Seeking Alpha
Profile| Send Message|
( followers)  

Jim Cramer, the “Mad Money" host, is one of the most entertaining stock pickers in the street. He made tons of stock calls recently, trying to help home gamers protect their money. In Sep 14’s Lightning Round, Cramer made seven calls this time, including great stocks like Philip Morris (PM), Altria Group (MO), and Johnson Controls (JCI).

I have examined all of his stock mentions from a fundamental perspective. I have applied my O-Metrix Grading System where possible. Here is a fundamental analysis of these stocks from Cramer's Sep. 14 Lightning Round:

Stock Name

Ticker

Cramer's Suggestion

O-Metrix Score

My Take

First Solar

FSLR

Avoid

7.05

Long-Term Buy

Precision Castparts

PCP

Buy

3.16

Hold

Imax Corp.

IMAX

Avoid

7.71

Buy

Johnson Controls

JCI

Buy

8.05

Buy

Altria Group

MO

Buy

4.85

Buy After Pullback

Philip Morris Int’l

PM

Buy

5.04

Long Term Buy

Advanced Micro Devices

AMD

Buy

8.12

Buy

Data obtained from Finviz/Morningstar, and is current as of Sep 14.

First Solar has big European exposure, and Cramer believes that “solar is not a winner.” First Solar has a P/E ratio of 15.6, and a forward P/E ratio of 8.5, as of the Sep 14 close. Five-year annualized EPS growth forecast is 17.0%, which sounds conservative given the 89.99% EPS growth of past 5 years. It has no dividend policy, while the profit margin was 20.3% in 2010.

Target price is $139.53, which implies a 52.4% upside potential. The stock is trading 47.85% lower than its 52-week high, whereas its O-Metrix score is 7.05. Institutions own 85.18% of the shares, and it returned -34.8% in a year. The debt-to assets ratio is decreasing for the last five years. Operating margin (22.8%), profit margin, and debt-to equity ratio (0.1) are strong green flags.

While ROE is 15.24%, ROI is 14.18%. PEG value is 0.5. I think the recent downward movement has created a good entry point. This stock can boom after the European crisis, so it would be a good idea to buy some.

Cramer thinks that Precision Castparts is “the best way to play aerospace.” The stock shows a trailing P/E ratio of 22.8, and a forward P/E ratio of 16.0, as of the Sep 14 close. Analysts estimate a 12.0% annualized EPS growth for the next five years. It paid a dividend of 0.07% dividend last year, while the profit margin (16.5%) more than doubles the industry average of 8.0%.

The stock returned 35.6% in the last twelve months, whereas O-Metrix score is 3.16. P/B is 3.2, and P/S is 3.7, both of which are way above their industry averages. Insiders own only 0.07% of the shares. Precision is yielding the same dividend since Sep 2005. Insiders have been exercising options and selling stocks for a while. Moreover, it has a three-star rating from Morningstar. Hold if you own it, but do not buy.

Cramer has been bearish on Imax for some time, and he reiterated his call. However, I have my doubts. Imax was trading at a P/E ratio of 19.5, and a forward P/E ratio of 15.1, as of Sep 14. Estimated annualized EPS growth for the next five years is 26.70%, which is conservative when its 62.65% EPS growth of past 5 years is considered. Profit margin (27.7%) crushes the industry average of 10.3%, and it has no dividend policy.

Imax has an admirable O-Metrix score of 7.71. Target price is $27.83, indicating an about 56.6% upside movement potential. The stock returned 21.8% in a year, whereas it is trading 53.24% lower than its 52-week high. Earnings increased by 1485.34% this year, and institutions own 74.55% of the stock. ROA, ROE, and ROI are 19.15%, 47.13% and 38.42%, respectively. Debt-to equity ratio is 0.0, far better than the industry average of 1.5. The debt-to assets ratio has landed within the last three years. Profit margin, ROE, and debt-to equity ratio are solid green flags. I guess the recent downfall has created a good entry point.

Cramer recommends buying Johnson Controls, this “dirt cheap” stock. As of Sep 14, it has a P/E ratio of 13.1, and a forward P/E ratio of 9.1. Analysts expect the company to have a 15.7% annual EPS growth in the next five years. With a profit margin of 3.9%, Johnson Controls offered a 2.19% dividend last year.

The stock is trading 31.50% lower than its 52-week high, while it has an admirable O-Metrix score of 8.05. Target price implies a 57.4% upside potential, and it returned 1.8% in the last twelve months. Debts are decreasing for the last five years, while assets are unstable. Debt-to equity ratio is 0.4, way below the industry average of 2.7. Earnings increased by 486.50% this year, and institutions hold 79.04% of the stock. PEG value is 0.6. With a five-star rating from Morningstar, analysts give a 1.3 recommendation for Johnson Controls (1=Buy, 3=Sell). This is a stock to dive into. Cramer commented:

These are both great... Altria has a great dividend, and I think the stock goes higher. PM [Philip Morris] has great growth and a lower dividend. If you want more growth, PM is your call. If you want a bigger dividend, MO is your call."

Here is a brief comparison between these two stocks:

Current as of Sep.14 close.

Altria

Philip Morris

P/E ratio

16.1

15.4

Forward P/E ratio

12.1

12.9

Estimated EPS growth for the next 5 years

7.5%

10.5%

Dividend yield

6.18%

3.79%

Profit margin

20.7%

27.5%

Gross margin

53.5%

65.4%

Upside movement potential

6.4%

12.4%

Altria is currently trading 2.76% lower than its 52-week high, while Philip Morris is trading 7.08% lower. O-Metrix scores of Altria and Philip Morris are 4.85 and 5.04, respectively. Altria returned 12.1% in a year, whereas Philip Morris returned 21.6% in a year. Philip Morris is a diversified dividend pick for the ultimate retirement portfolio.

Both of these two are opportune buys for income oriented investors. I am not a fan of their business, but these stocks have been outperformers, and I expect them to be outperformers in the long-run. Philip Morris recently increased its quarterly dividend to $0.77 per share. While the trailing yield is 3.79%, the projected dividend yield is close to 4.7%. Nice move for the dividend lovers.

Cramer likes Advanced Micro Devices “the least in its industry,” but he still expects it to go up. The California-based company was trading at a P/E ratio of 6.5, and a forward P/E ratio of 9.5, as of Sep 14. Analysts estimate a 13.0% annualized EPS growth for the next five years, which is reasonable given the 11.42% EPS growth of past five years. Profit margin (12.8%) is lower than the industry average of 18.9%, while it pays no dividend yield.

Earnings increased by 41.91% this year, and 235.37% this quarter. The stock is trading 24.74% lower than its 52-week high, whereas O-Metrix score is 8.12. Target price is $8.30, which implies a 15.1% increase potential. Insider transactions have increased by 34.62% within the last six months, while institutions own 77.92% of the stock. It returned 15.9% in a year.

The debt-to assets ratio is going south for the last five quarters. P/S (0.8) and ROE (69.2%) are strong green flags. Moreover, it has a five-star rating from Morningstar. The stock has been a looser for a while, but I wouldn’t ignore a stock with single digit P/E ratios. AMD is a good buy at these prices.

Find more information on O-Metrix Grading System here.

Source: 7 Ideas by Jim Cramer