Cramer's Lightning Round Recap: Further Analysis

Includes: CAG, EBAY, KMX
by: Thinking Big

On last night's Lightning Round on Jim Cramer's Mad Money, Jim recommended three stocks, eBay (NASDAQ:EBAY), ConAgra Foods (NYSE:CAG), and CarMax (NYSE:KMX). Jim is famous for his quick buy or sell recommendations during the lightning round, but rarely goes into details as to why he likes or dislikes a particular stock. Let's dive further into his three most recent buy recommendations.

eBay (EBAY)

eBay was Jim's first call of the lightning round, with the caller stating that he had recently bought eBay but is currently down on his position. Jim reassured him that his charitable trust owns eBay, and to hold onto the stock.

The stock has fallen after its most recent earnings release, particularly due to a slower growth rate than expected with eBay's payment system, PayPal. In terms of valuation, eBay does trade at a fairly large multiple of around 25, but is trading to only about 1.4 times its growth rate. A real catalyst for eBay may be its PayPal payment system. PayPal is becoming used more in both mobile and brick and mortar payments. Large amounts of innovation could lead to significant growth for eBay.

ConAgra (CAG)

ConAgra is a lesser known name than eBay, but is known for its packaged foods business. Brands such as Banquet, Chef Boyardee, Hebrew National, Peter Pan Peanut Butter, and more are all ConAgra brands. These consumer staples seem like a "textbook" safe buy, but what made Cramer want to recommend it? ConAgra's main strengths are a nice dividend of over 3%, its recent acquisition of Ralcorp Holdings (RAH), as well as recent increased earnings estimates. ConAgra is fairly valued, with a P/E of around 14 and a PEG of 1.31.


CarMax is a play on the automotive recovery in 2013. CarMax has taken all the things people hate about car dealerships, and created a one stop shop for used cars free of those worries. CarMax specializes in a hassle free, haggle free car buying experience. CarMax also offers the opportunity to sell a car to CarMax without having to buy your next car from them. Catalysts for CarMax include strengthening demand in used vehicles, more availability of credit for consumers, and overall expansion. Revenue has increased 14% year over year, bringing EPS to $0.46. Valuation for KMX isn't screaming a buy however, as it is trading at a PEG of almost 2. Waiting for a pullback may be wise.


If you choose to invest in any of these three companies, be sure to do your own investment research first. Cramer's recommendation of these three companies certainly doesn't hurt, but it is never a reason to buy a stock solely on his recommendation. Personally, I think all three are great companies, but feel they are currently priced too high for me to be buying here. As Cramer would say, mark these stocks down as potential "shopping list" stocks for when stocks go on "sale".

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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