Pages

Custom Search

Search Mad Money Fund Blog

Are You Buying Jim Cramer's Get Rich Carefully Book ?

Share Stock Picks

Sunday, November 27, 2011

Jim Cramer"s buy list :Banks And Buy These 5 Technology Stocks ?

There
are few reasons to place long positions, as US stocks dropped 4.7% for the week ending November 25. The performance capped the worst Thanksgiving-week performance seen since 1932.
Jim Cramer, host of CNBC’s Mad Money made fewer “buy” calls between November 18 and 23. Of the 42 stocks mentioned, 27 were rated “buy” (64.3% of the calls) and 15 (or 35.7%) were rated “sell.”
Cramer was bearish on banks but bullish on technology. The financial sector still constitutes the second-highest in daily trading volume as illustrated by trading on November 23rd. Technology is the next heaviest by net share volume:
Sector Share Volume
Conglomerates 889,897,513
Financial 821,013,349
Technology 778,933,666
Basic Materials 387,038,775
Services 355,314,236
Healthcare 138,711,644
Industrial Goods 117,519,652
Consumer Goods 116,295,114
Utilities 24,313,135
Grand Total 3,629,037,084
During his lightning round, Cramer said quite simply that "the banks just can't be trusted”.
1) JPMorgan Chase (JPM)
US banks are scheduled to go through another round of stress tests that includes the scenario for a European collapse. Cramer was least worried with JP Morgan Chase (JPM) in the sector, but advised investors to avoid the banking sector until the tests are completed.
JPMorgan Chase has a P/E of 6.07 and trades with a PEG of just 0.70 when it last traded at $28.48. The bank has a debt/equity of somewhere between 3 and 4. Between the two, JPMorgan and Goldman Sachs (GS) sold protection on more than $5 trillion of debt around the world (according to Bloomberg). JPMorgan’s “funded” exposure was below $1.5B.
Moving to the technology sector, Cramer was bullish on 5 out of 6 stocks:
Company Symbol Call Date
Oracle Corporation (ORCL) Buy 11/18/2011
QUALCOMM Inc. (QCOM) Buy 11/22/2011
Baidu, Inc. (BIDU) Buy 11/22/2011
CA Inc. (CA) Sell 11/18/2011
Novellus Systems, Inc. (NVLS) Buy 11/21/2011
2) Oracle Corp (ORCL) – Cramer says “Buy”
With growth highest in segments that helps lower costs, Oracle pales in comparison to virtualization software companies. VMWare (VMW) and Citrix (CTXS) are still riding with a high P/E. Trading with a P/E of 16.33, Oracle is down 20.95% from a 52-week high. It closed recently at $28.74.
Oracle is expected to grow revenues by 8% in fiscal 2012, compared with 33% in the previous year.
Insider selling was elevated in October due to activities by Kurian Thomas (EVP of Product Development). Thomas sold $48.4M worth of shares at a price of $33.15.
3) Qualcomm Inc. (QCOM) - Cramer says “Buy”
Qualcomm shares dropped $4 to close at $51.86 at a P/E of 19.14. Analyst targets range from $63 to $70. Cramer considered Qualcomm a buy in the context of the markets still being controlled negatively by Europe.
Qualcomm remains an aggressive play in the ongoing growth of the Apple (AAPL) iPhone 4S, RIM Blackberry (RIMM), and to a smaller degree, Nokia’s (NOK) Windows mobile phone. The “risk-off” is creating price downside on Qualcomm shares, but growth in cellular is in a long-term upward trend. Tablet and notebook growth provide additional long-term upside for investors looking for a play in these trends.
4) Baidu, Inc. (BIDU) – Cramer says “Buy”
Baidu shares backed off from $140 and now trade at a P/E of 46.30. The stock closed recently at $119.91, with no signs that heavy selling in recent trading sessions is about to end.
Baidu came up as the only Chinese stock that should be considered a “buy.”
Accounting scandals plagued many Chinese-listed stocks this year, but Baidu’s business model ensures the search engine will be dominant in China for the long term.
5) CA Inc. (CA) – Cramer says “Sell”
Backing down from a $22 level, CA closed on November 25 at $19.80. Cramer cited a lack of momentum as a reason to avoid CA. He suggested Oracle instead. CA shares are hovering 6.68% above a yearly low, down 22.22% from its 52-week high at current prices.
In its most recent earnings report, the company beat EPS expectations by $0.02. Revenues were in-line with estimates. Even though the fiscal year 2012 was also in-line, revenue was below consensus.
6) Novellus Systems, Inc. (NVLS) – Cramer says “Buy”
Similar to other semiconductor stocks that rallied from a bottom at the beginning of October, Novellus shares closed at $31.57. The P/E is 9.12. Traders failed to trade beyond the $36 level.
Novellus will be providing a mid-quarter update for its fourth quarter on Monday, December 5, 2011. Cramer’s “buy” call on Novellus is consistent with the one made at the start of November. At that time, Cramer liked the aggressive share buyback the company was making.
With semiconductor stocks signaling a global slowdown, investors should not make heavy bets in this space.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours
Post a Comment