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Jim Cramer is one of the most joyful stock pickers on the street. I have been examining Cramer’s Lightning Round stock picks from a fundamental point of view, explaining my opinions about them. Recently, Insider Monkey revealed a report on Cramer’s favorite stock picks, based on the number of recommendations in the last 30 days. I have analyzed five stocks on which I agree with Cramer.

However, there are five stocks and one commodity that I do not agree with Cramer. Cramer likes Chesapeake Energy (NYSE:CHK), Baidu (NASDAQ:BIDU), Chipotle Mexican Grill (NYSE:CMG), Verizon (NYSE:VZ), and Whole Foods (NASDAQ:WFM), all of which seem to be trading above their fair value. He also favors Gold (NYSEARCA:GLD), which I think is one of the riskiest investments in today’s valuation.

I have examined these stocks from a fundamental perspective, adding my O-Metrix Grading System where necessary. Here is a fundamental analysis of five stocks and one commodity on which I do not agree with Cramer:

Stock/ETF

Trailing P/E

Forward P/E

Dividend Yield

Long-Term EPS Growth Estimate

O-Metrix Score

Chesapeake Energy

28.62

10.70

1.1%

9%

2.57

Baidu

65.14

33.17

-

48%

4.90

Chipotle Mexican Grill

50.45

35.37

-

23%

2.69

Verizon

16.13

13.85

5.40%

8%

4.63

Whole Foods

34.94

28.57

0.62%

16%

2.74

Gold

-

-

-

-

-

Chesapeake Energy is one of Cramer’s favorite energy companies. Cramer thinks that, “Chesapeake has been creeping up nicely even though it doesn't get the credit it deserves".

It is true that Chesapeake has one of the best energy portfolios in the US. It has significant presence in Anadarko Basin and Eagle Ford Shale. Nevertheless, it is trading with a relatively high trailing P/E ratio of 28.62. Debt/equity ratio is 0.65. 52-week trading range is $19.76 - $35.76.

At a price of $31.77, it is trading 61% higher than the 52-week low. The stock returned 24% since January and 54% in the last 12 months. Based on an annualized EPS growth estimate of 9% for the next 5 years, Chesapeake has a PEG ratio of 3.15 and an O-Metrix score of 2.57.

Baidu is the only Chinese stock Cramer recommends for now. He suggests using deep in the money calls when buying Baidu shares. Baidu has been an outperformer. The stock returned 48% since January and 85% in the last 12 months.

Analysts have an extremely optimistic EPS growth estimate of 48% for the next 5 years. Even if their estimates hold, it is already priced by the market. Trailing P/E ratio is 65.14, whereas the forward P/E ratio falls to 33.17.

The company has only $4.61 of cash per share and the stock is trading with a P/B ratio of 28.60. In my humble opinion, Google (NASDAQ:GOOG) offers much better value than Baidu.

Here is a brief comparison of the two stocks:

Baidu

Google

P/E ratio

65.14

19.44

Forward P/E ratio

33.17

12.88

Estimated EPS growth for the next 5 years

48%

19.20%

Dividend yield

-

-

P/B Ratio

28.60

3.35

Beta

1.80

1.16

Google is priced with much lower P/E ratios. It is less volatile and has a significantly lower P/B value than Baidu. Surely, Baidu can be an outperformer if it keeps growing at this pace, but if things go south, the stock will fall off the cliff with nothing to hold on. On the other hand, Google has a soft cushion of $121 cash per share.

Chipotle Mexican Grill is another high momentum stock. It returned 43.54% since January and 106% in the last 12 months. The company has been doing pretty well. Annualized EPS growth in the last 5 years has been 31.60%. Gross margin is 26.11% and net profit margin is 9.4%. There are no debt issues. Debt/equity ratio is 0. Analysts have a mean annualized EPS growth estimate of 23% for the next 5 years.

While 23% EPS growth is possible, this is already priced by the market. The stock is trading with a high P/E ratio of 50.45 and a forward P/E ratio of 35.37. P/B value is 10.18. Based on 23% EPS growth estimate, Chipotle Mexican Grill has an O-Metrix score of 2.69.

Cramer suggests Verizon as a good dividend stock, "I would rather to go Verizon or Vodafone for yield".

While I agree that Verizon is a nifty dividend stock, I would rather prefer AT&T (NYSE:T) over Verizon. AT&T offers more buck for the money than Verizon. Here is a brief comparison of the two telecommunication service providers:

Verizon

AT&T

P/E ratio

16.13

8.87

Forward P/E ratio

13.85

11.52

Estimated EPS growth for the next 5 years

8.48%

5.89%

Dividend yield

5.40%

5.88%

Payout Ratio

87%

51.53%

P/B Ratio

2.60

1.52

PEG Ratio

1.90

1.51

While the EPS growth estimate for AT&T is slightly lower than that of Verizon, it offers a better yield with a much lower payout ratio. Moreover, AT&T has a low PEG ratio of 1.51 and a relatively lower P/B value of 1.52. It is also trading with a single digit trailing P/E ratio of 8.87. Based on these fundamentals AT&T has an O-Metrix score of 5.77, whereas Verizon has an O-Metrix score of 4.63.

Whole Foods Market has a niche product base of natural and organic foods. The company was able to increase its EPS at a rate of 7.60% in the last 5 years. EPS increased by 69.28% in this year and 30% in the last quarter. Analysts expect an annualized EPS growth of 16.5% for the next 5 years.

I have my doubts about Whole Foods’ EPS growth estimate. While the company has a nice niche of customers, other big retailers are getting more involved with organic and healthy foods. Local food co-operatives are also becoming serious competitors to Whole Foods’ chain stores.

Even if the earnings grow at the expected rate, this is already priced by the market. The stock is trading with a trailing P/E ratio of 35 and a forward P/E ratio of 28.57. It pays a yield of 0.62%. PEG ratio is 2.12 and O-Metrix score is 2.74.

Gold does not produce any economic activity, does not create any earnings, and it does not pay any dividends. The legendary investor, Warren Buffett suggests, "if you take all of the gold in the world and put it into a cube, it would be about 67 feet on a side and you could get a ladder and get up on top of it. You can fondle it, you can polish it, and you can stare at it. But it isn't going to do anything".

I totally agree with Warren Buffett on gold. It just does not have any utility. Similar to tulip-mania during the 18th century, and tech-mania of the late 90s, we are experiencing a gold-mania in the 21st century. The gold prices are being driven to insanely high levels, thanks to the massive speculation in gold futures. The speculations on futures drive the spot prices higher than fair value. The natural forces of demand and supply are not enough to justify the current prices. While it was a brilliant idea, to invest in gold 10 years ago, I would not buy any gold today, especially when the prices are hovering around $1,800. Gold is one of the riskiest investments in today’s valuation. If you believe that gold will never go down, take a look at the chart below:

click on image to enlarge

Source: Cramer Likes These 6 Stocks But I Do Not Agree With Him This Time