted to know if Ameresco’s acquisition of APS Energy give this renewable energy company a boost. Cramer said he doesn’t want to be in the energy companies that have alternative energy. He would rather go with a yielding energy stock like Teco Energy (TE), Progress Energy (PGN) or Duke Energy (DUK) which currently yields over 5.5%.
Pandora (P): Cramer said it is oxymoronic to think of “earnings” when it comes to Pandora (in reference to their earnings report) and that they’ve seemingly made a pledge against profitability. He doesn’t want people anywhere near the stock and advised a viewer to sell it if the stock gets a lift.
Travelzoo (TZOO): This online travel and local deal company is the quintessential momentum stock (according to Cramer) and went from $41.25 at the beginning of the year to $101 in late April before plummeting to current levels. The stock once dropped 35 points in a day after reporting a disappointing quarter.
Christopher Loughlin, CEO of Travelzoo, said that when economic times are tough, it’s great for us because people are looking for deals. The company’s PEG ratio shows it is the cheapest company of its competitors.
Hewlett-Packard (HPQ): After a disappointing quarter and making strategic announcements that it was shutting down its tablet business and buying British software services company Autonomy for 11 billion dollars, the stock immediately lost 25% of its value.
HP executives said they were switching focus to cloud computing and storage. Cramer recommends holding this stock, if you own it, in hopes it will recover. David Slager and Nat Rothschild of Attara Capital reduced their position by 42%. (See more of Slager and Rothschild’s holdings).
Salesforce.com (CRM): Cramer doesn’t think it makes sense for Salesforce.com to be down after the stellar quarter they just reported, but in a market like this mistakes happen. Believing it to be too cheap on a revenue growth basis, Cramer thinks CRM is a buy at this level.
Sohu.com (SOHU): A viewer wanted to know about this Chinese online media and gaming company trading in America. Cramer advised against increasing the positions in the stock as too many factors are unclear. Cramer repeated that the only Chinese stock he’s recommending right now is Baidu (BIDU).
Research in Motion (RIMM): Cramer told a viewer who had a position in Research in Motion that she needed to hope for a takeover. Although the cash and patents at RIMM are good, he can’t recommend owning a stock on a takeover basis if the fundamentals are bad.
Caterpillar (CAT): Cramer said that he’s liked Caterpillar for years and while he didn’t sell enough when it went higher, he’s not going to cut-and-run now. He said it’s a buy as it creeps closer to a 3.5% yield.
Peabody (BTU): Cramer said that although coal, copper and oil are all going lower, Peabody is a buy at $41. He feels coal may be rounding the corner. Ken Heebner of Capital Growth Management increased its position by 57%. (See more of Heebner’s picks).
Enterprise Products (EPD): All of the master limited partnerships fell on worries from a research firm that treasuries are going to get rid of terrific pass-through tax breaks. Cramer doesn’t think it’s going to happen. The stock currently yields 6.1%.
Philip-Morris (PM): Cramer said that Philip-Morris had a terrific quarter and is the best way to play tobacco. “It is one of my favorite stocks even though I don’t like tobacco,” Cramer said. The stock trades at 15 times earnings and yields 3.7%.
USG Corp. (USG): Cramer said USG was the “quintessential wrong stock to own here”. He gave it a sell recommendation as he thinks it could go even lower to below $5 per share.
Ford (F): The recent decline of the stock wasn’t because of the company. Cramer said that when people feel an economy is heading into a recession, the first thing to be sold is auto stocks. There isn’t anything you can do about it.
Prospect Capital (PSEC): This business development company is essentially a publicly traded private equity firm that lends money to mid-market companies. While it yields a 4.8% yield, Cramer said this is a case where a high yield is a red flag. He suggests the yield is only so high because the market is pricing a drop in dividend down the road. Paying out more money that it owns is always a bad sign. Cramer prefers Annaly Capital (NLY) for a high-yield capital play.
Encore Wire (WIRE): Cramer thinks copper could go lower and likes other copper companies more. The disappointing quarter should make you wait for it to go lower before even buying this one on speculation.
Cramer recommends going with an actual producer like Freeport-McMoran (FCX) if you want to ease into a position in copper. Stanley Shopkorn and Dogulas Day of Hilltop Park Associates has 3.5% of their portfolio in FCX (see more of Shopkorn and Day’s holdings).
CenturyLink (CTL): This rural telephone company recently sent Cramer a letter defending their dividend, which Cramer questioned because of a disappointing quarter. He still prefers Windstream (WIN) which features an 8.5% yield with more growth and consistency. They are on the offensive, buying growth companies outside of their service area and moving into data centers.
Cramer wants dividends with growth and said WIN gives us both.
Akamai (AKM): A viewer questioned Akamai’s potential as a takeover target. Cramer said streaming video is increasing, but these companies (and their stocks, respectively) are not working. Dmitry Balyasny of Balyasny Asset Management increased his position in the stock by 74% (see more of Balyasny’s picks here).
Agnico-Eagle Mines Limited (AEM): Cramer sees gold stocks going back up and advised a viewer not to sell his position. Cramer said, however, that he thinks Barrick Gold Corporation (ABX) and Randgold Resources (GOLD) executed well and performed better. He prefers owning Goldcorp (GG) long-term.
SPDR Gold Trust ETF (GLD): When surrounded by weak currencies (most intentionally made that way to increase exports), Cramer thinks you should own gold, the strongest currency around. GLD is one of Jim Cramer’s top stock picks recently. Here is Jim Cramer’s video clip where Jim Cramer discusses gold.