Seeking Alpha
Profile| Send Message|
( followers)  

As the global economy is being dragged to a major crisis due to these debt-deals, Cramer believes that there will be an opportune time to buy some stocks after this debt problems are done. He recommended four stocks that recently announced nifty quarterly reports. I have investigated these stocks from a fundamental perspective, using my O-Metrix Grading System where necessary. Here, is a fundamental analysis of these four stocks from Cramer’s Mad Money (Data obtained from Finviz/Morningstar and is current as of Aug 1):

Starbucks Corp. (NASDAQ:SBUX): Starbucks reported a magnificent quarter, increasing its net income by 34% and revenue by 12%. Here is Cramer’s comment on Starbucks:

“The stock would have jumped up three points if so many investors hadn’t been bungee jumping from buildings in desperation over the total dearth of leadership or consensus in Washington.”

As of the Aug 1 close, Starbucks owns a market cap of $29.5 billion. P/E ratio is 27.9, and forward P/E ratio is 21.99. Analysts expect the company to have a 17.84% annual EPS growth in the next five years, which is reasonable given the 15.34% EPS growth of past 5 years. Profit margin in 2010 was 10.15%, while the coffee-maker paid a 1.31% dividend.

SMA50 and SMA200 are 3.63% and 14.73%, respectively. Starbucks had a 136.17% EPS growth this year, and 33.35% this quarter. Institutions own 77.33% of the stock, and Starbucks is trading 4.38% lower than its 52-week high. Target price is $43.15, which indicates a 9.7% upside movement potential. It returned 59.4% in a year. Insiders have been both selling stocks and exercising options for a while. Debt-to assets ratio is decreasing for the last three years. Starbucks has been an excellent stock for the long-term investors. However, I would rather wait for a pullback.

Whole Foods Market (NASDAQ:WFM): Cramer likes Whole Foods, which had a remarkable quarter. It increased its net income by 35%, and total sales by 11%. He also likes Deckers Outdoor Corp. (NYSE:DECK), the company that “blew the doors off” with its report. Here is a brief comparison between these two companies:

Current as of Aug 1 close.

Whole Foods Market

Deckers Outdoor

P/E ratio

38.3

25.1

Forward P/E ratio

29.75

18.0

Estimated EPS growth for the next 5 years

16.49%

23.25%

Dividend yield

0.60%

-

Profit margin

3.10%

15.2%

Gross margin

35.02%

50.2%

Upside movement potential

11.8%

5.4%

Whole Foods is trading 4.82% lower than its 52-week high, while Deckers Outdoor is trading 1.54% higher than its 52-week high. Whole Foods returned 65.9% in the last twelve months, whereas Deckers Outdoor returned 97%. Whole Foods’ debt-to assets ratio is buried to nearly 0% within the last five quarters, while Deckers Outdoor has zero debts for the same amount of time. Analysts give a 2.50 rating for Whole Foods, and 1.80 for Deckers Outdoor (1=Buy, 5=Sell). Both are excellent growth companies with remarkable indicators, but Deckers has a lower P/E ratio, higher profit margin, and better EPS growth estimation for future.

Chesapeake Energy Corp. (NYSE:CHK) recently announced an oil discovery in Ohio, which, Cramer believes, might be the biggest oil discovery since Prudhoe Bay. His last pick, Chesapeake, has a P/E ratio of 27.6, and a forward P/E ratio of 11.12, as of Aug 1. Market cap of the company is $22.9 billion. Analysts estimate a 9.08% annualized EPS growth for the next five years. With a profit margin of 8.9%, the Oklahoma-based Chesapeake offers a dividend yield of 1.02%.

Chesapeake has a pretty low O-Metrix score is 2.60. Gross margin is 83.94%, and earnings increased by 126.27% this year. While SMA200 is 21.26%, SMA50 is 14.05%. Target price is $39.02, indicating an about 11.8% increase potential. The stock is trading only 2.40% lower than its 52-week high. Institutions own 73.84% of the stock. Debts and assets are unstable, and the company returned 60.6% in a year. Based on the financials, the stock looks pricey. Nevertheless, a pullback might create the fair price for entry.

Source: 4 Buy Ideas by Cramer