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. Nearly two hundred fifty thousand 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 stock picks on his show is the starting point for many investments made by these folks.
During the November 2nd show, Cramer discussed the following stocks:
Qualcomm (QCOM): This semiconductor company rose 5 points right after reporting its 3rd quarter results. Qualcomm yields, 1.7%, trades at 20.5 times earnings and has a $87.65 billion market cap.
Cramer used restaurants Panera Bread (PNRA) and Chipotle Mexican Grill (CMG) along with retailer VF Corp (VFC) to show investors that while we’re hearing bad macroeconomic news, we’re hearing strength from companies. The companies reporting strong earnings and future growth aren’t going down much during the broader market sell-off.
Jacobs Engineering (JEC): Despite the recent acquisition of KlingStubbins to enhance the architecture arm of its business, Cramer thinks it is too dangerous to own this engineering and construction company because there’s no guarantee that it will perform better than competitors that have been hammered. Jacobs Engineering has a $5.01 billion market cap and trades at 15.4 times earnings.
Potash (POT): Cramer likes the fertilizer company and thinks it is a great long-term play. Cramer doesn’t recommend it for the short-term because of low crop prices and talk of agriculture subsidies being cut. Potash trades at 17.4 times earnings and has a $40.04 billion market cap.
PPG Industries (PPG): This specialty chemical company is not getting enough credit from analysts as far as Cramer is concerned. The company delivered a $0.04 earnings beat on a $1.92 basis. PPG earned more in the first three quarters of 2011 than it earned in all of 2010. The company has true pricing power; increasing prices for 6 straight quarters to make up for increases in raw material costs. Now that raw material costs have come back down, the high prices should flow directly to the bottom line.
PPG Industries offers a 2.7% yield, trades at 12.6 times earnings and has a $13.39 billion market cap. Trading 11 points off its 52 week high, Cramer recommends buying PPG stock on a European-induced pullback. Ken Fisher of Fisher Asset Management owns more than 6.4M shares.
Randgold Resources (GOLD): Cramer continually recommends owning gold to serve as portfolio insurance because the precious metal will retain value and even go higher if the market sees sovereign defaults. While he traditionally favors the SPDR Gold Shares ETF (GLD), he said he’s willing to endorse Randgold Resources if you’re willing to take on a high-risk/high-reward play.
Cramer doesn’t particularly like mining stocks because they can be extremely hit-or-miss, but Randgold is experiencing rapid growth in production; estimating 2012 output should increase by 22%. Randgold Resources hit a new 52-week high and has a number of new mines coming into production, something the CEO said separates Randgold from other miners. Randgold Resources trades at 49.7 times earnings and has a $10.37 billion market cap. John Paulson of Paulson &Co owns 700K shares.
Darden Restaurants (DRI): With a 3.6% yield, Cramer said he would be more excited about the company if it would be less downbeat. Cramer thinks high raw material costs are a problem, but said the stock would be a buy at $44. Darden has a $6.21 billion market cap and trades at 14 times earnings.
Tata Motors (TTM): Cramer said “no thanks” to any auto company because they’re experiencing too many problems. Tata Motors yields 2.15%, trades at 7 times earnings and has a $10.79 billion market cap.
Alpha Natural Resources (ANR): Cramer said this is one of the most hideous stocks he’s seen, but isn’t sure why. While he feels they paid too much for an acquisition, he said Alpha Natural Resources is too low and gave it a buy recommendation. Alpha Natural Resources has a $5.43 billion market cap and trades at 56.4 times earnings.
EOG Resources (EOG): EOG Resources closed up $10.18, or 11.85% after reporting what Cramer said is a stellar quarter. EOG delivered a $0.07 earnings beat on a $0.70 basis. EOG Resources is the top producer in both the Bakken and Eagleford shales and production grew 54% during the third quarter. Despite the moves based on its quarterly results, the stock is still trading 25% off its 52-week high. EOG trades at 55.4 times earnings and has a $25.8 billion market cap. T. Boone Pickens of BP Capital reduced his position by 3%.
Diamond Foods (DMND): Cramer repeatedly endorsed Diamond Food’s strategy of pulling away from its nuts business and diversifying by acquiring forgotten-about brands and breathing new life into them. This was the thinking behind its plan to purchase Pringles from Proctor & Gamble (PG). However, the stock fell 11 points on the news that the deal may not end up being completed before the 1st half of 2012. This is due to the board’s investigation of the company’s payments to walnut farmers.
Cramer thinks this wouldn’t be that big of an issue for Proctor & Gamble if it were an all-cash deal. Since stock is involved, P&G may want to wait until the investigation settles before taking on a significant amount of Diamond Foods’ stock. Diamond Foods has a $1.16 billion market cap and trades at 28.9 times earnings.