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Cramer on BloggingStocks: Cramer bullish on the Dow for '09 -- Part V

Posted Jan 9th 2009 9:50AM by Jim CramerJim Cramer RSS Feed
Filed under: General Electric (GE), Pfizer (PFE), Wal-Mart (WMT), Exxon Mobil (XOM), AT and T (T), Target Corp. (TGT), Johnson and Johnson (JNJ), Comcast Cl'A' (CMCSA), Procter and Gamble (PG), Lowe's Cos (LOW), Verizon Communications (VZ), Merck and Co (MRK), United Technologies (UTX), DJIA, Stocks to Buy, Cramer on BloggingStocks

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TheStreet.com's Jim Cramer sees a stalled industrial and a winning retail play in this final portion of his 2009 predictions.

This is the fifth and final part of Jim Cramer's series of predictions for the Dow components in 2009. Be sure to read the first, second, third and fourth installments.

Pfizer (NYSE: PFE) (Cramer's Take): The high dividend, which was not augmented this year but seems very safe, might allow this stock to trade up nicely as investors search large-cap companies for good yields. The huge generic exposure in the out years without a plan to offset them worries me, though, and should put a $20 lid on the stock.

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Johnson & Johnson (NYSE: JNJ) (Cramer's Take) is a much, much better bet because of its higher growth even though it has a lower dividend. Pfizer, like Merck (NYSE: MRK) (Cramer's Take), could use a merger or an acquisition to spur growth. Some people might want to own it to $20, because when you include the dividend to the performance, you make some good money!
Cramer's Dow Outlook for 2009
Company
Target
2008 Close
% Change
Dow Point Change
PFE
$20.00
$17.71
11.45%
18.2
PG
$72.00
$61.82
14.14%
81.1
VZ
$37.00
$33.90
8.38%
24.7
WMT
$63.00
$56.06
11.02%
55.2
UTX
$58.00
$53.60
7.59%
35.0
XOM
$85.00
$79.83
6.08%
41.2
Source: TheStreet.com
Procter & Gamble (NYSE: PG) (Cramer's Take): One of my absolute favorites -- raw costs and weak dollar plus fabulous marketing muscle should make this one of the best performers in the Dow.

I could see it trading up 10% to the high $60s as management takes advantage of weak competitors and exploits growth in Asia, where I expect a turn. Good managements shine in a downturn, and P&G's got the best management in the Dow, which benefits, by the way, from a true lack of industrials and a greater focus on soft goods and drugs, like P&G's product portfolio. What holds this stock back is an endless description of it being very expensive, but you pay up for the best dividend-paying stock on the Big Board.

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Verizon (NYSE: VZ) (Cramer's Take): As with AT&T (NYSE: T) (Cramer's Take), I see this company truly blowing out the numbers now that it will be integrating Alltel and taking share from Comcast (NASDAQ: CMCSA) (Cramer's Take) with FiOS. The 5% yield is a terrific floor, but it's the earnings growth that could give you about a 10% gain in the company (measure this one from the close of 2008).

I love the management of this company, and I believe the dividend, like the dividend of AT&T, will go up again in 2009. This is one of the strongest stocks in the Dow. Ivan Seidenberg, Verizon's CEO, has the fire. I want to own this one on any pullback to below $30, although it will take a tsunami of selling to get back to that level.

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United Technologies (NYSE: UTX) (Cramer's Take): With a skimpy dividend and a portfolio of companies with an all-too-great exposure to commercial construction, defense and aerospace, UTX will have trouble rallying this year. It could make it as high as $58, but it'll be a bumpy and slow road.

If we get something good happening in China then you might get a save, but that could be a stretch. UTX is simply a stalled industrial waiting for the turn. This is one of those companies that simply doesn't have enough going for it, as no one will trust what looks to be low multiples in an environment where earnings don't hold up. If the worldwide economy turns up, GE (NYSE: GE) (Cramer's Take) will be the better pick anyway.

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Wal-Mart (NYSE: WMT) (Cramer's Take): This is Wal-Mart's time, but this year it will be without its fantastic CEO, Lee Scott, which will cause some limitation to the upside -- that's how good he is. A strapped consumer will shop at Wal-Mart, though, and earnings will be made if not exceeded.

I was perturbed by the decline in same-store sales and stock price yesterday, and I am tempted to shave my target down, but I believe it was an aberrant data point. I would buy it aggressively here, as I would like to do for Action Alert PLUS.

I see WMT taking out its high from 2008 and trading to $63 a share as it demolishes the competition. This was the best-performing stock in the Dow in 2008, and I believe that it will repeat a terrific performance with periodic bouts of selling as people rotate into more aggressive stocks. Others will gravitate to a Lowe's (NYSE: LOW) (Cramer's Take) or a Target (NYSE: TGT) (Cramer's Take) for the turn. I believe that you go with the company that takes all the share it wants, and that's a rejuvenated Wal-Mart. I like to shop there, too.

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ExxonMobil (NYSE: XOM) (Cramer's Take): This one acted terribly as oil peaked and acted terrifically while oil plummeted. I see oil trading up a tad for 2009, but frankly, I'm predicting that because the stock has been a terrific forecaster of the commodity. That means Exxon will likely be flat to down in 2009.

The company will cut back from its spending, but I don't see it increasing its dividend and spending the increased money buying back stock, which hasn't helped much at all. I see it trading back to $70 for a small loss for the year. Just not what you wanted, but then, you got a really good run in 2008 off the bottom.

So there you have it, a group of stocks that for the most part is less economically sensitive than it once was, with two of its major "true" industrials capable of being yanked and a predilection of the Dow keepers not to pick industrials to replace industrials in the Dow Jones Industrials! No wonder it outperformed all of the indices in 2008.

I don't know of that outperformance can be maintained, but when I look at the makeup of this index vs. the S&P 500, it sure has a shot in this credit-starved slowdown.

Posts in the series:
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long GE, Johnson & Johnson, Procter & Gamble and Wal-Mart.

Tags: cmcsa, djia, featured, ge, jim cramer, JimCramer, jnj, low, mrk, pfe, pg, t, tgt, utx, vz, wmt, xom

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S&P 500-0.591,105.65

Last updated: November 25, 2009: 06:20 AM

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