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Jim Cramer, the Mad Money host, is one of the most entertaining stock pickers in the market. He tries to guide investors with lots of stock suggestions. In Sep 8’s Lightning Round program, he made eight calls. His calls were divided into two this time, four of them bullish and the other four bearish. I have investigated all of his Lightning Round stock mentions from a fundamental perspective, adding my O-Metrix Grading System where necessary. Here is a fundamental analysis of these stocks from Cramer's Lightning Round:

Stock Name

Ticker

Cramer's Suggestion

O-Metrix Score

My Take

J.M. Smucker

SJM

Avoid for Now

3.41

Hold

Aflac Inc.

AFL

Avoid

10.97

Buy

MDU Resources

MDU

Buy

3.36

Hold

Duke Energy

DUK

Buy

3.53

Long-Term Buy

Teavana Holdings

TEA

Buy

N/A

Avoid

BMC Software

BMC

Avoid

5.28

Risky Buy

Tennant Co.

TNC

Avoid

6.18

Hold

Walter Energy

WLT

Sell some and hold the rest

13.20

Long-Term Buy

Cramer doesn’t want to recommend J.M. Smucker until it yields a minimum 3% dividend. It has a P/E ratio of 17.8, and a forward P/E ratio of 12.9, as of Sep 8. Five-year annual EPS growth forecast is 7.8%. It paid a 2.67% dividend last year, while the profit margin was 9.9%.

The stock returned 17.6% in the last twelve months, whereas it has an O-Metrix score of 3.41. Target price implies a 10.6% upside movement potential, and it is currently trading 9.77% lower than its 52-week high. The debt-to assets ratio is strolling around 20%. Insiders have been mostly selling stocks for some time. 9 out of 15 analysts recommend holding. Buying would not be wise in my opinion, but holding is OK.

Aflac is just another financial stock that Cramer doesn’t care for. As of the Sep 8 close, the company was trading at a P/E ratio of 9.2, and a forward P/E ratio of 5.4. Analysts estimate a 12.6% annualized EPS growth for the next five years. With a profit margin of 8.6%, shareholders enjoyed a 3.42% dividend last year.

Aflac’s O-Metrix score is 10.97, while it returned -30.7% in the last twelve months. Debts are far from being a threat. Target price indicates an about 69.6% increase potential, and the stock is trading 40.29% lower than its 52-week high. Operating margin (13.3%), ROE (16.4%), and debt-to equity ratio (0.0) are strong green flags. PEG value is 0.4, whereas earnings increased by 55.25% this year. Moreover, Aflac has a four-star rating from Morningstar. I believe the current decline has created an opportune entry point.

Cramer says that MDU Resources is “an extremely strong company with great growth.” The North Dakota-based MDU, as of Sep 8, shows a trailing P/E ratio of 16.1, and a forward P/E ratio of 14.1. Estimated annual EPS growth for the next five years is 7.0%. Profit margin in 2010 was 5.9%, while it offered a 3.15% dividend.

The stock is currently trading 12.95% lower than its 52-week high, and its O-Metrix score is 3.36. Target price is $23.44, implying a 13.6% increase potential. Operating margin (10.0%) and debt-to equity ratio (0.5) are strong green flags. MDU Resources returned 5.5% in a year, and earnings increased by 293.12% this year.

On the other hand, P/B (1.4) and P/S (1.0) are moderate red flags. Insiders own only 0.02% of the stock, and it is paying the same dividend since Sep 2008. SMA50 and SMA200 are -2.43% and -3.34%, respectively. Earnings decreased by 7.94% this quarter. Hold if you own it, but do not buy.

Cramer praises Duke Energy’s CEO Jim Rogers and he thinks that this stock is a buy. As of the Sep 8 close, Duke was trading at a P/E ratio of 12.2, and a forward P/E ratio of 13.3. Analysts expect the company to have a 3.7% annualized EPS growth in the next five years. Profit margin (14.0%) is way better than the industry average of 8.3%, while it offers a nifty dividend of 5.32%.

Its O-Metrix score is 3.53, whereas target price indicates a 0.6% downside potential. The stock is trading only 1.35% lower than its 52-week high, while it returned 7.2% in the last twelve months. Earnings increased by 291.84% this quarter, and 21.55% this year. Debts are increasing for the last four years, as well as assets. P/B (1.1), operating margin (22.0%), ROE (9.4%), and debt-to equity ratio (0.8) are moderate green flags. SMA50 is 1.91%, while SMA200 is 5.39%. I think it is a long-term buy.

Cramer gets behind Teavana as he likes its trustworthy management team. The specialty retailer has a P/E ratio of 60.70, as of Sep 8. It pays no dividend yield, while the profit margin (10.0%) is far better than the industry average of 3.7%.

Earnings increased by 126.85% this year, and 72.42% this quarter. Sales rose by 35.56% this quarter. Insiders own 59.58% of the stock, and insider transactions have increased by 65.26% in the last six months. Gross margin is 63.6%, while the stock is trading 23.68% lower than its 52-week high.

On the other hand, debt-to assets ratio has come from 0% to 25% within the last three quarters. P/B is -14.8, and P/S is 6.4, both of which are alarming red flags. SMA20, SMA50, and SMA200 are -7.45%, -11.08% and -11.08%, respectively. Moreover, P/E ratio is way too high to fit my criteria.

BMC Software doesn’t have the momentum required for performing well in the software business, Cramer said. The Texas- based BMC Software has a P/E ratio of 15.6, and a forward P/E ratio of 10.9, as of the Sep 8 close. Analysts estimate an annual EPS growth of 14.0% for the next five years. Profit margin (21.8%) is way above the industry average of 12.1%, while it has no dividend policy.

Earnings increased by 15.20% this year. Institutions hold 94.31% of the stock, while it has an O-Metrix score of 5.28. Target price implies a 34.3% upside movement potential, and the stock is trading 30.34% lower than its 52-week high. Gross margin is 76.1%, whereas operating margin is 25.6%. ROE and ROI are 30.56% and 25.10%, respectively. BMC Software returned 1.5% in the last twelve months, while debt-to assets ratio is slightly going down for the last five quarters. Operating margin, profit margin, ROE, and debt-to equity ratio (0.2) are strong green flags. The stock has a four-star rating from Morningstar. However, it came crushing down since July 2011. If you accept the risk, then this is your stock.

Cramer is bearish on the healthcare sector, as there is an uncertainty with healthcare reform. The Minnesota-based Tennant, as of Sep 8, shows a trailing P/E ratio of 21.5, and a forward P/E ratio of 16.0. Five-year annualized EPS growth forecast is 21.5%, which sounds great given the 7.41% EPS growth of last five years. It paid a 1.70% dividend last year, while the profit margin was 5.0%.

Its O-Metrix score is 6.18, which, I believe, should be much lower as long-term EPS growth estimates sound exaggerated. Target price is $49.33, indicating an about 23.1% upside potential. The stock is trading 10.46% lower than its 52-week high, while it returned 26.7% in a year. P/E ratio, P/B (3.4), operating margin (5.3%), and profit margin are strong red flags. Insiders own only 0.85% of the stock, and earnings decreased by 5.98% this quarter. Insiders have been exercising options and selling stocks for a while. Holding is all right, but buying would not be wise, in my opinion.

“Ring the register on this stock and let the rest run,” Cramer commented on Walter Energy. The stock was trading at a P/E ratio of 11.7, and a forward P/E ratio of 6.9, as of the Sep 8 close. Analysts expect the company to have a 24.00% annualized EPS growth in the next five years, which is conservative when its 49.84% EPS growth of past 5 years is considered. Profit margin (20.4%) outruns the industry average of 11.5%, while it pays a thin dividend of 0.57%.

The stock is currently trading 38.77% lower than its 52-week high, whereas it has an O-Metrix score of 13.20. Target price implies a 42.5% upside movement potential, and it returned 18.7% in a year. The debt-to assets ratio has nearly landed within the last five years. Cash flow seems all right. Operating margin (30.6%), profit margin, and ROE (34.9%) are trustworthy green flags. Earnings increased by 175.14% this year, and sales rose by 88.25% this quarter. Insider transactions have increased by 39.14% in the last six months, while institutions own 94.74% of the stock. Insiders have been buying stocks since the beginning of May 2011. Walter is capable of returning serious profits in the long run.


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

Source: Jim Cramer's Latest Stock Picks