Cramer had a short breather on his Lightning Round, making no shows since June 30. While I was looking forward to analyze his latest picks – and I was starting to lose my hope –, I saw that he made his first show since then. Along with utilities, Cramer will be one of my main subjects for some time, because I truly enjoy analyzing his stock picks. Here is a fundamental analysis of Cramer’s Lightning Round mentions from July 11.
Continental Resources (CLR): CLR is a charming stock for me. $1000 invested in CLR in May, 2007 is approximately $4470 now. As of July 12’s close, the oil company was trading at a forward P/E ratio of 19.44. Earnings increased by 135.51% this year, while analysts expect the company to have a 30.35% EPS growth next year. Continental Resources had an admirable increase between Oct 2010 and July 2011, leapfrogging from $45 to $65.68 The company is trading 10.89% lower than 52-week high. Target price is $74.74, implying an about 15% upside potential. CLR has no dividend policy. Although debts are going berserk, Cramer, like me, says that “If you believe that oil is going to stay permanently elevated, than you want to own American companies with American oil.”
MIPS Technologies (MIPS): MIPS almost went toes up this year. $1000 invested in MIPS six months ago is about $387 now. Although P/E ratio (14.91), target price ($11.50), profit margin (25.66%), and ROE (32.28%) looks fabulous on the sheet, I believe there are utopic estimations for the company. Analysts estimate a 19.33% EPS growth for the next five years, which is truly funny given the -4.21% EPS growth for the past-5 years. Although the company is admirable for its debt-downgrading process, assets decreased more than half in the last four years. Insiders have been both selling and exercising options for a while. Staying neutral should do okay.
SanDisk Corp. (SNDK): Although Cramer does not like technology for the time being, I believe SanDisk can be considered as an exception. The company, as of July 12, is trading at a magnificent P/E ratio of 7.81, and a forward P/E ratio of 8.56. Earnings increased by 203.64% this year, whereas analysts expect the company to have an EPS growth of 12.50% in the next five years. Target price is $60.50, which implies a 50% upside movement potential. The company is trading 23.15% lower than 52 week high. Profit margin is 25.62. SanDisk is truly underpriced and will return serious profits to shareholders. The company is a screaming buy for me.
OfficeMax Corp. (OMX): Wow, do you still hold OMX shares? It is a dead stock. Although current P/E (11.38) and forward P/E (8.99) ratios are admirable, the company is dead since Oct, 2008, when it paid the last dividend in its history. The company had an annualized EPS growth of -28.19% over the last five years, whereas analysts estimate a 10.07% EPS growth for the Illionis-based company. I believe even this estimation is utopic. Assets decreased more than 30% in the last four years, while debts are hardly going down. It has a razor thin profit margin of 0.8% with no dividend policy. Like Cramer says, “if you own it, it's time to sell.”
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.