Cramer Chooses Among Dogs of Dow For Appreciation & Preservation (DOW, VZ, T, MO, BMY)

On tonight’s MAD MONEY on CNBC, Jim Cramer wanted to look for stocks with both appreciation potential that also offer capital preservation.  He, just like us, believes we are starting to price in a Fed-led recession.  Here is looking for names with catalysts that make the stocks interesting and worth a look, plus he wants them to out-yield treasuries notes (noted the 10-year treasury at 3.87%).  His 4 stocks are as follows:

• Dow Chemical (NYSE: DOW) for its 4.4% yield, a recent 16% sell-off, and an underperformance since it announced this big joint venture in the middle east.
• Bristol-Myers Squibb Co. (NYSE: BMY) was his drug play in here as it is focusing on oncology and has changed its focus to more biopharma rather than acting like a traditional drug company.  It’s closing plants and contracting manufacturing and it raised its dividend to a new 4.7%.
• Verizon (NYSE: VZ) is Cramer’s pick in telecom as a better value than AT&T and it has a 4% yield.  With the defensive nature of its cellular and even its telecom infrastructure.  He likes the FiOS IPTV rolling out to 18 million homes in the coming two years for growth as well. Qwest’s yield looks superior today.
• Altria (NYSE: MO) is his favorite for preservation and growth in tobacco with a 4% dividend yield, and this is one of Cramer’s top value picks he’s sticking with.  With the spin-off of the international unit coming and with it priced cheaper than many other international tobacco names, he likes it.  He noted that the recently raised $89 target by Goldman Sachs is too low (although above analyst average of $83), and he thinks "it’s headed for PAR" (or $100).

Most of these were also listed as the DOGS OF THE DOW, and we gave our own synopsis on these with notes on each that show the relative dividend yields.  We also gave an average Wall Street price target and a "simple return" on price appreciation with each of these if the price jumped there suddenly.  We also gave our own updated list of roughly 10 stocks for the first part of 2008 that are the a673b.bigscoots-temp.com list of Defensive Stocks With An Eye For VALUE INVESTORS on these.  The goal is the same with yield and appreciation, but we also went for the value aspect of each name because we’ve noted how there is starting to be a valuation bubble in many of the traditional defensive stocks.

Jon C. Ogg
January 7, 2008