3 Recent Speculative Calls by Jim Cramer

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Includes: BBY, ORCL, SNE
by: Efsinvestment
Cramer recently made calls to three companies, two of them bullish, and the other one bearish. He explained his opinions about the two speculative stocks, Oracle (NASDAQ:ORCL) and Sony (NYSE:SNY). I have examined these stocks from a fundamental perspective, adding my O-Metrix Grading System where possible. Here is a fundamental analysis of these stocks from Cramer's Mad Money:
(Data obtained from Finviz / Morningstar and is current as of Aug.16)
Stock Name
Ticker
Cramer's Suggestion
O-Metrix Score
My Take
Oracle
Buy
5.53
Buy
Sony
Buy
N/A
Avoid
Best Buy Co.
Avoid
9.51
Long-Term Buy
Click to enlarge
Cramer said on Monday:

"RBC’s downgrade of Oracle , in my opinion, was wrong. Credit Agricole and FBR are right to like the stock. I like it, too, and think it is one of the few tech names that is worth buying in this environment until seasonality goes in tech's favor, which is not for another four weeks time."

The California-based tech titan, as of the Aug 16 close, was trading at a P/E ratio of 16.65, and a forward P/E ratio of 10.39. Analysts expect the company to have an annualized EPS growth of 14.1% in the next five years. Profit margin in 2010 was 23.99%, while it paid a 0.87% dividend. Earnings increased by 37.82% this year, and 33.80% this quarter. Target price is $37.32, indicating an about 35.6% upside potential. O-Metrix score of the company is 5.53. It has an admirable gross margin of 76.42%, and an operating margin of 33.78%.
Oracle returned 20.5% in a year, whereas it is trading 24.64% lower than its 52-week high. Assets stabilize debts. Institutions own 62.95% of the stock. 28 out of 41 analysts covering the company recommend buying Oracle. Moreover, it has a five-star rating from Morningstar. I would not ignore this stock.
"Apple (NASDAQ:AAPL) is the destroyer of Sony (SNY), but Sony still trades." Cramer said to a caller, who said: "Sony is one of the worst stocks out there."

The Tokyo-based electronic equipment company has a P/E ratio of -5.7, and a forward P/E ratio of 11.2, as of Aug 16. Analysts estimate a 84.0% annual EPS growth for the next five years, which sounds funny when its 23.09% EPS growth of the past 5 years is considered. Sony paid a 1.33% dividend last year, while the profit margin was -4.3%. Earnings decreased by 536.18% this year, and 160.32% this quarter. ROE, ROA, and ROI are -2.34%, -11.09%, and -7.12%, respectively. Target price indicates a 63.1% increase potential, while the stock is currently trading 40.38% lower than its 52-week high. Institutions own only 6.98% of the stock. Sony returned 25.9% in the last twelve months, whereas debt-to assets ratio is nearly stable for the last five years. Operating margin is 2.3%, below the industry average of 4.2%. I see no reason to have any relations with Sony for the time being.
As Best Buy Co. (NYSE:BBY) is “knocked down”, Cramer sees no hope for the company to mend itself soon. The company shows a remarkable trailing P/E ratio of 7.91, and a forward P/E ratio of 6.61, as of the Aug 16 close. Estimated annual EPS growth for the next five years is 11.2%. With a profit margin of 2.5%, Best Buy offered a 2.61% dividend last year. It has an admirable O-Metrix score of 9.51. Insider transactions for the last 6 months have increased by 68.06%, and institutions own 72.14% of the stock. Target price is $35.75%, which implies a 44.3% upside movement potential. Best Buy returned about -24.6% in a year, and it is trading 44.85% lower than its 52-week high. Debts are going down since 2009. P/B and P/S are 1.5 and 0.2, respectively. Debt-to equity ratio is 0.3, way below the industry average of 1.3. Although this stock is capable of beating the market, it is currently having hard times. I believe this stock will outperform in the future.


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