If you are familiar with CNBC, you are probably also familiar with Mad Money.
Mad Money has made Jim Cramer into one of the faces of the financial world, and one of the biggest names on Wall Street.
Love Cramer or hate Cramer – it is nearly impossible to ignore him.
Jim Cramer’s stock picking television career began in the 1990s as a co-host and guest on various financial programs.
Cramer began as a co-host of Kudlow & Cramer, which became Jim Cramer’s Real Money, and eventually, Mad Money.
But how does Cramer pick stocks with such accuracy?
Here are three of Jim Cramer’s stock picking metrics:
- Stocks that are up when the rest of the market is down
- Stocks with heavy short-selling activity
- Stocks that are covered by less than six institutional analysts
While you see Cramer running and yelling on your television set, have you every stopped to ask…
…how accurate is this guy?
Well, today we are going to put several Cramer stock picks to the test.
5 Jim Cramer Stock Picks
Pick Date:
- EPR Properties (NYSE: EPR)
Jim Cramer Analysis
This was one of Jim Cramer’s favorite income-producing stocks, calling the REIT “terrific.”
In an “Executive Decision” segment, Cramer sat down with president and CEO of EPR Properties, Greg Silvers. At the time, EPR Properties owned over $5.5 billion in total investments. The company specializes in recreational and lifestyle-enhancement properties.
Silvers explained that EPR is looking to be the leader in recreational experiences. In fact, around 10% of the company’s properties will be ski resorts. Shares hovered around $71 back in 2017.
But how are they doing today?
Stock Price (as of 3/10/2017): 70.80
Where they are today
The stock plunged to a low of $53.35 in April 2018.
However, if you continued to hold the stock, you would have seen your money back and more.
The nearly 400 properties owned by EPR can be grouped into three categories:
- Entertainment
- Recreation
- Education
EPR trades for a cheap valuation and invests in properties that have significant growth potential in the coming years.
Think about it – millennials are the largest demographic in the U.S. and are seeking experiences.
This bodes very well for a company that is focused on delivering experiences. Apart from that, the company pays a 6.1% dividend yield.
Bottom line: The Company has a cheap valuation, provides an excellent income stream, and has long-term potential for growth.
And if you had invested in 2017, you would have made a few bucks.
Stock Price (as of 4/19/2019): 77.00
The verdict: CORRECT!
- Kimco Realty (NYSE: KIM)
Jim Cramer Analysis
Kimco Realty is another one of Cramer’s favorite REITs.
Kimco is a self-administered REIT that owns and manages open-air shopping centers. At the time, the company owned 525 shopping center properties with 85.4 million square feet in gross leasable area in 34 states, Puerto Rico, and Canada.
Shares of the company were coming off of lows and were a bargain at around $22.
Stock Price (as of 3/10/2017): 21.64
Where they are today
Kimco went as low as $13.33 in April 2018.
By the end of 2018, Kimco owned just 437 properties. This change is in stark contrast to the 800+ properties owned in 2010.
The Company has been spending recent years creating a better portfolio and is still selling assets. Kimco also has several small projects that should keep the company moving in the right direction. Additionally, the company has been paying out a 6%+ dividend yield.
So, what can you do? Sit back, collect your dividend, and watch Kimco continue to re-invent itself.
Still, we will call Jim Cramer wrong, for the time being, because anything could happen.
Stock Price (as of 4/19/2019): 17.53
The verdict: WRONG!
- Flextronics (Nasdaq: FLEX)
Jim Cramer Analysis
Cramer has called Flextronics “the king of contract manufacturing” in the past and advised followers to “not give up” on the stock.
Flextronics is a Singapore-based, multi-market design, manufacturing, and supply chain company. The company operates in the medical, automotive, aerospace, defense, mobile devices, semiconductor, capital equipment, and industrial automation divisions.
Cramer has backed the stock for many years – but has it ever performed?
Stock Price (as of 3/10/2017): 16.66
Where they are today
Flextronics has found limited manufacturing capacity in India. The company invests heavily in Indian facilities in order to capture to capture demand for products made in India to be sold in India.
Flex has been having difficulty getting additional capacity off the ground to meet the rising demand in India. Thus, there is plenty of business being left on the table in India.
Flex plans to get the situation under control by mid-2019 (we’re almost there!). But, for now, investors are taking a step back given this concern.
We will call Cramer wrong on this one!
Stock Price (as of 4/19/2019): 11.21
The verdict: WRONG!
- United Healthcare (NYSE: UNH)
Jim Cramer Analysis
United Healthcare performed well in 2016, up 35 percent.
During that time, Cigna and Anthem, and Humana and Aetna were trying to merge. However, UnitedHealtcare stood out to Cramer as the single company to challenge the Affordable Care Act by speaking publicly about healthcare exchanges.
Cramer expects Trump to rely on UnitedHealth to help re-invent healthcare.
“UnitedHealth is the most likely to become a two-year dynasty.”
Stock Price (as of 7/7/2017): 187.96
Where they are today
United Healthcare 2019 first-quarter earnings beat Wall Street forecasts and increased outlook on expectations that the company will expand benefits while keeping costs down.
However, the stock still fell over investors’ growing anxiety about the healthcare regulatory landscape. Investors are concerned whether there will be “Medicate-for-All” come to reality.
These events still remain to be seen, but if you had taken Cramer up on his recommendation, you would be rollin’ in the dough.
Stock Price (as of 4/19/2019): 221.75
The verdict: CORRECT!
- Caterpillar (NYSE: CAT)
Jim Cramer Analysis
This pick is a little different as Cramer chose this stock to go down.
Cramer said:
“If you buy CAT here, you have to believe that numbers come up, not down, and as much as I have championed the stock, I think it has given you all it has to give, at least for now, unless Trump issues $500 billion in 50-year Make America Great Again bonds where the money is earmarked to purchase only U.S. made products.”
Caterpillar was up 36 percent in 2016.
This recommendation came in the form of a “Sell,” which means we will look for the share price to have gone down. So, how is the stock doing today?
Stock Price (as of 7/7/2017): 106.92
Where they are today
Caterpillar’s massive free cash flow kept the stock moving in the right direction for a while. From there, the strength in construction and oil and gas kept the stock looking good.
Recently, CAT saw dropping sales, but the company’s earnings report managed to beat estimate for the most recent quarter.
However, headwinds in the construction and oil and gas industries has been the story as of late. Some investors are predicting declining sales beginning in 2020 which will shrink profit margins and slow revenue growth.
If you had kept the stock from mid-2017 to this point, you would be pretty happy.
However, CAT stock could be facing more challenges ahead. We will call Cramer wrong…for now.
Stock Price (as of 4/19/2019): 143.36
The verdict: WRONG!
Summary
We can’t make totally accurate predications all of the time – not even the gurus!
Despite Cramer’s experience and extension knowledge, his picks are not always winners. In fact, the guy has had more than a few high-profile losing picks.
But the man doesn’t have crystal ball!
However, I find Jim Cramer’s opinion a valuable source of information and a way to supplement my own investment research.
And you should never blindly invest based on one persons’ advice.
Correct: 2
Wrong: 3
Here are the final results (on a per share basis) on the Jim Cramer stock picks that we sampled:
EPR Properties: CORRECT!
Kimco Realty: WRONG!
Flextronics: WRONG!
United Healthcare: CORRECT!
Caterpillar: WRONG!
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