4 Recent Trading Ideas By Jim Cramer

 |  Includes: ENB, FRAN, NFLX, PIR
by: Efsinvestment

Jim Cramer is the co-founder of TheStreet.com, and the host of Mad Money by CNBC. He is one of the most entertaining stock pickers of all times. The global economy is in a serious uncertainty, and Cramer is trying to help investors save their earnings. Recently, he made calls on four stocks, making three bullish and one bearish call. I have investigated all of these stocks from a fundamental perspective, adding my opinion about them. I have applied my O-Metrix Grading System where possible. Here is a fundamental analysis of these stocks from Cramer's Mad Money:

Stock Name


Cramer's Suggestion

O-Metrix Score

My Take

Francesca’s Holdings




Risky Buy

Pier 1 Imports




Buy After Pullback

Enbridge, Inc





Netflix, Inc.





Click to enlarge

(Data obtained from Finviz/Morningstar and is current as of Sep 19. You can download O-Metrix calculator, here)

“It's a wait-and-see,” Cramer says, “at the moment this stock [Francesca’s Holdings] is neither a buy nor a sell.” The company was trading at a P/E ratio of 43.7, and a forward P/E ratio of 27.9, as of the Sep 19 close. Finviz analysts estimate a 35.50% annual EPS growth for the next five years. It has no dividend policy, while the profit margin (11.3%) crushes the industry average of 3.9%.

Target price is $27.67, indicating a 40.3% upside movement potential. The stock is trading 33.71% lower than its 52-week high, while O-Metrix score is 4.95. Insiders own only 0.99% of the shares, whereas insider transactions have decreased by 97.26% within the last five years. SMA20, SMA50, and SMA200 are -9.46%, -17.25% and -17.25%, respectively. Earnings decreased by 8.34% this quarter. Within just one year, debts nearly doubled assets, moving debt-to assets ratio from 0% to 190%. P/E ratio and P/S (4.9) are strong red flags. Moreover, the stock is relatively volatile. I would rate it as risky buy.

In an interview with the CEO Alex Smith, Cramer said

Pier 1 is in the sweet spot thanks to the slow pace of the housing recovery. People are staying in their homes longer and updating their furnishings rather than moving.

The Texas-based Pier 1, as of Sep 19, has a P/E ratio of 12.7, and a forward P/E ratio of 12.1. Finviz analysts expect the company to have a 12.50% annualized EPS growth in the next five years, which sounds optimistic given the -26.74% EPS growth of past five years. Profit margin (7.5%) nearly doubles the industry average of 3.9%, while it pays no dividend.

O-Metrix score of the company is 5.04, whereas earnings increased by 15.51% this quarter. Target price is $13.75, which implies a 19.0% upside potential. Institutions hold 81.98% of the shares, and the stock is trading 9.33% lower than its 52-week high. The debt-to assets ratio has landed, and cash flow is doing great. P/E ratio, operating margin (8.1%), profit margin, ROE (28.6%) and debt-to equity ratio (0.0) are strong green flags. While SMA50 is 7.36%, SMA200 is 7.94%. Pier1 returned 39.1% in the last twelve months. Analysts give a 1.70 recommendation for the company (1=Buy, 5=Sell). This stock is a buy after a pullback.

Cramer thinks that there’s a bull market being created in anything related with the oil & gas transportation, including Enbridge. It was trading at a P/E ratio of 21.0, and a forward P/E ratio of 20.1, as of the Sep 19 close. Estimated annual EPS growth for the next five years is 6.52%, which is rational when its 6.10% EPS growth of past 5 years is considered. With a profit margin of 6.6%, Enbridge pays a 3.10% dividend.

Enbridge is trading 5.49% lower than its 52-week high, while it has an O-Metrix score of 2.34. The stock returned 26.5% in a year, whereas it is currently trading 5.49% lower than its 52-week high. Target price is $31.77, implying an about 0.3% increase potential. Yields seem all right. Operating margin is 10.0%. ROA and ROE are 3.86% and 14.96%, respectively. Debts are increasing for the last four years, whereas earnings decreased by 55.59% this year. P/B is 3.1, above the industry average of 2.5. Enbridge might be worth holding, but there are better buys in the energy sector.

Cramer is sorry for staying in Netflix, as things didn’t go as he expected. After a price increase in DVDs, nearly 0.8 million cancelled their subscriptions. Netflix shows a trailing P/E ratio of 42.9, and a forward P/E ratio of 25.1, as of Sep 19. Five-year annual EPS growth forecast is 33.1%. Profit margin (8.0%) more than doubles the industry average of 3.9%, while it has no dividend policy.

Netflix had an EPS growth of 57.95% this quarter, and 49.35% this year. Target price implies a 55.0% increase potential, whereas it is trading 50.48% lower than its 52-week high. O-Metrix score is 4.86. Netflix returned 4.9% in a year, while debts have climbed within the last three years. Insiders hold 0.22% of the stock, and insider transactions have decreased by 92.85% in the last six months. P/B (24.4) and P/S (3.2) are hopeless red flags. Average analyst rating is 1.9 (1=Buy, 3=Sell). Moreover, it has a two-star rating from Morningstar. Insiders have been exercising options and selling stocks for a while. While SMA50 is -37.70%, SMA200 is -33.74%. Even after losing 40% in a quarter, the stock is still going down, and it is too late to sell. Holding is the best for now.

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