Jim Cramer’s Best Stocks for 2016 · 2015-12-14 · Jim Cramer’s Best Stocks for 2016 So 2015...

Jim Cramer’s Best Stocks for 2016

So 2015 was a do-nothing year.

A year where we lived in fear of the Federal Reserve. A year marred by the collapse of Chinese growth. Still another year where Washington provided a pall of gloom despite the best job growth since before the Great Recession. Another year where just a handful of stocks and a series of takeovers provided whatever oomph the market demonstrated.

Well, I’ve got some good news. In years where we flat-lined, we’ve followed up with dramatic outperformance worth noting: 23% in 1961, 10.82% in 1971, 12.13% in 1979, 26% in 1985, 12.4% in 1988 and 13.49% in 2012, giving us an average 18% return after ones like 2015.

That’s a far better record than what we’ve seen in an election year, which is a decidedly mixed return. I come in optimistic for stocks, but only for a few of them, and hopefully you will pick your favorites to add to your portfolio.

ECO-PSYCHOLOGICAL SCARCITY

What’s ailing this stock market? Why can’t I be more bullish for the entire market or at least the S&P 500?

I think we are stuck in an era where we recognize we have too many stocks, too many public companies, too many companies that don’t warrant our attention or our investment. Too, dare I say, irrelevant companies

Jim Cramer is one of America’s most recognized and respected investment professionals and media personalities.

He is the Portfolio Manager for the Action Alerts PLUS Charitable Trust.

In 1996, Jim founded TheStreet, one of the most visited financial media websites for individual and institutional investors. Jim also writes daily market commentary for TheStreet’s Real Money premium service and participates in video segments on TheStreet TV. He also serves as the host of the “Mad Money” television program and co-host of “Squawk on the Street”, both on CNBC.

Jim graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. He went on to earn a law degree from Harvard Law School in 1984. From there, Jim joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While still managing his fund, Jim helped start Smart Money for Dow Jones.

Originally presented at The Deal Economy Conference – 12/3/15


in all sorts of industries, and some industries and sectors themselves that have become irrelevant.

I want you to keep that concept in mind, something I am christening the Eco-Psychological Scarcity Factor, where we don’t have enough investible stocks and that phenomenon, I believe, is going to drive investing returns regardless of what the Fed does or who wins the Presidency.

No, I am not punting on these big issues. I think this is what we called—in political science back in the day—a critical election year, where Hillary Clinton wins so big that the Republican Party will have to change the way they arrive at their future presidential candidates the way the Democrats had to after the George McGovern era.

The Republicans are just too darned conservative socially for our country—even if you agree with them on these issues. As far as the Fed—call me no fan these days.

After a “Ben Bernanke Fed”, which, despite the quiet demeanor of the man, amounted to an iron-fisted Fed with no cacophony of voices to sow confusion. These days the “Yellen Fed” stymies all but the most individual-stock focused of investors, with an on-again, off-again blowing in the wind multi-voiced ensemble of confounding Fedspeak.

That said, I think that a combination of a stronger Europe, and a slowly evolving consumer-oriented economy in China, with 400 million people still to join the middle class, and many more on the way now that the single child policy is history, will give the Fed ample cover to start raising rates.

Business remains robust for many industries, even as others like the fossil fuels, dwindle away, something that would be hastened by a Clinton victory.

HOW HIGH WILL THE FED TAKE RATES?

The Fed is data dependent, so given that there might not be too much of an acceleration in economic growth after their first hike—and there might be some weakness in current areas of strength—I suspect we are in for a truly gradual series of increases.


I would be surprised if we were higher than 125 basis points at end of 2016, not something that should crush us even as I think stocks would be much higher if we were just one and done.

That should leave the robust industries of the country, housing and autos, still strong, although I think the latter peaked in 2015. Strong auto sales have been a function of the job market, but it’s hard to see either getting hotter than they currently are. That’s because the rising cost of everything from health insurance to minimum wages to the need to meet needed but onerous regulations will put a lid on 2016 at a 2-3% growth pace.

I say that as both an Inn and a Tavern owner, small businesses which have given me more insight into the way government is run than any ten company CEOs I interview for Mad Money or Squawk on the Street.

[Of course, I invite all of you to my small plate restaurant, Bar San Miguel in Carroll Gardens, Brooklyn, where we sell Modelo and Corona and specialty margaritas because if we just made food and served liquor as an afterthought we would have closed long ago. Instead it’s two years old and going strong, particularly when I host!]

Despite the uneven performance of election years and the fact that we will be fighting the Fed in 2016, the list of stocks I am about to present to you factors in these negatives.

THE ANOINTED ONES OF 2016

Yep, the Eco-Psychological Scarcity value of certain stocks, of certain companies, allows them to transcend the headwinds I see for 2016. They are the anointed ones. You need to know them.

Why is there such a scarcity?

Let’s start with the obvious: technology.

The last few years have seen an explosion of stock offerings in technology, with lots more to come if the 120 unicorns—the non-public companies valued at a billion dollars or more—that are waiting in the wings manage to get to the IPO altar.

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Yet, here’s what you need to know about those unicorns. We don’t want them. We don’t want them coming to market. With the exception of perhaps AirBnB and Uber, we want nothing to do with them.

I say that for several reasons.

First, the bitterness of the failed deals sticks with me and not just because I stare straight at the podium from Post Nine when we get an opening IPO bell rung at the New York Stock Exchange. There are so many poorly performing companies with stocks that have cost people fortunes that I dread the queue of companies hoping to come public.

Take Square (SQ). There’s a deal that came at about half of what the private market valued it not long ago, and only a last minute deep dive in the pricing saved the stock from disaster.

I can’t think of any area of tech as commoditized as anything having to do with the register, and Square’s payment system has so little that is proprietary that I find it astonishing that it was able to come public at all.

The losses, the slowing customer adoption, the easily imitated product, it’s all meant to lose you money. And I think that it’s pretty much par for the course of what awaits us with the much ballyhooed unicorns. There’s a reason why that species was mythological.

So what wins in this world of scarcity?

I’ll spell them out for you and they aren’t just FANG, the acronym I created for the real winners of the era—Facebook (FB), Amazon (AMZN), Netflix (NFLX), and Google (GOOGL), now Alphabet. Fortunately, they aren’t alone for tech representatives in this, the largest cohort in the S&P 500. I’ve got four others: Expedia (EXPE), Linked (LNKD), Palo Alto Networks (PANW), and Salesforce.com (CRM).


TECH WINNERS AND LOSERS

So let’s give you some background about what distinguishes these winners from the losers.

Facebook (FB)

First, is that they’ve won already. Facebook never really had any competition. It was always going to be the best example of an amazing business model, something you look at constantly, all day, not just when you come home from work the way television used to be.

The content? Created by you. We used to joke that 50% of advertising works and that would be terrific if we only knew which 50% did. Guess what. Facebook’s cracked that code, which is why when I speak with CEOs about their advertising budgets—and I probably speak to more CEOs than just about anyone in the country—I always hear about the dollars coming from print and television going to Facebook and its colleague Alphabet. Mind you, not many others, at least for now.

Facebook had a chance of being defeated by one rival, Instagram, but three years ago it paid $1 billion for it. Now there’s a unicorn that got stolen, although if you go back to the press at that moment, it was a widely panned acquisition.

Facebook’s biggest problem is an inability to handle all of the incoming orders. That’s always the highest quality of issues.

I think that the company’s only going to get stronger as it stretches its reach from 1.5 billion users—of which one billion pretty much check in constantly—with Oculus, the 3D gamewear, and the Whatsapp acquisition. There are 7 billion people in this world and I think Mark Zuckerberg won’t be happy until at least half of these people regard Facebook


as their alter ego.

Amazingly, the $19 billion Facebook paid for Whatsapp was widely regarded as a massive overpay, but in this world of fanciful valuations by a handful of venture capitalists, I am sure it would been valued at twice that and could have become a competitor to Facebook, like Instagram, if it hadn’t been taken out. Brilliant again, Mr. Zuckerberg.

Amazon (AMZN)

How about Amazon?

Until 2015, we always thought that Amazon was an enterprise that existed in the figment of ubergrowth managers’ imaginations. I would often speak to some of the highest quality retail executives in this country and they were always grousing that Amazon played with funny money and wasn’t bound by the four walls of same store sales as they were.

They were right, but it turned out that funny money built a network with an unassailable moat. In 2015, we discovered that the moat could produce a profit that others could only dream of.

Jeff Bezos is the most rapacious capitalist of our time. He figured out a way to get a product to you for much less than everyone else, making you a joyous club member for much less than it should cost, especially because those merchants who use his web services company end up competing against themselves.

Have you seen that yourself?

I wanted to come dressed as one of three amigos for a Halloween party recently and I had two options. I could order my outfit from the Mexican Connection, some totally unknown outfit, with no time frame for arrival for $180. Or I could order the same outfit, made by the


same place yet sold on Amazon, available in three days for Prime members for 30% less than the Connection. How can you compete with that?

That’s Amazon.

That’s the power of Amazon and if it wanted to it could show any amount of profit it wanted to. It’s the ultimate gross margin killer—of everyone else’s margins.

Speaking of bargains, do you really think you wouldn’t play twice what you pay for Netflix?

Netflix (NFLX)

Right now the single most relevant television programming is the unDVR-able ESPN, and it has lost an astounding 7 million viewers in the last two years and the cord cutting is snowballing.

Netflix is in the opposite trajectory.

Here’s a harder one to value than either Facebook, which believe it or not sells only a little more than a market multiple on 2017 earnings, and Amazon, which can sell at whatever price to earnings ratio it chooses.

I tend to look at it as a market capitalization story. How can this company, which is rolling out worldwide use (including China next year) only be valued at about $50 billion? I think that’s nuts. $100 billion is more like it. That’s because not only is it widely popular and a bargain, but it also one of the greatest hit makers of all time.

When I recently spoke to CEO Reed Hastings, he made an astounding point to me that Netflix has never produced a show that there wasn’t demand for at least a sequel.

Compare that to the sorry record of the so-much-better-capitalized networks. Pathetic. No sooner do I cotton up to “Narcos” then I find myself starting “Jessica Jones”, another


monster hit for these guys. It’s very hard to say it is overvalued with that hit machine and those worldwide sign-ups.

People keep thinking a challenger has to develop here. They don’t know the real beauty of Netflix: it’s easy onboarding. So simple to use with the best customer service I have ever experienced and I have called them at all hours to test that thesis.

Google – now Alphabet (GOOGL)

How about Alphabet?

Who would have thought that a CFO, not a CEO, but a CFO, could make such a difference here?

This company likes to spend but not all of the spending pays off. It must spend, though, to defend and grow, something that’s not reflected in its price-to-earnings multiple, which is no more than a market multiple on 2017 earnings.

So the toughest CFO I have ever had to deal with, Ruth Porat at Morgan Stanley, returns to San Francisco and brilliantly splits Google into two, the spend chary and the profligate, and you get both under one roof.

Again, Google or Alphabet, or whatever, is a winner because everyone else has lost.

Many companies have tried to compete in search but they’ve failed. You know that because every few years some government takes a shot at trying to call Google search a monopoly but, what the heck, of course it is; however, there’s no solution for that dominance.

What do I like best about Google? That its YouTube division hasn’t begun to monetize its assets. This division is so arrogant, so not worth working with, that people have shied away from giving them obvious sources of revenue streams.


But a little noticed change in management recently will make 2016 the year of profitability culminating with what I hope will be the NFL international rights contract, the last big sports contract out there.

The current YouTube crowd has no feel for sports programming whatsoever. That’s over in 2016, too. That’s where the big money is.

Now how about these other techs?

Expedia (EXPE)

Expedia has made acquisition after acquisition to make traveling seamless. When we took over The Debary Inn in Summit, NJ, we used to need a night person to book people in and answer the phone. Now we outsource it to Expedia like everyone else with a half a brain does.

Sure, they take their cut. But what a gross margin expander. The acquisitions they have made have put them in an unassailable position as the world’s travel backbone.

Here’s another:

LinkedIn (LNKD)

I keep thinking that LinkedIn has to run out of gas, but it seems to get stronger by the quarter and its subscription revenue stream makes it the most predictable of the newer internet companies.

http://www.thedebaryinn.com/

http://www.thedebaryinn.com/


Palo Alto Networks (PANW)

Cybersecurity is a dominant theme and isn’t going to get any better, but there’s only one company that’s best of breed with a soup-to-nuts defense offering, and that’s Palo Alto Networks, which just reported a truly blowout quarter, the only one to do so in the entire group.

This is the company that boards trust to create a system–not bolt one on. The bolt-ons, as well as the post-hack forensics, have seen their day.

Salesforce.com (CRM)

Finally, there’s Salesforce.com, a company that, like Amazon, believed that what mattered first is revenue growth.

Here’s another once heavily shorted company that has now gotten the respect—and the business—of countless multi-billion dollar enterprises who are trying to figure out what their customers want before others figure it out and take those customers away from them.

CEO Marc Benioff has added a billion in revenues a year for the last eight years, making his company the fastest growing large software company on earth.


WHERE ELSE IS THERE ECO-PSYCHOLOGICAL SCARCITY?

How about in health care?

With the coming dissolution of Obamacare by the simple recognition that it is uneconomic to all involved, including those who had a hand in its creation through intense lobbying, there’s not much that’s investible in this huge cohort.

After the vast destruction of literally hundreds of biotechs in the last five years, there are only five that standout as having more than one legitimate revenue stream: Amgen (AMGEN), Biogen (BIIB), Celgene (CELG), Gilead (GILD), and Regeneron (REGN).

Ever since the press exposed the broad profiteering in this industry—something that wasn’t all that hard to do given that a suspect hedge fund manager turned pharmaceutical exec came on TV and boasted about putting through gigantic price increases for medicines with little to no competition—the jig has been up for the serial price increasers.

That’s wiped out the prospects of so many drug companies that are often in the news, such as Valeant (VRX), but it’s even dented the earnings possibilities of Gilead, with its Hep C cure, and Biogen with its MS franchise.

Even Regeneron’s got some competition for its next generation anti-cholesterol drug and Celgene’s Revlimid could be peaking before new drugs from its recently acquired Receptos kick in.

I still like all five stocks but they aren’t going to repeat their amazing performances that we had gotten used to and spoiled by.

I have little good to say about old pharma. I think that the combination of Pfizer (PFE) and Allergan (AGN) will enable the new company to put on some points and I feel even more strongly about that judgment after speaking with Allergan CEO Brent Saunders on Mad Money.


I like the anti-Alzheimer’s formulation for Eli Lilly (LLY), as well as its diabetes formulations, and I think Bristol-Myers (BMY) has a tremendous anti-cancer franchise.

But I can’t be wildly bullish on any visible pharmaceutical company given that every price increase will be scrutinized and harangued about by Hillary Clinton, who I think will wage war on the health care establishment in 2016 before failing, like everyone else, including herself in 1992 when it comes to actually fixing it.

CONSUMER BRANDED KINGS

You know where I am astounded at the lack of companies with stocks that could go higher? Companies in what I am calling the Consumer Branded Kings category, those who have franchises that aren’t going to be challenged by a strengthening Amazon or flailing Walmart or by companies from their own niche of business.

First among equals are two technology companies, one that sells shoes and the other that sells coffee. I am talking about Nike (NKE) and Starbucks (SBUX).

Nike (NKE)

Nike’s a designer of personalized footwear for about a billion people around the world.

Starbucks (SBUX)

Starbucks has developed a technology system that allows you to have mobile order pay so that its


retail stores can handle all of its customers all the way around the world.

It wasn’t that long ago that people were talking about Howard Schultz’s company peaking in the U.S. Incredibly, through technology that allows him to handle all of the lines, and through invention like the Disneyworld of coffee, the Roastery, he’s still accelerating his American rollout. He’s way short of stores in this country now that he can push through so many customers during key hours with terrific technology.

Some fear their businesses in China are running out of steam. But both Nike and Starbucks are seeing a pick-up in business that’s increasing their already preposterously strong sales. That’s right, an acceleration in business in China. You can’t make this stuff up.

Under Armour (UA)

Only Under Armour, another stealth apparel play, can challenge Nike in its clothing niche, but the unbelievably warm weather we have been having has put a lid on the stock, as few want clothes that keep them warm when a t-shirt will do.

You can probably buy with deep in the money calls going out a couple of months for those of you who like to trade. I just don’t want to miss this opportunity to own a company that skipped a beat not because of its own product, but because of a fickle Mother Nature.

WINNOWING OF THE CONSUMER SECTOR

We have so many stores and restaurant chains in this country that I think 2016 will bring about a winnowing just like in health care. Who survives?

Home Depot (HD)

Again, you have to think about the nemesis that is Amazon. That means you want to bet


on Home Depot, which has the advantage of improving home prices, as well as the beginning of a return of stronger household formation in the country.

For seven years, homeowners spent on fixing up their homes. Now they are investing because their homes are going up in value and that’s a big psychological difference.

Costco (COST)

There’s Costco, which actually makes its money on its membership, something that it could charge a heck of a lot more for judging by the virtually nil loss of members by a recent couple buck increase two years ago. That’s how it can charge so little for those big Samsung TV’s.

Kroger (KR)

There’s a triumphant supermarket chain that has beaten back all, including Albertsons, which is struggling to come public, and Whole Foods (WFM), and that’s Kroger, an unlikely beast of a retailer with the best research in the world for what millennials want.


Go into a Kroger. It’s got side-by-side natural and organic items made by its own house brand that are as cheap or cheaper than the nationally advertised branded versions that may be far less natural and organic. Incredible. The place is a sustainability paradise.

Ulta (ULTA)

Then there’s Ulta, the beauty parlor chain that’s putting up spectacular numbers. Talk about a business that Amazon can’t compete with, yet I think Mary Dillon’s just getting started with her national rollout of better priced goods and services.

L Brands (LB)

I don’t have anything I want to recommend at the dinosaur filling station that has become the shopping mall except L Brands, which is pretty remarkable given that it is run by Les Wexner, the philanthropic first CEO who pretty much invented the between anchor store concept.

I can’t recommend a single department store. This is the year we are going to see a major drop-off in same store sales for all. They can survive, but they can’t thrive even as their stocks look very cheap versus the rest of the market. They are becoming value traps.

CONSUMER PACKAGED GOODS


We’ve always had a stable of big-time consumer packaged goods companies that could be counted on for steady revenues. That’s history. I have some new ones that are worth buying though.

Constellation Brands (STZ)

Ever heard of Constellation Brands? That’s Corona and Modelo and they are the hottest two beers in the country.

They were given to this once sleepy wine and spirits company by the Antitrust division of the Justice Department to bless the merger of Bud and Ambev, not unlike the recent windfall that Molson Coors has been given by Justice to satisfy another Anbev purchase, SAB Miller.

What a fantastic business. Constellation has periodic bouts with profit-taking. One is going on now. That’s always been the time to pounce.

Monster (MNST)

In an era where natural and organic is supposed to be the way of the current and the future, the prominence of Monster Beverage might seem odd.

But 2016 could be the year of some serious outperformance because Monster’s distribution overseas will now be run by the greatest consumer packaged goods supply chain ever


assembled: that of Coca Cola (KO). I see an awesome combination coming there. It’s going to challenge arch-rival Red Bull for supremacy and this year is the year it wins.

But, amazingly, that’s all I really want to recommend to you in this giant sector because, once again, there are too many consumer packaged goods with challenged growth, growth that will only be harder to come by as the Fed raises rates because the dollar will keep soaring with them.

Sure, I can see owning Kimberly Clarke (KMB) or Clorox (CLX) or PepsiCo (PEP), but remember when rates go higher, there will be a great unwind by hedge funds that have been hiding in these stocks as bond market equivalents. They borrow at nil and lever up on these stocks like they are bonds. They aren’t.

That trade should dissipate the moment we get not to the first, but the second rate hike, as it will be obvious to many that the hikes will soon come fast and furious, even as they are most likely wrong.

I have to mention a couple of acquisition minded outliers because I like what they are putting together: Hormel (HRL), Smuckers (SJM), and Treehouse (THS).

Hormel (HRL)

Hormel, the maker of Spam, has perhaps been the most aggressive in becoming more natural and organic, something that’s hurt the scarcity value of two of my favorites, White Wave (WWAV) and Hain Celestial (HAIN), two companies with stocks that have demonstrated a level of ennui that’s pretty disconcerting.


Smuckers (SJM)

Smucker keeps acquiring and the numbers just keep accelerating, with a potential colossus developing in the inner portion of the supermarket.

Treehouse (THS)

Treehouse is the company that makes store brands, allowing them to come in well under the branded versions. We aren’t that far from the Great Recession and peoples’ spending habits have been ratcheted down to the point that that store brands seems almost foolish to pass up, especially since their packaging is often more compelling than those that we are just plain sick of after all these years.

THE BANKS

Now, here’s what’s really amazing about 2016. You’ve got a couple of gigantic groups where there are only a very few stocks that are investible.

If the Fed is going to raise rates three times as I have predicted, then institutions will pile into the stocks of the three biggest banks: JP Morgan (JPM), Wells Fargo (WFC), and Bank of America (BAC). These banks were able to circumvent old rules about national share that had spanned decades. But the Great Recession changed a lot of rules by necessity.


However, they were hobbled by a Justice Department that seemed to relish torturing their shareholders. Notice, I said their shareholders, as the CEOs and their teams went completely unscathed.

That era is over now, a new Attorney General is running the show who doesn’t care about the banks, and this is their time, as each rate hike boosts earnings power substantially. I like all three.

THE INDUSTRIALS

Same goes for industrials. As the dollar soars and soars with our trading partners debasing their currencies added by ill-conceived trade deals, at least when it comes to American workers, I am hard-pressed to find any industrials worth owning.

I arrive at three: a reconstituted General Electric (GE), sans a financial arm that obscured the best organic growth of any manufacturer, as well as Honeywell (HON) and 3M (MMM), the latter huge trains being led by the engines of Dave Cote and Inge Thulin, two executives that might be considered the best of the era.

All three men, however, will be challenged to have numbers raised with this currency issue upon them—something that will lead to aggressive number cuts for the vast majority of U.S.-based internationals.

ELECTION YEAR STOCKS

Finally, there’s a troika of geopolitical election year stocks that have soared and yet still have very big moves ahead of them: General Dynamics (GD), Lockheed Martin (LMT), and Northrop Grumman (NOC).

In the environment I am discussing for 2016, the vast majority of companies are facing headwinds, whether it be higher rates, a stronger dollar, burgeoning health care costs, or endless competition. But not defense companies.

I believe that all the candidates will be tripping over themselves to boost military spending. At the same time, we have retreated from being the world’s policeman, but we have not


retreated from being the world’s arms merchants. All three companies will be able to raise prices and book gigantic orders.

They are all ridiculously underpriced and my charitable trust—which you can follow along at ActionAlertsPLUS.com and owns many of these stocks—has a big position in Lockheed Martin, the cheapest of them all. It was downgraded recently by still one more disbelieving analyst, taken to an outright sell. Guy must be some sort of wild-eyed pacifist.

A PERSPECTIVE ON M&A

Now I know that it’s the Deal conference which means we should speak of deals, but I think we’ve peaked in activity for the cycle given the rising rate environment.

I expect more deals to occur, but have you noticed that the stock of the acquirer has stopped going up on the announcement of a deal? That’s like a bartender announcing last call. Anyone who drinks after this is drinking at his own risk and most CEOs aren’t bold or foolish enough to do that.

I’d rather highlight a couple of breakups and three suggested tuck-in acquisitions.

First is the division of Yum Brands (YUM) into, basically, China Yum and Rest of World Yum, showcasing the turn in China for KFC.

I think this de-merger could produce some strong results. These are good prices to accumulate YUM and, believe me, I don’t care for the restaurant business at all with escalating wage and health care inflation. Doesn’t matter. China’s coming back for YUM and this stock’s giving you a ticket to the big China dance.

In 2016, Alcoa (AA) will break up into a lower-cost commodity metals company and a proprietary technology company that includes many uses for aluminum. That change will allow it to dodge the endless tag of being a mining company hostage to Chinese growth. I know it has been a very hard one to own but it won’t when the split is finalized.

UNDERVALUED COMPANIES

http://secure2.thestreet.com/cap/prm.do?OID=031709


Then I have three companies with stocks that are undervalued versus what management could do for them.

The first is Whole Foods (WFM), which is spending a fortune buying its own stock back and yet at the same time is beginning to experience a turn in its core business and is opening a new division geared for millennials.

This company’s sales per square foot are unlike any other in retail and even though same store sales have been declining for years, I think that the cash flow will make a difference and if the stock goes low enough, they will just take it private and do what needs to be done to grow the institution.

Finally I like two techs: Qlik Technologies (QLIK) for data analytics and CyberArk (CYBR), a cyber-security concern.

I like them because they could be the answer for IBM’s (IBM) attempts to get more of its business coming from fast-growing portions of its mosaic of information technology offerings. IBM, which has about 30% of its businesses in fast growing industries and 70% in declining ones, needs to change that ratio—and fast. These two acquisitions will do it for them.

I know I have hit you with a lot of ideas here. The thing you need to know though is that while it seems like a fire hose, it’s actually is just a trickle compared with the 2,000 companies that I try to follow and examined for this speech.

The scarcity of stocks that can triumph over this environment is extraordinary.

The companies with the leadership and the books of business that can grow with any alacrity are dwindling fast.

Think of all of the areas that I have avoided or given you a minuscule number to buy: financials, health care, consumer products, industrials, oil and gas, old line technologies and so many others. They are not part of a rising tide, they are just trying to stay afloat.

Happy investing and happy hunting in 2016.


WHAT’S NEXT?

You’ve just read my investing themes for 2016 and the best stocks to play them.

But there’s plenty more to learn.

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What positions am I trimming and increasing?

What sectors am I following most closely?

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Jim Cramer’s Best Stocks for 2016 · 2015-12-14 · Jim Cramer’s Best Stocks for 2016 So 2015...

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