By Darnell Brown
This article will review five stocks that stock analyst Jim Cramer recommended on his CNBC TV show Mad Money on July 20:
International Business Machine Corporation (IBM) IBM Corporation provides computer hardware and software to companies and to individuals.
IBM Corporation has a market cap of $188.15 billion, with a price to earnings ratio of 12.79. The stock has traded in a 52 week range of between $122.28 and $185.63. The stock’s current price is $157.54. On July 18, the company reported second quarter revenues of $26.7 billion which was an increase from the 23.7 billion reported in the second quarter of 2010. The company reported second quarter net income of $3.66 billion which was up from the $3.39 billion reported in the second quarter of 2010. Year over year net income increased to $14.8 billion in 2010 from $13.4 billion in 2009.
Hewlett Packard (HPQ) is probably IBM Corporation’s closest competitor now that it plans to exit the tablet business. Hewlett Packard’s last quarter earnings per share growth was 2%, compared to IBM Corporation’s earnings per share growth of 18%. Hewlett Packard’s stock has performed poorly and is 52.2% off of its 52 week high. The stock of IBM Corporation is 15.1% off of its 52 week high.
IBM Corporation has increased its net income in each of the last five years. Second quarter revenues were 12% higher and net income was 11% higher, than the second quarter of last year. The company has done an admirable job of consistently growing revenues. The company currently has earnings of $12.79 per share and plans to increase earnings per share to $20.00 by 2014. CNBC stock analyst Jim Cramer believes that this stock will reach $200.00 per share in 2012. I rate IBM as a buy.
Peabody Energy Corporation (BTU) Peabody Energy produces and sales coal in the United States and Australia. Peabody Energy Company is the world’s largest coal company.
Peabody Energy has a market cap of $11.62 billion, with a price to earnings ratio of 13.07. The company stock has traded in a 52 week price range of between $40.79 and $73.95. The stock is currently trading at $42.91. On July 19th, the company reported second quarter revenues of $2.01 billion and net income of $285 million, which compared favorably to the second quarter of 2010 revenues of $1.66 billion and net income of $206 million.
Peabody Energy’s closest competitor is Consol Energy Inc. (CNX). Consol Energy is also a coal company, and it has a market cap of $9.46 billion. Last quarter Consol Energy grew its earnings per share by 69%, compared to Peabody Energy which grew earnings per share by 65%. Consol Energy’s stock price is 25.9% off of its 52 week high, while Peabody Energy’s price is 42% off of its 52 week high.
Peabody Energy increased its second quarter net income by 35% over the second quarter of 2010. In the year 2010 year over year earnings were up by 72%. The company’s Australian business has been doing extremely well. The reason that the Australian business is growing is because of sales to China which is Peabody Energy’s “cornerstone to growth”. China needs the coal for its fast growing electric generation and steel industries. Peabody Energy should be able to continue growing revenues and income. On July 19th Jim Cramer believed that Peabody Energy was an inexpensive stock that could make a lot of money. I agree, and I rate Peabody Energy Corporation as a buy.
InterDigital Inc. (IDCC) InterDigital Inc. designs digital wireless technologies for use in mobile telephones, notebook computers and PDAs.
InterDigital Inc. has a market cap of $2.86 billion, with a price to earnings ratio of 25.96. The stock has been trading in a 52 week range of between $24.39 and $82.50. The current stock price is $62.98. The company reported second quarter revenues of $69.9 million compared to revenues of $91.2 million in the second quarter of 2010. Second quarter net income was also down reporting at $17 million compared to $35 million in 2010.
On July 19th Jim Cramer recommended that investors in InterDigital Inc. should “take their profits right here”. Since July 19th, the stock price has increased by 18% from $53.26 to $62.98. This stock has been on an incredible run and has increased in price from $26.49 on August 20, 2010, to its current $62.98. The earnings per share decreased by 53% last quarter and 21% over the last three quarters. This is a disturbing trend. Jim Cramer may not have picked this stocks exact ceiling, but I think he is right. This stock probably has run its course and is due for a fall. I would not purchase shares of InterDigital Inc. at its current price and rate this stock as a hold.
Apple Inc. (AAPL) Apple Inc. is a design and manufacturing juggernaut in the mobile communication devices field through its hit iPad, Mac and iPhone products.
Apple Inc. has a market cap of $330 billion, with a price to earnings ratio of 14. The stock has been in a 52 week trading range of between $235.56 and $404.50. The stock is currently trading at $356.03. Apple Inc. reported blow out third quarter fiscal year earnings results. Revenues were $28.6 billion up 82% from the third quarter of 2010 revenues of $15.7 billion. Net income was $7.31 billion up 124% from the $3.25 billion reported in the third quarter of last year.
The primary reason for Apple Inc.’s tremendous growth was the sale of their iPhones. The iPhone is the most widely used smartphone in the world. Apple Inc. also produces the iPad which is the most popular tablet computer in the world. On July 20th, Jim Cramer spoke about what he termed the “United States of Apple”. He believes that Apple Inc. will continue to thrive because of its smart innovations and products. He thinks that Apple Inc. will also benefit from the new cloud computing sensation and predicted that Apple’s stock will reach $500.00. After the company’s second quarter performance, I have to agree with him. Apple Inc is an innovative, fast growing technology company with a price to earnings ratio of only14.09. I think the stock price will increase, and I rate Apple Inc. as a buy.
Advance American Cash Advance Center Inc. (AEA) Advanced American provides short term cash loans in United States, the United Kingdom, and Canada.
Advanced American has a market cap of $487.38 million with a price to earnings ratio of 10.98. The stock has traded in a 52 week trading range of $3.26 and $9.32. The stock currently trades at $7.81. The company reported second quarter revenues of $141 million which matched second quarter revenues of $141 million from one year ago. The company’s net income was $8.6 million, which was a 67% increase from the $5.12 million reported in the second quarter of 2010.
Q C Holdings Inc. (QCCO) is a competitor of Advance American. Q C Holdings Inc. has a market cap of $65.86 million with a price to earnings ratio of 6.56. Q C Holdings Inc. is currently trading at $3.87.
Advanced American has provided its investors with a consistent bottom line for years. The company has paid an annualized dividend of $0.25 since the fourth quarter of 2008. The current dividend yield is 3.20%. On July 19th, Jim Cramer rated this stock as a buy. This company has a secure business, and the stock pays a reasonably good dividend. The stock is trading in the upper part of its 52 week trading range, and has increased in price by 98% from $3.94 to 7.81 over the last three years. I believe this stock has the potential to appreciate in price and provide a steady flow of income. I rate Advance American Cash Advance Center Inc. as a buy.