In Cramer’s Lightning Round on July 15, his mentions were equally divided; three of them bearish and the other three bullish. In this article, I introduce a vital analysis on these stocks that every investor should have a look at. Here is a fundamental analysis of the stocks mentioned in Cramer’s Lightning Round on July 15 (data from finviz/morningstar, and current as of July 13’s close):
Corning (GLW): Cramer does not like tech stocks in general for now, and recommends avoiding Corning unless it reports strong earnings results at the end of July. Although the company looks fabulous on the sheet, field performance is not so well. $1000 invested in Corning one year ago is $987 now. With a P/E of 7.61 and a forward P/E of 7.47 as of July 16, GLW is trading 28.22% lower than the 52-week high. Analysts expect the company to have an 11.88% EPS growth in the next five years, which is conservative given the 42.48% EPS growth of past 5 years is considered. With a 49.81% profit margin, Corning pays a 1.19% yield. SMA50 is -11.37%, and SMA200 is -14.72%. The company is doing terrible since Feb, 2011. Although it is capable of beating the market, I would stay away from this company for now.
Research In Motion (RIMM): RIMM came crashing down for the last twelve months, returning -48% to shareholders. Since Mar 2011, RIMM fell from $67 to $27.52. One thousand dollars invested in RIMM in Jun,2008 is about $190 now. Although the company is trading 60.99% lower than the 52-week high, and P/E (4.37), forward P/E (5.04), and ROE (37.95%) are admirable, RIMM is highly volatile. SMA50 is -24.81%, whereas SMA200 is -48.13%. The company has a 16.22% profit margin with no dividend policy. Analysts give a 3.10 recommendation for RIMM (1=Buy, 5=Sell). Cramer is bearish on Research In Motion, thinking that it will be a waste like Nokia (NOK). I am not sure whether Cramer is right on both. I think both Nokia and RIM are deeply undervalued. Current prices offer a really good deal on these stocks.
Deere (DE): Deere has been an excellent profit-maker since 2009. $1000 invested in DE in Mar, 2009 is about $3202 now. The farm machinery maker, as of the July 16 close, shows a trailing ratio of 14.04, and a forward P/E of 11.11. Analysts expect the company to increase its earnings by 10.04% in the next five years, which is quite reasonable given the 8.68% EPS growth in the past 5 years. Target price is $106.23, implying a 30% increase potential. Earnings increased by 111.34% this year, and 66.18% this quarter. With an 8.55% profit margin, DE pays a 2.01% dividend. It is trading 17.73% lower than the 52-week high, and the company returned 36.7% in a year. ROE is 38.11%. Although debts are at alarming rates, I believe DE will overcome that problem. Insiders have been both selling and exercising options for a while. It may be the time to collect profits.
Peabody Energy (BTU): BTU returned 42.5% in a year, and Cramer remains bullish on this stock. As of the July 16 close, BTU has a trailing ratio of 19.80, and a forward P/E of 10.05. Analysts expect the company to have a 32.80% EPS growth in the next five years. Target price implies a 28% increase potential, and the company is trading 19.28% lower than 52-week high. With a net profit margin of 11.96%, Peabody yields a 0.57% dividend. Debts are decreasing for the last four years, while assets are having sharp increases. Cramer believes the company will hit to $70. BTU has been a stable profit maker for a considerable time.
Intel Corp. (INTC): Cramer says that Intel has flatlined; therefore, he is not interested in buying. Although the dip in Mar, 2009 returned serious profits to investors, the company did not show a significant performance last year. As of July 16, the California-based company was trading at a 10.40 P/E ratio, and a 9.36 forward P/E ratio. PEG is 0.9, while ROA is 20.08%. Estimated EPS growth in the next five years is 11.13%, and earnings increased by 160.04% this year. Profit margin is 26.38%, while gross margin is 64.64%. SMA200 is 6.37%, whereas target price indicates a 15% upside movement potential. Moreover, it is trading 6.64% lower than 52-week high and pays a 3.7% dividend. Insiders have been mostly exercising options for a while. It could still return large amounts of profits; I believe. Given its superior quality, Intel is a great deal at this price. My long-term fair value estimate for Intel is $34.
Bankrate (RATE): RATE is doing quite well for now. It returned 17.2% in a month. The Internet company, as of July 16, has a forward P/E of 15.33. Analysts estimate a 21.25% EPS growth for the next five years. Gross margin of 61.75% is admirable. RATE is one of the cheapest internet stocks in the market. Target price is $25.38, indicating a 41.5% upside potential. The company has no dividend policy. SMA20, SMA50, and SMA200 are all 10.09%. Like me, Cramer believes that this stock is likely to go higher. It will be a profitable stock in the future.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.