Jim Cramer’s Cheap Great Stocks to Buy: GS, AAPL, GOOG, AMZN, CMG, NFLX
“It’s time to dispel the notion that some stocks are too expensive,” Jim Cramer said on his “Mad Money” TV show. He pointed out that a high price does not mean a stock is too expensive.
For example, Cramer mentioned Goldman Sachs Group, Inc. (NYSE:GS) and Apple Inc. (NASDAQ:AAPL), two stocks he holds in his charitable trust, along with Google Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), Chipotle Mexican Grill, Inc. (NYSE:CMG) and Netflix, Inc. (NASDAQ:NFLX). He explained that these triple-digit stock prices might seem expensive, but on a price-to-earnings basis, these stocks are actually cheap.
This is why Cramer wants to see ten-for-one splits on stocks like Apple, Google and Goldman, even if those splits create little value.
“The share price tells you nothing about the value of a company,” Cramer said. It’s the price earnings multiples that tells you how much the market’s willing to pay for a company’s earnings per share.
“But emotionally these hundred-plus dollar stocks scare the bejeesus out of people,” Cramer said. “The idea of losing $10 on a $262 stock is a lot more frightening than losing $1 on a $26 stock, especially in an age of high frequency trading, even though objectively there’s no difference. They’re both 3.8% declines.”
Cramer told viewers to divide these companies’ share prices and earnings by 10 to make them easier to get a handle on. By looking at the stock as a tenth expensive with a tenth of the earnings, it is easy to see how cheap the stock really is. Cramer would love to see a ten-for-one split, but he doesn’t think it will happen. Instead, he recommended deep-in-the-money call options as a way to control the same amount of stock for less money.
“In-the-money calls offer all of the upside, with very limited downside, and can be a great way to control a large number of shares,” he said. “Please, please, if you do buy the common stocks, remember they aren’t expensive, they are just high dollar amounts, and if you mentally divide by ten, you will be far less frightened when they inevitably go against you.” Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!
Jim Cramer’s Lightning Round: Buy Baidu.com, Inc. (NASDAQ:BIDU), Sell China MediaExpress Holdings Inc (NASDAQ:CCME)
Bullish
Electronic Arts Inc. (NASDAQ:ERTS) and Baidu.com, Inc. (ADR)(NASDAQ:BIDU).
Bearish
Activision Blizzard, Inc. (NASDAQ:ATVI) and China MediaExpress Holdings Inc (NASDAQ:CCME). Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!
Jim Cramer’s Stop Trading!: BRK.A, MCD
“Warren Buffett’s company Berkshire Hathaway Inc. (BRK.A) is a clear buy,” Jim Cramer said on Monday’s “Stop Trading!” segment. “This is one of the finest operating quarters I’ve seen from Berkshire,” he said. “The railroad is on fire.”
On Friday, Berkshire Hathaway reported that operating profit increased by 73%, but second-quarter income dropped by 40%. “The headline was all wrong,” Cramer said, “Berkshire has the single-best chart in the whole book.”
Moving on to the food service sector, McDonald’s Corporation (NYSE:MCD) hit an all-time high Monday after the fast food giant reported better-than-expected July sales data. Cramer said McDonald’s is a well-run company and he’s blown-away by its current menu. He also mentioned that if the euro goes to 1.40 it will make for easier compares for the fourth-quarter.
Finally, Cramer told viewers that what’s good for GM is good for America. He reiterated his belief that all Americans should be able to benefit from the GM IPO. “If you’re going to do these privatizations, there’s got to be a really good way for America to benefit,” Cramer said. Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!
Jim Cramer’s Lightning Round: Buy Eldorado Gold Corporation (NYSE:EGO), Sell SandRidge Energy Inc. (NYSE:SD)
Bullish
Eldorado Gold Corporation (NYSE:EGO), Deere & Company (NYSE:DE), Potash Corp./Saskatchewan (USA)(NYSE:POT), Monsanto Company (NYSE:MON) and Energy Transfer Partners, L.P. (NYSE:ETP).
Bearish
SandRidge Energy Inc. (NYSE:SD) and Tyson Foods, Inc. (NYSE:TSN). Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!
Jim Cramer’s LED Energy Stock Buys: CREE, POWI, RBCN
“The big takeaway from this earnings season is that energy conservation companies are absolutely smokin,” Jim Cramer said on his “Mad Money” TV show. “Energy efficiency is the new face of going green, unlike the conversion to renewable energy sources, this trend doesn’t need government subsidies to make money,” he said.
Cramer told viewers that in 2007, Congress passed a law that increasing energy efficiency light bulbs starting in 2012. With over 5 billion bulbs just in the U.S., this means a huge opportunity for more energy efficient technology.
Cramer said his best play on this trend is Cree, Inc. (NASDAQ:CREE), a maker of chips that control LED bulbs. “Cree is the dominant player in the LED business,” he said. But, many market players have been selling the stock aggressively due to increased competition. Cramer thinks those sellers are wrong since the competition is coming from LED screens, which is only 25% of Cree’s business.
He pointed out that Cree has gross margins of 1,700 to 2,200 basis points or 17 to 22 percentage points higher than its competition due to its superior technology and efficiency. Even though LED prices have dropped, Cree still has been able to increase margins by lower costs and boosting sales volumes — trends Cramer thinks will continue.
Cree is already up 117% from its lows, and trades at 25 times earnings, but Cramer thinks the stock is still cheap given its 22% growth rate and future prospects.
For the speculative market players, Cramer said take a look at Power Integrations, Inc. (NASDAQ:POWI), a maker of high-voltage semiconductors that are used in power-efficient energy conversion. “The company’s chips are used in everything from home appliances to cell phone chargers and it also has LED lighting exposure that continues to grow,” Cramer said. On Monday, POWI reported a strong quarter with gross margins of 52.2% that were up from 50.5% in the previous quarter. Another speculative name Cramer likes is Rubicon Technology, Inc. (NASDAQ:RBCN), a small player, but one with growing exposure to the sector.
“With companies looking to save money on energy costs, the LED lighting business is in the sweet spot,” Cramer said. “An industry that has government support, but doesn’t need it.” Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!
Jim Cramer’s Wheat Ban AG Stock Buys: POT, DE, BG, MON, DD, GIS, K, ADM
“There’s a bull market in agriculture, and it’s not too late to buy,” Jim Cramer said on his “Mad Money” TV show. “What we’re seeing here is a turbo-charged ag bull market based on soaring demand from emerging markets creating a potentially massive worldwide food shortage,” Cramer said. “There is also increased demand in both China and Canada.”
He said that the recent news out of Russia which banned grain exports due to drought conditions is also bullish for ag stocks. The Russian ban has helped push wheat prices to new highs.
Cramer said if you like a high risk stock, take a look at fertilizer king Potash Corp./Saskatchewan (USA)(NYSE:POT), which beat earnings by 19-cents-a-share and said on their conference call that demand is outstripping supply.
Cramer also likes Deere & Company (NYSE:DE), which he thinks is a good way to play ethanol, in addition to the increased demand for more crops-per-acre. Another name to consider is Bunge Limited (NYSE:BG), White Plains, N.Y.-based dealer in fertilizer and other farm products.
For conservative investors, Cramer recommended seed makers Monsanto Company (NYSE:MON) and E.I. du Pont de Nemours & Company (NYSE:DD). DuPont operates in a variety of businesses and agriculture is one of them. “The company has a 3.9% dividend yield and as a history of paying a dividend for more than a century,” Cramer said. As for Monsanto, Cramer said he got bullish on the stock at $57.61 a hare because the estimates hand come down so low, that he thought the firm could beat them. The company just raised its dividend by 3 cents on Wednesday.
Cramer told viewers that the only losers from the grain shortage will be General Mills, Inc. (NYSE:GIS) and Kellogg Company (NYSE:K), two companies that will see their profits take a hit due to the grain shortage. Another name he would avoid is Archer Daniels Midland Company (NYSE:ADM), a stock Cramer said is guilty until proven innocent until it posts some positive quarterly numbers.
“I think the agriculture bull market is here to say,” Cramer said. “You need to get a piece of it. Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!
