Jim Cramer’s Latest Stock Portfolio: Top 10 Recommendations

3. Texas Instruments Inc (NASDAQ:TXN)

Number of Hedge Fund Investors: 49

Jim Cramer last month recommended Texas Instruments Inc (NASDAQ:TXN) during a ‘Lightning Round’ segment on his program. Cramer said you’d want to buy the stock as he thinks it can go “higher.”  Cramer also praised Texas Instruments Inc’s (NASDAQ:TXN) management team.

UBS recently published a list of high-quality stocks that also pay dividends. Texas Instruments Inc (NASDAQ:TXN) made it to the list. The stock has a 2.61% dividend yield as of July 3.

Texas Instruments Inc’s (NASDAQ:TXN) valuation has been a concern for many amid lack of strong growth catalysts. The stock’s forward P/E is 37.80, much higher than the industry median of 24. Average analyst price target on the stock is $181, which is lower than its July 3 closing price of $198. According to data from Yahoo Finance, Wall Street expects Texas Instruments Inc’s (NASDAQ:TXN) earnings to fall by 6% over the next five years on a per-annum basis.

Texas Instruments Inc (NASDAQ:TXN) makes most of its revenue from Industrial applications, Automotive and Personal Electronics.  During the first quarter earnings call the management said the industrial segment was down “upper-single digits. The automotive market was down mid-single digits. Personal electronics was down mid-teens. Next, communications equipment was down about 25%.”

“First, we saw personal electronics was the first market that went into the correction. It really is — was the first to come out in the last few quarters, I’d describe it as behaving more seasonal. If you go to the other end of the spectrum, we have, had industrial, which has been declining sequentially from some time. And over the last few quarters, we’ve been talking about how there’s some asynchronous behavior inside of the 12, 13 sectors that we have there. That continued inside of the quarter. So we have got some of the later-cycle sectors that are continuing to decline and declining at double-digit rates. But there are some that are beginning to — begin to slow in the declines and even a couple that grew sequentially.”