7 Bullish, 2 Neutral and 5 Bearish Calls by Jim Cramer

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 |  Includes: AET, ANTM, BIDU, CMI, ESV, FSC, JCP, OXM, PCAR, RIG, SLB, TEO, VFC, WM, WMT
by: Efsinvestment

Jim Cramer, the “Mad Money” host, is one of the most colorful stock pickers of the market. I like the way he entertains the audience when making his calls. In July 28’s Lightning Round, Cramer mentioned 13 companies. He is bullish on seven stocks, neutral on two stocks, and bearish on five stocks. He also suggested alternatives to some of the stocks in concern. Here is a fundamental analysis of the stocks mentioned in Cramer’s Lightning Round (Data obtained from Finviz/Morningstar and is current as of July 28):

Baidu, Inc. (NASDAQ:BIDU): Baidu is the only Chinese stock Cramer wants to hold as its performance is truly impressive. However, it has a sky-high P/E ratio of 72.5, and a forward P/E ratio of 39.7, as of the July 28 close. While I am not in favor of sky-high valuations, I have to admit that Baidu has some impressive indicators. Estimated annual EPS growth for the next five years is 49.48%, which is conservative given the magnificent EPS growth of 132.51% over the past five years. Profit margins of 46.5% and operating margins of 52.2% are both above the industry average. Gross margins are 73.9%. Analysts' average target price suggests 5.4% upside movement potential. The stock is trading 5.50% lower than its 52-week high. ROE, ROA, and ROI are 43.32%, 55.72% and 55.18%, respectively. Earnings increased by 122.41% this quarter, and 136.41% this year. The stock returned 98.1% in the last twelve months. RBC Capital suggests an outperform rating for Baidu, whereas Stifel Nicolaus, Brean Murray, and Kaufman Bros recommend buying. Average analyst rating for the company is 1.90 (1=Buy, 5=Sell).

PACCAR Inc. (NASDAQ:PCAR): Cramer says that Paccar reported a “bad number” and Cummins (NYSE:CMI) reported a “good number”; therefore, he recommends Cummins instead. Here, is a brief comparison between these two:

Current as of the July 28 close.

PACCAR

Cummins

P/E ratio

27.16

16.84

Forward P/E ratio

11.33

10.89

Estimated EPS growth for the next 5 years

16.47%

11.23%

Dividend yield

1.67%

1.51%

Profit margin

5.13%

9.14%

Gross margin

20.1%

24.12%

Upside movement potential

39.2%

29.6%

Click to enlarge

PACCAR’s long-term EPS growth estimates and dividend yield are slightly better than that of Cummins'. However, Cummins has a cheaper P/E ratio and forward P/E ratio than that of PACCAR's. O-Metrix scores of PACCAR and Cummins are 4.71 and 4.59, respectively. PACCAR is trading 27.13% lower than its 52-week high, while Cummins is trading 14.83% lower. PACCAR returned -6.5% in the last twelve months, and Cummins returned 30.8%. PACCAR’s debt-to assets ratio is around 40% whereas Cummins debt-to-asset ratio is hovering around 10% for the last five years. I agree with Cramer; I think Cummins is a safer alternative to PACCAR.

Amerigroup Corp. (AGP): Cramer prefers Aetna (NYSE:AET) instead when it comes to healthcare plan providers. Here, is a brief comparison between the two:

Current as of July 28 close.

Amerigroup

Aetna

P/E ratio

11.33

9.1

Forward P/E ratio

14.78

9.03

Estimated EPS growth for the next 5 years

14.22%

11.28%

Dividend yield

-

1.43%

Profit margin

5.05%

5.26%

Gross margin

16.6%

28.9%

Upside movement potential

32.8%

22.8%

Click to enlarge

Amerigroup returned 68.4% in a year, while Aetna returned 52.8%. Amerigroup is trading 29.28% lower than its 52-week high, and Aetna is trading 11.42% lower than 52-week high. I think both companies are highly profitable companies with strong upside potentials. However, Aetna is relatively better than Amerigroup in terms of P/E ratio and forward P/E ratio. Moreover, Aetna's dividend yield is a bonus for the investor. With an O-metrix score of 6.7, I expect Aetna to be an outperformer for the next 5 years.

Oxford Industries (NYSE:OXM): Cramer prefers VF Corp. (NYSE:VFC), the “best of breed”, instead of Oxford. Here, is a small comparison between the two:

Current as of July 28 close.

Oxford Industries

VF Corp.

P/E ratio

25.56

20.50

Forward P/E ratio

14.31

13.72

Estimated EPS growth for the next 5 years

13.00%

10.84%

Dividend yield

1.36%

2.15%

Profit margin

13.0%

7.72%

Gross margin

54.79%

46.8%

Upside movement potential

14.9%

6.8%

Click to enlarge

O-Metrix scores are 3.60 and 3.79, respectively. Oxford returned 71.9% in a year, whereas VF Corp. returned 47.8%. Oxford’s debt-to assets ratio is more than double that of VF Corp.’s. Oxford is trading only 3.42% lower than its 52-week high, while VF Corp. is trading 11.58% lower. Oxford seems to be overpriced for now. VF Corp. offers a relatively safer investment opportunity.

Transocean Ltd. (NYSE:RIG): Cramer rather prefers Schlumberger (NYSE:SLB) and Ensco (NYSE:ESV), saying:

I've got SLB all the way down...if you want offshore, you've got Ensco...much better than Transocean.

Here, is a brief comparison between them:

Current as of July 28 close.

Transocean

Schlumberger

Ensco

P/E ratio

46.9

25.4

16.6

Forward P/E ratio

9.97

17.41

8.94

Estimated EPS growth for the next 5 years

19.84%

20.66%

13.58%

Dividend yield

1.46%

1.09%

2.66%

Profit margin

6.5%

14.2%

28.08%

Gross margin

42.1%

23.9%

51.71%

Upside movement potential

35.4%

18.9%

24%

Click to enlarge

O-Metrix scores of Transocean, Schlumberger, and Ensco are 3.74, 5.08 and 6.35, respectively. Transocean returned 32.6% in a year, while Schlumberger returned 52.6%, and Ensco returned 28.2%. The debt to assets ratios of all companies are going down for the last four years. Transocean is trading 27.60% lower than its 52-week high, whereas Schlumberger is trading 4.65% lower than its 52 week high, and Ensco is trading 11.86% lower than its 52 week high. Among the three, I would prefer Ensco. It has the lowest P/E ratio, highest dividend yield and best O-Metrix score.

Fifth Street Finance Corp. (NYSE:FSC): Cramer wants to do some research about this stock before making a call on it. FSC was trading at a P/E ratio of 15.9, and a forward P/E ratio of 8.88, as of the July 28 close. Analysts expect the company to have an annual EPS growth of 6.83% in the next five years. With a profit margin of 50.4%, and a projected dividend yield of 11.91%, Fifth Street Finance is an outstanding pick for dividend lovers. Earnings increased by 96.36% this year, and it is trading 21.38% lower than its 52-week high. Analysts’ average target price estimate is $13.33, which implies a 27.3% upside potential. SMA50 is -9.81%, and SMA200 is -11.61%. Its O-Metrix score is 7.56. Analysts give a 2.00 recommendation for the company (1=Buy, 5=Sell). If the analysts' growth expectation holds, Fifth Street can beat the market over the long-term.

Telecom Argentina (NYSE:TEO): Telecom Argentina returned 37.9% in a year, and Cramer is bullish on it. The company shows a trailing P/E ratio of 9.51 and a forward P/E ratio of 6.3, as of July 28. The company is expected to increase its annual earnings by 4.10% in the next five years. Profit margins in 2010 were 13.98%, while shareholders enjoyed a dividend yield of 8.79%. Debts are nearly buried to zero within the last five years. ROA and ROE are 18.46% and 33.74%, respectively. Earnings increased by 53.29% this quarter, and 37.72% this year. SMA50 is 1.89%, whereas SMA200 is 7.01%. The stock is trading 5.28% lower than its 52-week high, while analysts' average target price indicates a 7.5% upside potential. Its O-Metrix score is 8.15. The company is a nifty profit-maker and the stock can enter portfolios as a long-term investment.

J.C. Penney Co. (NYSE:JCP): Cramer prefers waiting two quarters to see how this company performs before making a call. However, he says that J.C. Penney is “going to be a very tough situation to fix.” The company has a P/E ratio of 19.24 and a forward P/E ratio of 12.54 as of the July 28 close. Estimated annual EPS growth for the next five years is 12.03%, which sounds utopian given the -16.15% EPS growth of past 5 years. With a thin profit margin of 2.15%, J.C. Penney offers a 2.58% dividend. It returned 24.6% in the last twelve months, and the debt-to assets ratio has been nearly stable for the last five quarters. Institutions own 99.87% of the stock. Target price implies a 13.1% upside movement potential, while the stock is trading 24.92% lower than its 52-week high. Its O-Metrix score is 5.54. SMA50 is -8.30%, and SMA200 is -9.38%. Investing in J.C. Penney can be profitable, but I think Wal-Mart (NYSE:WMT) offers better safety.

Waste Management, Inc. (NYSE:WM): Waste Management shareholders had a pretty bad quarter. Since July 27, the stock came crashing down from $35.51 to $31.73. As of July 28, the Texas-based Waste Management shows a trailing P/E ratio of 16.42, and a forward P/E ratio of 13.7. Analysts expect the company to have an annualized EPS growth of 10% in the next five years. With a profit margin of 7.93%, Waste Management offers an enjoyable dividend yield of 4.16%. Analysts average target price is $40.17, which indicates an about 26.5% upside movement potential. SMA20, SMA50, and SMA200 ratios are -12.93%, -14.41%, and -13.13%, respectively. The stock is currently trading 19.34% lower than its 52-week high. It returned -7.5% in a year. Debts are increasing for the last three years, as well as assets. Debt-to equity ratio is 1.46. Insiders have been mostly selling stocks for a while. Waste Management has an O-Metrix score of 4.70.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.