Jim Cramer, one of the most joyful stock pickers in the market, returned from his vacation with lots of stock suggestions:
Even in the most hideous market, there are winners out there despite the turmoil.
He helped investors by offering four stocks that performed the best in the last five years.
I have investigated these four stocks from a fundamental perspective, adding my O-Metrix Grading System where applicable. Here is a fundamental analysis of these stocks from Cramer's Mad Money:
Stock Name | Ticker | Cramer's Suggestion | O-Metrix Score | My Take |
Green Mountain Coffee Roasters | Buy | 2.58 | Hold | |
Baidu | Buy | 4.25 | Avoid | |
Questcor | Buy | 4.44 | Risky Buy | |
Priceline.com | Buy | 3.93 | Hold |
Data obtained from Finviz/Morningstar, and is current as of Sep 6.
Green Mountain Coffee Roasters (NASDAQ:GMCR) keeps going berserk, and it is #1 in Cramerâ€™s list. The company shows a trailing P/E ratio of 103.1, and a forward P/E ratio of 40.0 as of September 6. Five-year annualized EPS growth forecast is 37.0%, which is reasonable given the 46.14% EPS growth of the past 5 years. It has no dividend policy, while the net profit margin was 6.5% last year.
Earnings increased by 175.40% this quarter, and 27.54% this year. Sales rose by 126.55% this quarter. The stock is trading only 3.80% lower than its 52-week high, whereas it has an O-Metrix score of 2.58. Target price implies a 13.3% upside potential, while it returned 242% in a year. Assets are increasing for the last three quarters, and debts are decreasing. SMA50 and SMA200 are 11.88% and 66.57%, respectively. Institutions own 76.72% of the stock. Debt-to equity ratio is 0.2, way better than the industry average of 1.3.
However, forward P/E ratios are too high for me. Moreover, P/B (9.0) and P/S (6.8) are alarming red flags. Hold if you own it, but do not buy.
Cramer keeps recommending Baidu (NASDAQ:BIDU) although it returned nearly 50% since January. As of the September 6 close, it was trading at a sky-high P/E ratio of 64.9, and a forward P/E ratio of 33.0. Estimated annual EPS growth for the next five years is 41.7%. With a profit margin of 46.5%, Baidu pays no dividend yield.
Target price is $184.7, which indicates a 29.6% upside movement potential. O-Metrix score is 4.25, and it returned 75.3% in a year. P/B is 28.6%, and P/S is 30.3%, both of which are way higher than their industry averages. The stock is trading 14.12% lower than its 52-week high. Baidu made its first debt last year, moving its debt-to assets ratio up from 0%. Moreover, the stock has a two-star rating from Morningstar. I do not find annual EPS growth expectations rational. It's best to stay away in my opinion.
That [Questcor Pharmaceuticals] is exactly what we like to look for when we speculate in biotech stocks. You have to keep these orphan drug names on your radar screen, companies with treatments for extremely rare conditions. Cramer comments.
The California-based Questcor (QCOR), as of the September 6 close, has a P/E ratio of 45.2, and a forward P/E ratio of 24.6. Analysts expect the company to have an annualized EPS growth of 31.0% in the next five years, which sounds reasonable when its 41.64% EPS growth of last five years is considered. Profit margin in 2010 was 30.0%, while it has no dividend policy.
The company has an O-Metrix score of 4.44, whereas it returned 215% in the last twelve months. Target price indicates a 10.4% downside potential, and it is trading 7.29% lower than its 52-week high. Institutions hold 93.75% of the stock. Earnings increased by 34.79% this year, and 47.37% this quarter. Sales rose by 62.38% this quarter. Gross margin and operating margin are 93.9% and 44.9%, respectively. While ROE is 35.63%, ROA is 28.17%.
On the other hand, P/B (12.9) and P/S (13.6) are extremely higher than their industry averages. Insider transactions for the last six months have decreased by 17.62%, and insiders own only 0.75% of the stock. Questcorâ€™s P/E- forward P/E ratios are way too high for me. Insiders have been exercising options and selling stocks for a while. Moreover, the stock is highly volatile. Buy at your risk.
Finally, his last pick is Priceline.com, (NASDAQ:PCLN) which returned approximately 1500% in the last five years. It shows a trailing P/E ratio of 37.9, and a forward P/E ratio of 18.0, as of September 6. Estimated annual EPS growth for the next five years is 22.0%. Profit margin (19.8%) nearly triples the industry average of 6.7%, while it has no dividend policy.
The company had an EPS growth of 121.89% this quarter, and 31.28% this year. Institutions own 99.24% of the stock, and the O-Metrix score is 3.93. While SMA200 is 12.46%, SMA50 is 4.50%. Target price is $621.42, implying an about 15.6% upside movement potential. The stock is trading only 4.33% lower than its 52-week high, while it returned 72.2% in a year. Operating margin (27.6%), profit margin, ROE (42.7%), and debt-to equity ratio are solid green flags.
On the other hand, the P/E ratio is too high. P/B (13.4) and P/S (7.5) are alarming red flags. Moreover, Priceline has a two-star rating from Morningstar. Insiders have been mostly selling stocks for approximately one year. Hold if you own it, but buying would not be wise, in my opinion.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.