4 Buy And 4 Sell Ideas By Cramer

by: Efsinvestment

Jim Cramer is one of the most entertaining and respectable stock pickers in the market. While I enjoy the way he presents his shows, I hardly catch up with him as he makes his suggestions so fast. In the week’s last Lightning Round program, he made eight calls, four of them bullish and the other four bearish. I have investigated all of these stock mentions from a fundamental perspective, adding my O-Metrix Grading System where applicable. Here is a fundamental analysis of these stocks from Cramer's Lightning Round:

Stock Name


Cramer's Suggestion

O-Metrix Score

My Take

MAKO Surgical


Sell Some and Hold the Rest



Insituform Technologies





Broadridge Financial





Eastman Kodak














Long-Term Buy

iShares Silver Trust





SPDR Gold Trust





Cramer is a little concerned about MAKO Surgical, and he recommends taking “a little off the table.” The company has a P/E ratio of -35.5, and a forward P/E ratio of -83.3, as of Sep 9. Five-year annualized EPS growth forecast is 20.00%. With a horrible profit margin of -67.9%, MAKO has no dividend policy. Note that the industry average for the profit margin is 13.4%.

Insider transactions have decreased by 70.33% in the last six months, while insiders own only 2.87% of the stock. Target price indicates a 32.5% downside potential, whereas it is trading 8.94% lower than its 52-week high. P/B is 13.5, and P/S is 23.0, both of which are alarming red flags. ROA and ROE are -37.65% and -42.66%, respectively. Operating margin is -68.4%, and the stock returned 227% in a year. Insiders have been selling stocks and exercising options for a while. Moreover, it has a one-star rating from Morningstar. Five-year annual EPS growth estimation is beyong MAKO’s reach, especially with these indicators. Staying away is the best.

Cramer recommends avoiding Insituform Technologies for now. As of the Sep 9 close, it was trading at a P/E ratio of 13.6, and a forward P/E ratio of 8.6. Analysts expect the company to have 17.8% annual EPS growth in the next five years, which is fair given the 15.49% EPS growth of past 5 years. Profit margin (5.1%) more than doubles the industry average of 2.4%, while it pays no dividend yield.

The company returned -28.7% in the last twelve months, whereas it has an O-Metrix score of 8.01. Institutions own 97.30% of the stock, and earnings increased by 90.61% this year. Target price is $25.94, implying a 67.3% increase potential. The stock is trading 48.33% lower than its 52-week high. Operating margin (7.1%), profit margin, and debt-to equity ratio are strong green flags. Insiders have been buying stocks since mid-May. Average analyst recommendation is 1.2 (1=Buy, 3=Sell). Current decline has created a good entry point, in my opinion.

Cramer is a buyer of Broadridge Financial, as technological outsourcing has been a “good business.” The New York-based Broadridge shows a trailing P/E ratio of 15.4, and a forward P/E ratio of 10.9, as of the Friday close. Estimated annualized EPS growth for the next five years is 8.0%. Profit margin in 2010 was 7.8%, while shareholders enjoyed a 3.20% dividend.

O-Metrix score of Broadridge is 4.25, and it returned -11.0% in a year. Target price implies an about 23.4% upside potential, whereas it is currently trading 19.57% lower than its 52-week high. ROE is 21.1%, and debt-to equity ratio is 0.2, both of which are way better than their industry averages. Institutions hold 87.12% of the shares, and analysts estimate a 25.83% EPS growth for the next year. ROE and ROI are 21.14% and 11.89%, respectively. I wouldn’t ignore this stock.

Cramer recommends avoiding Eastman Kodak as it is currently overpriced. It has a P/E ratio of -0.8, and a forward P/E ratio of -2.8, as of the Sep 9 close. Analysts estimate a 10.00% EPS growth for the next five years, which sounds overdone when its -15.68% EPS growth of past 5 years is considered. Profit margin (-16.3%) is crushed by the industry average of 6.7%, while it offers no dividend yield.

Earnings decreased by 7.03% this quarter, and 189.16% this year. Insiders own only 0.23% of the stock, whereas it is trading 51.76% lower than its 52-week high. Sales decreased by 4.50% this quarter, while operating margin is -15.7%. ROA is -17.53%, and SMA200 is -19.81%. Target price implies a 35.1% upside potential, whereas it returned -25.9% in a year. Analysts give a 2.4 recommendation for Eastman Kodak (1=Buy, 3=Sell). I see no reason to have any relations with this stock for now.

Cramer expects Alcoa to turn around in accordance with the global economy, therefore, he remains bullish on it. The New York-based aluminum maker, as of Friday’s close, was trading at a P/E ratio of 13.8, and a forward P/E ratio of 8.1. Morningstar analysts estimate an annual EPS growth of 3.0% in the next five years. Interestingly, Finviz suggests 70% EPS growth for the next 5 years. Yahoo Finance states 36.4% EPS growth for the next 5 years. It paid a 1.04% dividend last year, while the profit margin was 4.0%.

Alcoa returned 3.6% in a year. Insiders own only 0.07% of the stock, whereas it is trading 37.06% lower than its 52-week high. Target price is $18.85, indicating an about 62.7% upside movement potential. SMA20, SMA50, and SMA200 are -3.78%, -16.00% and -25.33%, respectively. Insiders have been both exercising options and selling stocks for a while. The debt-to equity ratio is 0.6, higher than the industry average of 0.4. Operating margin is 5.9%. While ROA is 2.41%, ROE is 6.74%. Alcoa has the support of Cramer, but it has been a loser so far. Cramer does not want you to give up on Alcoa. I agree with Cramer, and I think the stock found a strong support at $11 -$12 range. Downside is limited, but upside potential is high on Alcoa.

Coach returned 37.7% in the last twelve months, and Cramer is still bullish on it. As of Sep 9, the company shows a trailing P/E ratio of 18.8, and a forward P/E ratio of 14.0. Five-year annualized EPS growth forecast is 15.2%. Profit margin (21.2%) more than doubles the industry average of 10.3%, while it offered a 1.68% dividend last year.

Target price is $69.74, which implies a 30.0% upside movement potential. The stock is currently trading 22.17% lower than its 52-week high, whereas its O-Metrix score is 5.14. ROA, ROE, and ROI are 34.53%, 56.50% and 55.63%, respectively. Coach had an EPS growth of 25.53% this year, and 6.63% this quarter. Institutions own 91.88% of the stock. Debts are far from posing a threat. Operating margin (31.4%), profit margin, ROE, and debt-to equity ratio (0.0) are trustworthy green flags. Yields are consistent. 18 out of 27 analysts covering the company recommend buying. Current price offers a good entry point, and Coach is a stable profit-maker in the long-term.

Cramer rather prefers Gold instead of Silver. Here is what Warren Buffett says about gold:

(Gold) gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head. 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.

We are observing a gold-mania in this century, similar to tech-mania of the late 90s. Who can explain gold’s price at this high with this physical supply-demand forces ? I am bearish on gold, silver, and any other precious metals. They have no utility, they pay no dividends and do not create any earnings. Similar to Buffett, George Soros is bearish on gold as well. He nearly closed his gold stake last quarter, reducing it by 98.95%. I guess gold is playing “Live fast, die young” in this century, as it will come crushing down with this insane volatility. Gold will come down as soon as speculators are convinced that they have made quite a fortune on it.

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