Seeking Alpha
Profile| Send Message|
( followers)  

As fears for a double-dip recession get deeper, investors are seeking ways to keep their money safe. Jim Cramer, one of the best market commentators, recommends stocks that can save your money throughout this doomsday situation. In August 9’s Lightning Round, Cramer made five bullish and three bearish calls.

I have investigated these stocks from a fundamental perspective, adding my O-Metrix Grading System where applicable. Here, is a fundamental analysis of these stocks from Cramer's Lightning Round (data obtained from Finviz/Morningstar and is current as of August 9):

Stock Name

Ticker

Cramer's Suggestion

O-Metrix Score

My Take

Carbo Ceramics

(NYSE:CRR)

Avoid

7.54

Avoid

Core Laboratories

(NYSE:CLB)

Buy

3.44

Hold

Hecla Mining

(NYSE:HL)

Avoid

1.4

Avoid

Mercer Int’l

(NASDAQ:MERC)

Top Pick

8.3

Long-term Buy

Winn-Dixie Stores

(NASDAQ:WINN)

Sell

N/A

Sell

Whole Foods Market

(NASDAQ:WFM)

Buy

3.06

Hold

Cliffs Natural Resources

(NYSE:CLF)

Buy

9.94

Buy

Alaska Communications

(NASDAQ:ALSK)

Buy

N/A

Avoid

Carbo Ceramics

Cramer recommends Core Laboratories instead as it is “more consistent and is a better bet.” Here is a brief comparison between these two companies:

Current as of August 9 Close

Carbo Ceramics

Core Laboratories

P/E ratio

29.5

29.6

Forward P/E ratio

17.9

20.9

Estimated EPS growth for the next 5 years

35.0%

16.0%

Dividend yield

0.74%

1.42%

Profit margin

18.77%

19.7%

Gross margin

39.93%

34.7%

Upside movement potential

44%

17.8%

O-Metrix scores of Carbo Ceramics and Core Labs are 7.54 and 3.44, respectively. Carbo returned 73.3% in a year, while Core Labs returned 26.9%. Carbo has no debts for the last five years, while Core’s debt-to assets ratio is having a free fall since then. Carbo is trading 29.36% lower than its 52-week high, and Core is trading 15.01% lower. Although Carbo’s O-Metrix score is better, 35% EPS growth sounds estimation does not sound attainable. Core is a safer bet.

Hecla Mining

Cramer comments:

I've been wanting to say this since I started the show: to heck with Hecla Mining...I don't like the silver miners. I have a hard enough time buying the gold stocks...and I gotta tell you, if you want exposure, you buy the ETFs.

The Idaho-based silver miner shows a trailing P/E ratio of 28.7, and a forward P/E ratio of 9.9, as of Aug 9. Estimated annual EPS growth for the next five years is 5.00%, which sounds conservative given the 20.69% EPS growth of past 5 years. Profit margin is 12.7%, below the industry average of 35.4%. Earnings decreased by 43.48% this year. The stock is trading 37.89% lower than its 52-week high, while target price implies a 59% increase potential. It returned 44.2% in a year, and debts are almost at zero percent. I think the forward P/E ratio is too optimistic. I agree with Cramer on the silver miners. They are well-overvalued. I would stay away from this company for now.

Mercer Int’l

Mercer returned 57.2% in a year, and Cramer is still bullish on it. The company has an excellent P/E ratio of 2.6, and a forward P/E ratio of 3.9, as of the Aug 9 close. Analysts estimate a 5.00% annualized EPS growth for the next five years. Profit margin is 13.4%, above the industry average of 9.7%. Earnings increased by 190.9% this year, and institutions own 55.67% of the stock. Target price is $10.67, which indicates an about 28.7% upside potential. The stock is trading 45.71% lower than its 52-week high, while debt-to assets ratio is going down for the last three quarters. P/S is 0.3. All of the analysts covering the company give a “Buy” rating for Mercer. Although the stock is highly volatile, I believe a dip can return a large amount of gaining. Moreover, current price offers an opportune entry point.

Cramer does not like supermarkets including Winn-Dixie Stores, and he wants “you out of WINN.” Instead, he prefers Whole Foods Market. Here is a brief comparison between these two stocks:

Current as of August 9 Close

Winn-Dixie Stores

Whole Foods Market

P/E ratio

-15.9

32.2

Forward P/E ratio

-43.1

24.9

Estimated EPS growth for the next 5 years

-

16.8%

Dividend yield

-

0.72%

Profit margin

-0.9%

3.1%

Gross margin

28.24%

35.02%

Upside movement potential

41.4%

34.6%

Winn-Dixie is trading 29.17% lower than its 52-week high, while Whole Foods is trading 20.13% lower. Winn-Dixie returned -25.9% in the last twelve months, and Whole Foods returned 51.3%. Both of the companies have no problems with their debts. Whole Foods has an O-Metrix score of 3.06. Average analyst recommendations for Winn-Dixie and Whole Foods are 2.20 and 2.50, respectively (1=Buy, 5=Sell). Whole Foods is a better buy when compared to Winn-Dixie. Moreover, Whole Foods just multiple topped, and it is relatively less volatile.

Cliffs Natural Resources

Cliffs Natural recently multiple topped, and Cramer says:

I'm sticking with Cliffs. I like the cyclicals down here.... People say 'Cramer, you are killing us with these.' I do not know. I don’t see a severe recession.

The Ohio-based Cliffs Natural was trading at a P/E ratio of 6.68, and a forward P/E ratio of 4.9, as of the Aug 9 close. Analysts expect the company to have a 10.00% annual EPS growth in the next five years, which sounds conservative when its 25.01% EPS growth of the past 5 years is considered. With a profit margin of 26.3%, Cliffs Natural paid a 1.52% dividend last year. Earnings increased by 52.30% this year, and 359.33% this quarter. ROA and ROE are 15.67% and 35.41%, respectively. Operating margin is 33.73%, and the company has an impressive O-Metrix score of 9.94. Target price implies a 75.5% upside movement potential, while the stock is currently trading 29.24% lower than its 52-week high. It returned approximately 20.1% in a year, whereas debt-to assets ratio keeps increasing for the last two quarters. Debt-to equity ratio is 0.7, far better than the industry average of 2.7. Like Cramer says, “I think CLR is OK to buy.”

Alaska Communications

Alaska Communications returned -21.1% in the last twelve months, but Cramer remains bullish on it. The company shows a trailing P/E ratio of -58.5, and a forward P/E ratio of 16.9, as of Aug 9. Although profit margin is not that optimistic (-1.51%), dividend yield is outstanding (12.59%). Earnings decreased by 751.89% this year, and insider transactions have decreased by 44.69% during the last five months. ROA is -0.84%, while the stock is trading 34.53% lower than its 52-week high. Target price is $8.00, which implies an about 11.7% increase potential. SMA20, SMA50, and SMA200 are -5.96%, -13.35%, and -23.16%, respectively. Debts-to assets ratio increased from 65%s to 90% since 2007. I like the dividend yield, but I doubtt its sustainability. I would not think of buying Alaska Communications as long as I see some good profits in the balance sheet.

You can find more information on the O-Metrix Grading System here.

Source: Cramer's August 9 Lightning Round: 5 Buy, 3 Sell Ideas