Portfolio de Jim Crammer +23.51% YTD
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Portfolio de Jim Crammer +23.51% YTD
Action Alerts
Stocks proved their resiliency this week. They look pricey on a fundamental basis, and a lot of my trusted technical indicators tell me that stocks are overbought. But as the Dow moves to 10,000 by the end of the year, a lot of popular market truisms will be proven wrong.
The portfolio had a decent week, and some timely trades allowed us to lock in good gains ahead of the selloff on Friday. This isn't going to be like the exquisite moment, where we went from having nearly 20% cash to being almost fully invested two weeks later. This market just isn't that binary; the trading ranges are narrowing. Instead, we must temper our bullishness when prices look too high, and ratchet it up again when we experience sustainable declines.
I sold out of two positions this week, giving me a total of 24 stocks in the portfolio. I've heard good feedback from you readers about AT&T Wireless (AWE:NYSE), confirming my own homework. It has a good balance sheet, an industry-low churn rate and a network that could prove attractive to one of the major European telcos down the road. As I told you readers on Friday, I'll initiate a position in AWE on Monday.
I'm choosing to stay on the sidelines with Sony (SNE:NYSE ADR) and Automatic Data Processing (ADP:NYSE) but will keep them on my radar screen. Both of these stocks have run already, so I'd like to wait for a 10% pullback. We have 9.31% of cash on the sidelines, but I think the market remains generally overbought right here.
If you are new to the Weekly Roundup, you should know I rate my stocks on a scale of One to Four. This is a technique I used at my old hedge fund to help me prioritize the dozens of names I was interested in at any one time. The Ones are stocks that I would buy right now, whereas Fours are stocks I'd be looking to unload.
Now for the rankings:
ONES
Cendant (CD:NYSE, $17.65, 3,500 shares, 2.44%): Bought 1,000 shares on Wednesday. The consumer cyclicals should continue to rally into the fourth quarter, and I want to build up a position in Cendant while we can, not when we feel like we have to -- when the stock has already run to $20.
Comcast (CMCSA:NYSE, $28.52, 4,000 shares, 3.66%): A recent study shows that cable companies are getting more incremental revenue from their subscribers than their satellite competitors. Despite competitive pricing, I believe cable will continue to attract customers through video-on-demand and its more reliable high-speed data offerings.
E*Trade Group (ET:NYSE, $9.05, 20,000 shares, 5.81%): This company has mortgage exposure but I think CEO Mitch Caplan's strategy has E*Trade on the right track. I'd add more shares at or below $9.
Limited Brands (LTD:NYSE, $16.25, 3,500 shares, 1.83%): Bought a total of 1,500 shares this week. The retailer reported a solid July quarter on Thursday, but noted that August sales got off to a slow start. The weakness remains contained to the company's smaller apparel chains, and I believe that Limited remains well-positioned, especially at Victoria's Secret (easily its largest division), for the fall season. It also declared its next 10-cent quarterly dividend, payable Sept. 16 to investors at the close of trading on Sept. 2. Limited has $4 a share of cash on the balance sheet, and otherwise can cover its 2.4% yield 2.6 times over with estimated fiscal 2004 earnings.
Newell Rubbermaid (NWL:NYSE, $23.50, 14,000 shares, 10.56%): Bought 1,000 shares on Friday. I did a lot of retail homework while I was away this week, and now firmly believe that management can turn this business around. My stake now has ballooned up to 10% of my total portfolio, which goes against my diversification edict. That said, Newell very well could turn out to be a winner on the magnitude of Honeywell (HON:NYSE), and I can't afford not to make this a sizable position.
Schering-Plough (SGP:NYSE, $14.96, 8,000 shares, 3.84%): Shouldn't be stunned by the dividend cut, because we've seen it coming for months now. Fred Hassan is starting to work his magic. This selloff is exactly what we've been waiting for, and now's the time to take action. I'm going to buy at least 2,000 shares on Monday, when I'm allowed to buy the stock again. This leaves me room to buy another 2,500 shares down the road, should we see another favorable opportunity.
Wells Fargo (WFC:NYSE, $49.13, 3,500 shares, 5.52%): It's been a tough week for the banks, with investors unable to satiate their desire for high-beta stocks. If Wells were to drop below $49, I'd buy 500 shares.
TWOS
AOL Time Warner (AOL:NYSE, $16.02, 10,000 shares, 5.14%): The company won permission from the Federal Communications Commission to allow video transmission over its instant messenger service, which in my mind is the most valuable asset of the company's AOL division. I think the stock looks attractive on a pullback, because it likely will be trading above the teens by the end of the year.
Charter Communications (CHTR:NYSE, $3.98, 15,000 shares, 1.92%): Once again, you readers were able to benefit from taking action when I couldn't, because of my restrictions. The stock ran 10% after S&P upped its credit rating. I don't want to buy Charter here for the sake of buying. I'll add to my stake on a pullback to the $3.75, where you readers were able to buy last week.
Dick's Sporting Goods (DKS:NYSE, $35.69, 1,500 shares, 1.72%): Sold another 500 shares ahead of Thursday's earnings report, which proved to be a smart move. Dick's already had priced in a lot of good news, so it was "disappointing" when the company only met prior expectations. Despite the poor weather this summer, Dick's is expanding margins and seems to be gaining market share from its peers. With that in mind, I shifted gears and started rebuilding my position with 500 shares at $35.
FleetBoston Financial (FBF:NYSE, $29.93, 4,000 shares, 3.84%): Declared next quarterly dividend of 35 cents, payable Oct. 1 to investors at the close of trading on Thursday. I would add to my stake at or below $29 ahead of this date.
Honeywell International (HON:NYSE, $29.12, 6,500 shares, 6.08%): Sold 1,000 shares on Wednesday for a 25% profit. Honeywell remains my favorite stock, but it never pays to be piggish, especially with a large position.
Intel (INTC:Nasdaq, $27.39, 1,500 shares, 1.32%): Preannounced on Friday that the current quarter is tracking well above current expectations. While it was too cautious to say the recent pace of sales is sustainable, Intel is the clear winner of the current PC price wars. I'm taking the stock out of the Ones this week given the recent gains, but definitely think that Intel still can move higher from current levels.
JDS Uniphase (JDSU:Nasdaq, $3.39, 25,000 shares, 2.72%): The front-office shuffle announced on Thursday is clearly a positive event, and could drive the stock over $4 in the coming weeks. New CEO Kevin Kennedy comes from Openwave Systems (OPWV:Nasdaq) and Cisco Systems (CSCO:Nasdaq), and is one of the most respected executives in the industry. It was another solid week for this stock. I already own so many shares down at $3 that I'd need to see the stock pull back before committing new capital.
J.P. Morgan (JPM:NYSE, $33.92, 3,000 shares, 3.27%): The company clearly isn't suffering from bond trading losses, which had been widely rumored. Even with the best days in the mortgage business likely in the rear-view mirror, J.P. Morgan continues to look attractive at 11 times full-year earnings.
Nextel Communications (NXTL:NYSE, $17.72, 4,000 shares, 2.28%): The company redeemed some 10.65% debt this week as it continues to use free cash flow to work down its borrowing. We never did see the pullback that I was hoping to see with Verizon's (VZ:NYSE) walkie-talkie service. Too bad, because I really did want to buy more Nextel while it's still in the high teens.
Pfizer (PFE:NYSE, $29.55, 1,000 shares, 0.95%): I'm ready to circle the wagons around this position and start buying again on weakness. Top products Lipitor and Viagra face new competition, but I believe the stock looks oversold. Smith Barney Citigroup downgraded the stock on Thursday, but I think Pfizer's patents ultimately will stand up against generic competition.
Raytheon (RTN:NYSE, $31.27, 9,000 shares, 9.03%): Landed an $881 million missile contract from the Navy. Looks good on a pullback below $30.
UnitedHealth Group (UNH:NYSE, $48.91, 3,500 shares, 5.49%): Coming back to an attractive level. I would consider buying some more stock on the next pullback.
ValueClick (VCLK:Nasdaq, $8.08, 11,000 shares, 2.85%): Our patience continues to pay off. I'd look to add another 1,500 shares on a 10% drop.
Watson Pharmaceutical (WPI:NYSE, $39.35, 3,000 shares, 3.79%): Submitted an amended filing to the Food and Drug Administration for the antidepressant patch, Emsam. The joint venture with Somerset Pharma originally was submitted in 2001, but didn't have convincing clinical data. Of course, it's the generic business we're most interested in here. I'd like to buy more Watson at or below $37.
THREES
Anadarko Petroleum (APC:NYSE, $43.08, 1,500 shares, 2.07%): Sold a total of 2,000 shares this week. The fundamentals in the natural gas market aren't panning out as well as we had hoped, and I won't maintain a large position in any stock just because it's a takeover candidate.
Conexant Systems (CNXT:Nasdaq, $5.39, 15,000 shares, 2.6%): Another solid week as the chip rally continued to gain momentum. I think it's prudent to book some more profits if Conexant continues to run to $6.
Zoran (ZRAN:Nasdaq, $25.16, 3,000 shares, 2.42%): What a difference a week makes. I don't think we're going to get the chance to buy more Zoran at $21 anytime soon! In fact, it might be prudent for you readers to lock in some quick profits as we head into the next rally, especially if you followed my alerts to buy some shares in the post-earnings decline.
Regards,
James J. Cramer
DISCLOSURE: At the time of publication, Cramer was long Anadarko Petroleum, AOL Time Warner, Cendant, Charter Communications, Comcast, Conexant, Dick's Sporting Goods, E*Trade, FleetBoston, Honeywell, Intel, JDS Uniphase, J.P. Morgan, Limited, Newell Rubbermaid, Nextel, Pfizer, Raytheon, Schering-Plough, UnitedHealth Group, ValueClick, Watson Pharmaceuticals, Wells Fargo and Zoran.
Stocks proved their resiliency this week. They look pricey on a fundamental basis, and a lot of my trusted technical indicators tell me that stocks are overbought. But as the Dow moves to 10,000 by the end of the year, a lot of popular market truisms will be proven wrong.
The portfolio had a decent week, and some timely trades allowed us to lock in good gains ahead of the selloff on Friday. This isn't going to be like the exquisite moment, where we went from having nearly 20% cash to being almost fully invested two weeks later. This market just isn't that binary; the trading ranges are narrowing. Instead, we must temper our bullishness when prices look too high, and ratchet it up again when we experience sustainable declines.
I sold out of two positions this week, giving me a total of 24 stocks in the portfolio. I've heard good feedback from you readers about AT&T Wireless (AWE:NYSE), confirming my own homework. It has a good balance sheet, an industry-low churn rate and a network that could prove attractive to one of the major European telcos down the road. As I told you readers on Friday, I'll initiate a position in AWE on Monday.
I'm choosing to stay on the sidelines with Sony (SNE:NYSE ADR) and Automatic Data Processing (ADP:NYSE) but will keep them on my radar screen. Both of these stocks have run already, so I'd like to wait for a 10% pullback. We have 9.31% of cash on the sidelines, but I think the market remains generally overbought right here.
If you are new to the Weekly Roundup, you should know I rate my stocks on a scale of One to Four. This is a technique I used at my old hedge fund to help me prioritize the dozens of names I was interested in at any one time. The Ones are stocks that I would buy right now, whereas Fours are stocks I'd be looking to unload.
Now for the rankings:
ONES
Cendant (CD:NYSE, $17.65, 3,500 shares, 2.44%): Bought 1,000 shares on Wednesday. The consumer cyclicals should continue to rally into the fourth quarter, and I want to build up a position in Cendant while we can, not when we feel like we have to -- when the stock has already run to $20.
Comcast (CMCSA:NYSE, $28.52, 4,000 shares, 3.66%): A recent study shows that cable companies are getting more incremental revenue from their subscribers than their satellite competitors. Despite competitive pricing, I believe cable will continue to attract customers through video-on-demand and its more reliable high-speed data offerings.
E*Trade Group (ET:NYSE, $9.05, 20,000 shares, 5.81%): This company has mortgage exposure but I think CEO Mitch Caplan's strategy has E*Trade on the right track. I'd add more shares at or below $9.
Limited Brands (LTD:NYSE, $16.25, 3,500 shares, 1.83%): Bought a total of 1,500 shares this week. The retailer reported a solid July quarter on Thursday, but noted that August sales got off to a slow start. The weakness remains contained to the company's smaller apparel chains, and I believe that Limited remains well-positioned, especially at Victoria's Secret (easily its largest division), for the fall season. It also declared its next 10-cent quarterly dividend, payable Sept. 16 to investors at the close of trading on Sept. 2. Limited has $4 a share of cash on the balance sheet, and otherwise can cover its 2.4% yield 2.6 times over with estimated fiscal 2004 earnings.
Newell Rubbermaid (NWL:NYSE, $23.50, 14,000 shares, 10.56%): Bought 1,000 shares on Friday. I did a lot of retail homework while I was away this week, and now firmly believe that management can turn this business around. My stake now has ballooned up to 10% of my total portfolio, which goes against my diversification edict. That said, Newell very well could turn out to be a winner on the magnitude of Honeywell (HON:NYSE), and I can't afford not to make this a sizable position.
Schering-Plough (SGP:NYSE, $14.96, 8,000 shares, 3.84%): Shouldn't be stunned by the dividend cut, because we've seen it coming for months now. Fred Hassan is starting to work his magic. This selloff is exactly what we've been waiting for, and now's the time to take action. I'm going to buy at least 2,000 shares on Monday, when I'm allowed to buy the stock again. This leaves me room to buy another 2,500 shares down the road, should we see another favorable opportunity.
Wells Fargo (WFC:NYSE, $49.13, 3,500 shares, 5.52%): It's been a tough week for the banks, with investors unable to satiate their desire for high-beta stocks. If Wells were to drop below $49, I'd buy 500 shares.
TWOS
AOL Time Warner (AOL:NYSE, $16.02, 10,000 shares, 5.14%): The company won permission from the Federal Communications Commission to allow video transmission over its instant messenger service, which in my mind is the most valuable asset of the company's AOL division. I think the stock looks attractive on a pullback, because it likely will be trading above the teens by the end of the year.
Charter Communications (CHTR:NYSE, $3.98, 15,000 shares, 1.92%): Once again, you readers were able to benefit from taking action when I couldn't, because of my restrictions. The stock ran 10% after S&P upped its credit rating. I don't want to buy Charter here for the sake of buying. I'll add to my stake on a pullback to the $3.75, where you readers were able to buy last week.
Dick's Sporting Goods (DKS:NYSE, $35.69, 1,500 shares, 1.72%): Sold another 500 shares ahead of Thursday's earnings report, which proved to be a smart move. Dick's already had priced in a lot of good news, so it was "disappointing" when the company only met prior expectations. Despite the poor weather this summer, Dick's is expanding margins and seems to be gaining market share from its peers. With that in mind, I shifted gears and started rebuilding my position with 500 shares at $35.
FleetBoston Financial (FBF:NYSE, $29.93, 4,000 shares, 3.84%): Declared next quarterly dividend of 35 cents, payable Oct. 1 to investors at the close of trading on Thursday. I would add to my stake at or below $29 ahead of this date.
Honeywell International (HON:NYSE, $29.12, 6,500 shares, 6.08%): Sold 1,000 shares on Wednesday for a 25% profit. Honeywell remains my favorite stock, but it never pays to be piggish, especially with a large position.
Intel (INTC:Nasdaq, $27.39, 1,500 shares, 1.32%): Preannounced on Friday that the current quarter is tracking well above current expectations. While it was too cautious to say the recent pace of sales is sustainable, Intel is the clear winner of the current PC price wars. I'm taking the stock out of the Ones this week given the recent gains, but definitely think that Intel still can move higher from current levels.
JDS Uniphase (JDSU:Nasdaq, $3.39, 25,000 shares, 2.72%): The front-office shuffle announced on Thursday is clearly a positive event, and could drive the stock over $4 in the coming weeks. New CEO Kevin Kennedy comes from Openwave Systems (OPWV:Nasdaq) and Cisco Systems (CSCO:Nasdaq), and is one of the most respected executives in the industry. It was another solid week for this stock. I already own so many shares down at $3 that I'd need to see the stock pull back before committing new capital.
J.P. Morgan (JPM:NYSE, $33.92, 3,000 shares, 3.27%): The company clearly isn't suffering from bond trading losses, which had been widely rumored. Even with the best days in the mortgage business likely in the rear-view mirror, J.P. Morgan continues to look attractive at 11 times full-year earnings.
Nextel Communications (NXTL:NYSE, $17.72, 4,000 shares, 2.28%): The company redeemed some 10.65% debt this week as it continues to use free cash flow to work down its borrowing. We never did see the pullback that I was hoping to see with Verizon's (VZ:NYSE) walkie-talkie service. Too bad, because I really did want to buy more Nextel while it's still in the high teens.
Pfizer (PFE:NYSE, $29.55, 1,000 shares, 0.95%): I'm ready to circle the wagons around this position and start buying again on weakness. Top products Lipitor and Viagra face new competition, but I believe the stock looks oversold. Smith Barney Citigroup downgraded the stock on Thursday, but I think Pfizer's patents ultimately will stand up against generic competition.
Raytheon (RTN:NYSE, $31.27, 9,000 shares, 9.03%): Landed an $881 million missile contract from the Navy. Looks good on a pullback below $30.
UnitedHealth Group (UNH:NYSE, $48.91, 3,500 shares, 5.49%): Coming back to an attractive level. I would consider buying some more stock on the next pullback.
ValueClick (VCLK:Nasdaq, $8.08, 11,000 shares, 2.85%): Our patience continues to pay off. I'd look to add another 1,500 shares on a 10% drop.
Watson Pharmaceutical (WPI:NYSE, $39.35, 3,000 shares, 3.79%): Submitted an amended filing to the Food and Drug Administration for the antidepressant patch, Emsam. The joint venture with Somerset Pharma originally was submitted in 2001, but didn't have convincing clinical data. Of course, it's the generic business we're most interested in here. I'd like to buy more Watson at or below $37.
THREES
Anadarko Petroleum (APC:NYSE, $43.08, 1,500 shares, 2.07%): Sold a total of 2,000 shares this week. The fundamentals in the natural gas market aren't panning out as well as we had hoped, and I won't maintain a large position in any stock just because it's a takeover candidate.
Conexant Systems (CNXT:Nasdaq, $5.39, 15,000 shares, 2.6%): Another solid week as the chip rally continued to gain momentum. I think it's prudent to book some more profits if Conexant continues to run to $6.
Zoran (ZRAN:Nasdaq, $25.16, 3,000 shares, 2.42%): What a difference a week makes. I don't think we're going to get the chance to buy more Zoran at $21 anytime soon! In fact, it might be prudent for you readers to lock in some quick profits as we head into the next rally, especially if you followed my alerts to buy some shares in the post-earnings decline.
Regards,
James J. Cramer
DISCLOSURE: At the time of publication, Cramer was long Anadarko Petroleum, AOL Time Warner, Cendant, Charter Communications, Comcast, Conexant, Dick's Sporting Goods, E*Trade, FleetBoston, Honeywell, Intel, JDS Uniphase, J.P. Morgan, Limited, Newell Rubbermaid, Nextel, Pfizer, Raytheon, Schering-Plough, UnitedHealth Group, ValueClick, Watson Pharmaceuticals, Wells Fargo and Zoran.
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