4 Stocks Favored By Cramer For Solid Growth In 2013
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Despite catastrophic moments, most of the markets have shown sizeable gains in 2012. The NASDAQ has posted returns of 15% in the last year, while the S&P 500 was up by 13%. Moreover, 2013 had a fruitful start. The upwards trend is expected to continue for some more time.
It is essential to bet on the right stocks to take advantage of the optimistic environment. If you choose the right ones, you can harvest well from this year. Investors have a tendency to follow professionals and imitate their picks when choosing stocks to invest. As far as I see, Jim Cramer from CNBC is remarkably good at stock picking. I watch his Lightning Round and Mad Money shows very often, and appreciate his efforts to help "homegamers" make the most out of investing. I like following his suggestions and analyzing them in my point of view. He recently listed ten favorite stock picks he expects to outperform in 2013. In my article, I have picked the first four of his stock choices and added my own analysis on profitability and safety of these names. Here are the four stocks handpicked by Jim Cramer for solid growth in 2013.
"These guys -Amazon (NASDAQ: AMZN)- are taking share and taking names, plus, the company keeps expanding its hardware ecosystem with new versions of the Kindle," Cramer said, "also, they're trying to own the digital content business the same way they own traditional online shopping, and it's working."
Amazon has been doing okay since mid-November 2012. The company did the right thing going after video content and making movies and tv shows available to Amazon Prime members, which brought a fruitful challenge with Netflix upon the company. Amazon is up by 20.5% since November 15.
The company is still performing well despite disappointing Q4 results. Analysts estimate a 17.2% upside potential in the mid-term. Revenue and assets leapfrog year by year. Debt-to assets ratio shows an ignorable debt amount. Out of twelve analysts, six gave a Buy call while the other six recommends holding AMZN shares. The stock has a Beta value of 0.88, second only to Liquidity Services in its industry.
Amazon was a high-flyer once. There was a time when it was trading 100% above its fair value. The stock seems to be in a better mood as it is trading with a Relative Strength Index of 50.92%. Amazon has successfully managed to understand customers and adjusted to their demands. The e-book industry is growing larger day by day, which results in lower interest on physical books. Amazon is the key figure in the e-book industry now. With the e-book reader Kindle, Amazon has got a larger portion of the e-book reading customers.
"Our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just 5%. We're excited and very grateful to our customers for their response to Kindle and our ever expanding ecosystem and selection," said Jeff Bezos, founder and CEO of the company.
Amazon investors have made considerable profits on their investment thanks to enormous growth in the stock. Although the stock relatively cooled off, it is still trading at unexplainable multiples. I can recommend it for short-term gains, but you have to wait for more reasonable levels if you prefer a long-term investment.
As you know, the tech giant Google (NASDAQ: GOOG) stock hit a new all-time high, $776 per share, on rumors that the company might be close to dissolve the anti-trust investigations. Since the beginning of the year, shareholders enjoyed a 8.5% return.
Despite rapid leapfrogs, Google still isn't too hot to invest. Relative Strength Index (RSI) still offers some space for growth (RSI at 64.84% currently), and analysts agree on an average of 7.7% increase in mid-term. Revenue and assets are very optimistic, as well as cash flow. There are hardly any red flags in Google's key stats. With a Beta value of 1.01, Google is the sixth least volatile stock in its industry.
As you can see, the balance sheet is quite strong. The company has just won a court case in Australia, fending off the claims that Google Ads were misleading. This decision of the Australia's High Court will definitely lead to acceleration in Google's upside movement for some time. Google is the dominant Internet search provider for a long time, and it has enlarged its arsenal to have permanent users that use Google beyond search, like Google+ and Gmail. What's more, -like Cramer says- it "owns Android, the largest mobile operating system in the world". I would not ignore this stock as it is likely to outperform this year.
"These two stocks are both plays on the worldwide switch from paper currency to plastic, as they make their money from transaction volumes. Visa and Mastercard both reported strong quarters in October, and they have very healthy balance sheets."
Both of the stocks are going straight up for years. These are no traditional banks, yet still offer financial exposure to shareholders. Both of them are renowned world-wide payment solutions and report sizeable growths most of the time. There's really not much to compare one another, both of them are just "excellent" picks to bet on.
Here is a small tip for you: Rush on them before "gift" days like Christmas and Valentine's Day- yes, the one which is only a week away, so this is your one lucky moment. Credit card usage simply blows up to record numbers around these days, which leads to sharp rises, and eventually, larger volume values. Both of them hold very little debt, while their cash flows climb up year by year. If you buy some shares within this week, you will definitely be rewarded with nifty gains. The choice is yours to make. If you want consistent gains, choose Visa. If you wish to take more risks and go for a rougher challenge, choose MasterCard.
BargainReporter has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Google, and Visa. The Motley Fool owns shares of Amazon.com, Google, and MasterCard. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!