The fiscal cliff made for a challenging year end for Action Alerts PLUS, Jim Cramer and Stephanie Link told Chairman's Club investors on a conference call Wednesday. But that didn't stop the charitable trust form delivering a 16.7% return for 2012 that beat the Dow Jones Industrial Average. Cramer and Link said they remain positive for their 2013 outlook and took questions from those on the call.
Cramer said the he was expecting taxes to increase on capital gains and dividends, a thesis that helped drive his decisions to cut loose some of the stocks in the trust that weren't working and raise a little cash in the process. Markets would soar to all-time highs if our country's budget issues finally get resolved, which is why he remains fully invested so as not to miss that move, he said.
Both Cramer and Link said they feel good about the recovery in 2013, both here in the U.S. as well as in the rest of the world.
China is adding liquidity and is expected to grow between 11% and 12% this year, meanwhile Japan may be coming back at the same time as Europe begins to recover, Cramer said. Stocks remain at attractive valuations, below that of their historical averages, he added.
That's why the trust remains focused on the financials, as well as on the industrials that should do well in a global recovery, Link said.
They're also bullish on those companies that have cut costs and fixed their balance sheets, as well as on those that are actively pursuing acquisitions and other ways to increase shareholder value.
Link noted that stocks like Cisco (CSCO) are trading at just 9x earnings, while the company is diversifying away from just routers and switches and into more lucrative software and security products.
When asked about the big moves in Nokia (NOK) and Research in Motion (RIMM), Cramer said that both stocks have moved higher as questions about those companies' solvency have been put to rest. Both stocks would be buys on weakness, he said.
Cramer was also bullish when asked about Sirius XM Radio (SIRI), saying that stock could go up another 50% from these levels. He also liked Yahoo (YHOO) as another company that could potentially take itself private. In the healthcare space, Abbott Labs (ABT) and Bristol Myers-Squibb (BMY) remained favorites.
When asked about the elephant in the room, Apple (AAPL), Cramer said that the stock suffers from a lot of "weak shareholders" who don't know why they own it other than the fact that it used to go up every day. There is a crisis of confidence brewing, one that's not being helped by the company's secretive nature, he added.
Turning to China, Cramer noted that he prefers to own the iShares FTSE China 25 (FXI) rather than individual stocks since the Chinese don't have as many regulations and oversight as the U.S. Owning the ETF is just a safety precaution, he said.
Finally, when the topic of how to value Facebook (FB) surfaced, Cramer and Link said that the company offers the only real alternative for advertisers to reach an increasingly mobile nation. Facebook can reach people in ways no other platform can, which makes that stock a buy, they said.
-- Written by Scott Rutt