As Thursday’s doomsday situation gave a boost to the macro-economic worries, Cramer picked profitable companies that have announced solid quarterly results and talked with their CEOs. I have used my O-Metrix Grading System where applicable. Here is a fundamental analysis of these stocks mentioned on Cramer's Mad Money (Data obtained from Finviz/Morningstar and is current as of Aug.4):
Federal Realty Investment Trust (FRT): After announcing strong earnings, Federal Realty will yield $0.69 per share, increasing its dividend by $0.02.
"You are a breath of fresh air on a really dark day," said Cramer to FRT’s CEO Don Wood.
The Maryland-based company shows a trailing P/E ratio of 39.8, and a forward P/E ratio of 34.7, as of the Aug 4 close. Estimated annualized EPS growth for the next five years is 6.15%, which sounds quite reasonable given the 7.76% EPS growth of last 5 years. It paid a 3.28% dividend, while the profit margin was 23.4% last year. Operating margin is 41.95%, and gross margin is 68.75%. Target price is $87.84, which implies an about 8.4% upside potential. Federal Realty is trading 10.60% lower than its 52-week high, and institutions own 93.05% of the stock. It returned 2.9% in the last twelve months. Debt-to-assets ratio is nearly stable for the last three years. It has a quite low O-Metrix score of 1.26. Federal Realty has been increasing its dividend permanently since its first yield in Nov, 1987. The company will not show remarkable growth in the long-term, and P/E- forward P/E ratios are too high. Its PEG value is 4.3. P/B is 4.2 and P/S is 9.2, both of which are well above the industry averages (2.3 and 5.8, respectively). Moreover, it has a two-star rating from Morningstar. Federal Realty is a profitable company, but the stock is highly overpriced.
The Mosaic Company (MOS): Mosaic delivered strong results, beating the Street estimates by 7 cent.
“Mosaic is a beautiful buy in this hideous market,” Cramer says.
As of Aug 4, the company was trading at a P/E ratio of 12.7, slightly higher than the industry average of 11.2. Analysts expect the company to have a 9.00% annualized EPS growth in the next five years. With a profit margin of 25.34%, Mosaic pays a 0.31% dividend yield. Earnings increased by 63.57% this quarter, and 203.42% this year. Institutions own 25.32% of the stock, while insider transactions for the last six months have decreased by 99.88%. Target price is $83.26, which indicates a 34.2% increase potential. The stock is trading 30.72% lower than its 52-week high. Operating margin is 26.7%, and gross margin is 31.41%. SMA50 and SMA200 are -8.52% and -15.44%, respectively. It returned 23% in a year, while debt-to assets ratio is decreasing for the last four quarters. If analyst estimates hold, Mosaic might be a profitable long-term buy.
Herbalife Ltd. (HLF): Herbalife is another company that reported solid numbers. Revenue increased by 27%, and it reported a 5-cent-beat earnings result. Here is what CEO Michael Johnson says:
"We've got the best distributors in the world as far as we're concerned and the momentum that these folks are bringing to the marketplace for the great product in the middle of this obesity epidemic and obviously an income opportunity that is really needed in these times."
The Cayman Islands-based Herbalife has a P/E ratio of 20.3, as of Aug 4. Analysts estimate a 15.17% annual EPS growth for the next five years, which is quite conservative when its 29.43% EPS growth of past 5 years is considered. With a profit margin of 11.5%, Herbalife offers a dividend yield of 1.38%. Earnings increased by 70.90% this quarter, and 44.81% this year. SMA50 and SMA200 are 0.79% and 33.71%, respectively. Herbalife is currently trading 8.40% lower than its 52-week high. While ROA is 27.39%, ROE is 71.84%. Target price is $65.56, indicating a 13% upside movement potential. The stock returned 110% in a year, and debts are decreasing sharply for the last four years. Debt-to equity ratio is 0.3, far better than the industry average of 1.6. Average analyst recommendation for Herbalife is 1.00 (1=Buy, 5=Sell). Moreover, the stock just double topped. "You have made fortunes for our viewers," Cramer says to CEO Michael. No doubt that this stock was a good deal a year ago, but current valuation is too high for me.
Allergan Inc. (AGN): Allergan increased its revenues by 13.6% and earnings by 12.9%, when compared to the year-ago quarter.
"I think when I reflect upon everything, it shows even in turbulent economic times, it is really the power of innovation that wins, especially with well-differentiated products," says CEO David Pyott.
As of the Aug 4 close, Allergan was trading at a negative P/E ratio, and a forward P/E ratio of 17.9. Estimated annualized EPS growth for the next five years is 13.89%, which sounds highly exaggerated given the negative EPS growth of the last five years. With a profit margin of -0.1%, Allergan pays a 0.26% dividend yield. Earnings decreased by 99.90% this year, and 6.84% this quarter. Insider transactions for the last six months have decreased by 22.58%. ROA, ROE, and ROI are -0.11%, -0.18% and -0.13%, respectively. SMA20 is -6.21%, while SMA50 is -5.88%.
On the other hand, Allergan has a remarkable gross margin of 85.4%, and it is currently trading 10.16% lower than its 52-week high. It returned 20.5% in the last twelve months. Target price is $87.53, which implies a 12.9% increase potential. Debts and assets are unstable. Allergan has some terrible indicators. However, it can be a profitable investment if the analyst estimates hold.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.