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Jim Cramer's Action Alerts PLUS

Action Alerts PLUS

Snapping Up More Twitter

BY Jim Cramer and Stephanie Link | 09/17/14 - 10:21 AM EDT
Actions Taken:
Symbol Action # Shares Traded Recent Price Shares Owned After Trade % of Portfolio After Trade
TWTR Buy 200 $50.67 1100 2.00%

After the close Tuesday night, Microsoft (MSFT) announced an 11% dividend increase and two new board members. The payout was in line with consensus, although there had been growing optimism that the 40% payout could be bumped higher for a larger increase -- whisper figures were for 20%. Even so, the company’s payout yield will now be 2.6%, which easily beats out the current average S&P 500 figure of 1.9%.

We wouldn’t rule out further increases, as the company has $8.6 billion in U.S. and onshore cash, and $86 billion in total. We expect that free-cash-flow generation in 2015 will be $21 billion with $8.5 billion in the U.S. and onshore. Plus, with just $23 billion in debt on its balance sheet, we wouldn’t be surprised at additional leverage opportunities for further payout bumps. Microsoft did not comment on its stock-buyback program, and it still has $35 billion left on the current $40 billion plan, which the company had announced last year.

On the board changes, Dave Marquardt and Dina Dublon are not seeking reelection, and the board has added Kraft (KRFT) Chief Financial Officer Teri List-Stoll and Visa (V) CEO Charles Scharf. They represent a fresh set of eyes on the company, and we view this change positively.

We are restricted in Microsoft shares currently, but we would otherwise easily take advantage of the current 1% pullback to build out the position. We like the cloud and mobile-growth strategy, the focus on enterprise, the strong balance sheet and the medium- and long-term opportunities for further growth from the new CEO and team. We will add when we can.

In that vein, we are finally cleared on Twitter (TWTR:Nasdaq), and will buy 200 shares at around $50.67 after you receive this Alert. We have been very vocal that, were we not previously restricted, we would have been adding to this position on the recent dip in shares, especially under $50. We’ll add here because we foresee earnings, revenue and margin upside, as well as engagement stabilization and a healthy balance sheet. Shares are down 22% from their high, and we like the risk-reward scenario right now.

Regards,

Jim Cramer, Stephanie Link, and TheStreet Research Team

DISCLOSURE: At the time of publication, Action Alerts PLUS was long TWTR and MSFT.

Stanley Black & Decker Nails It
Stocks in Focus: SWK

Committed to being a world-class franchise and creating shareholder value.

09/17/14 - 09:47 AM EDT
United Tech Remains on Track
Stocks in Focus: UTX

We like the risk/reward and the company's buyback plans.

09/17/14 - 09:33 AM EDT
Weekly Roundup

We made a few buys this week as the major indices cooled a bit.

09/12/14 - 05:07 PM EDT

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DOW 17,151.40 +19.43 0.11%
S&P 500 2,000.80 +1.82 0.09%
NASDAQ 4,558.7040 +5.9450 0.13%

Action Alerts PLUS Holdings

Stocks we would buy right now

Symbol % Portfolio
Weighting
Current
Price
Avg.Cost
Basis
% Gain/
Loss
AIG 2.21% $55.94 $55.71 0.41%
AXP 4.15% $88.72 $87.28 1.65%
BWP 3.01% $18.60 $19.25 -3.40%
CI 2.71% $94.23 $88.52 6.45%
DOW 4.38% $54.14 $52.60 2.94%
ESV 3.09% $45.28 $51.53 -12.11%
ETN 4.08% $66.74 $75.10 -11.13%
FCX 3.19% $34.77 $38.22 -9.04%
KMI 2.47% $38.18 $39.60 -3.58%
M 1.74% $60.60 $59.92 1.13%
MMM 1.83% $145.14 $141.54 2.54%
MSFT 1.51% $46.50 $43.53 6.82%
ORCL 3.10% $41.05 $41.77 -1.73%
PVH 2.28% $126.72 $112.61 12.53%
RDS.A 2.81% $78.27 $80.37 -2.61%
SBUX 3.12% $75.51 $78.22 -3.47%
STI 4.55% $39.51 $38.80 1.84%
TWTR 2.00% $50.65 $50.73 -0.17%
UPS 2.15% $99.43 $97.24 2.25%
VALE 1.56% $12.41 $14.60 -15.02%
WAG 2.76% $63.94 $62.62 2.11%

Stocks we would buy on a pullback

Symbol % Portfolio
Weighting
Current
Price
Avg.Cost
Basis
% Gain/
Loss
AAPL 2.98% $101.17 $79.05 27.98%
BAC 3.91% $16.73 $15.61 7.19%
FB 3.84% $76.21 $64.23 18.65%
GM 4.14% $33.86 $37.69 -10.17%
GOOGL 4.79% $591.82 $574.35 3.04%
GS 2.98% $184.44 $162.86 13.25%
JNJ 2.37% $106.22 $91.83 15.67%
LEA 3.43% $100.37 $96.39 4.13%
SWK 2.83% $92.42 $84.55 9.31%
UTX 4.39% $108.47 $115.41 -6.01%

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