8 Bullish Stock Picks By Jim Cramer

by: Efsinvestment

Jim Cramer is one of the most entertaining stock pickers on the street, who gives a hand to simple investors on how to choose stocks. After making lots of stock suggestions recently, Cramer made an excellent program yesterday. In September 28’s Lightning Round, Cramer came up with some outstanding stocks like Potash (NYSE:POT), Google (NASDAQ:GOOG), Apple (NASDAQ:AAPL), KKR Financial (KFN) Microsoft and (NASDAQ:MSFT).

I have enjoyed the most writing this article, as almost all of them were among my favorite picks. He made eight calls this time, and none of them were bearish. I have examined all of his stock mentions from a fundamental perspective, and added my opinion about them. I have applied my O-Metrix Grading System where possible, as well. Here is a fundamental analysis of these stocks from Cramer's September 28 Lightning Round:

Stock Name


Cramer's Suggestion

O-Metrix Score

My Take



Long-Term Buy


Long-Term Buy



Buy After Pullback


Top Pick



Buy After Pullback





Buy After Pullback


Top Pick

B&G Foods





KKR Financial




Top Pick





Long-Term Buy

Annaly Capital




Risky Buy

Click to enlarge

Data from Finviz/Morningstar and is current as of September 29 close. You can download O-Metrix calculator, here.

Cramer recommends homegamers to buy Potash only if they will “hold it for 6 to 12 months”. The company has a P/E ratio of 16.5, and a forward P/E ratio of 10.3, as of September 29. Five-year annual EPS growth forecast is 18.0%. Although profit margin (31.0%) is great, dividend yield (0.62%) is thin.

Target price indicates a 48.0% increase potential, while it is trading 28.85% lower than its 52-week high. O-Metrix score is 6.94. Potash returned -5.9% in a year, and institutions own 73.76% of it. Earnings increased by 82.36% this quarter, and 79.63% this year. The debt-to assets ratio is decreasing for the last three quarters, while yields seem all right.

Operating margin (43.7%), profit margin and ROE (34.0%) are solid green flags. ROI is 21.30%. Morningstar gives a four-star rating to Potash, and its PEG value is 0.6. Potash is gaining a great momentum, and it can be a rewarding long-term play.

"Google, Amazon.com, and Apple can all be bought on the way down,” Cramer commented. Here is a brief comparison between these three stocks.

Current as of September 29 close.




P/E ratio




Forward P/E ratio




Estimated EPS growth for the next 5 years




Dividend yield




Profit margin




Gross margin




Upside movement potential




Click to enlarge

I would eliminate Amazon at first, as it is the poorest in terms of P/E- forward P/E ratios, O-Metrix score, profit margin, gross margin, and upside potential. I believe that Amazon is trading way above its intrinsic value. It is very likely that Amazon.com can share the same faith with Netflix (NASDAQ:NFLX) (read a full analysis of Amazon here).

Google is trading 17.96% lower than its 52-week high, while Apple is trading 7.64% lower. O-Metrix scores of Google and Apple are 6.07 and 6.69, respectively. Google returned 0.2% in a year, whereas Apple returned 38.1%. Google’s debt-to assets ratio is hovering around 10%s for the last four quarters, while Apple has zero debts.

Both of them are a must for the ultimate retirement portfolio, but Apple seems to be a slightly better bet. Moreover, we are in the eve of a new iPhone release, so this might be your last chance before the news spread out. Apple will just rock the market. My fair value estimate is $546 for Google, and $430 for Apple (full analysis here and here).

Cramer recommends buying B&G Foods, as it has a 5% dividend. The New Jersey-based food company was trading at a P/E ratio of 16.7, and a forward P/E ratio of 15.4, as of September 29. Five-year annual EPS growth forecast is 10.0%. Profit margin (9.4%) is better than the industry average of 6.8%, while it offers an attractive dividend of 4.95%.

Earnings increased by 47.77% this quarter, and 52.74% this year. Target price is $19.20, implying a 16.1% increase potential. The stock is trading 19.75% lower than its 52-week high, while it returned 49.7% in a year. O-Metrix score is 4.65. The debt-to assets ratio is decreasing since 2006, and cash flow is OK. ROE is 21.65%. B&G Foods is showing a great recovery since October 2008, so consider adding this stock to your portfolio.

Cramer is bullish on KKR Financial as it is “very inexpensive, and make that dividend.” The asset management company shows an outstanding P/E ratio of 3.6, and a forward P/E ratio of 4.5, as of the September 29 close. Morningstar analysts estimate a 10.0% annualized EPS growth for the next five years. With a profit margin of 68.0%, and a dividend of 9.44%, KKR is a terrific stock for dividend lovers.

Target price is $12.03, indicating an about 60.8% upside movement potential. The stock is trading 24.75% lower than its 52-week high, while it has an O-Metrix score of 24.00. Debt-to equity ratio is 0.4, which crushes the industry average of 1.8. ROE is 23.77%, and PEG value is 0.5. KKR Financial returned -10.1% in the last twelve months.

Although its debt-to assets ratio is at horrifying rates, it keeps decreasing for the last five quarters. P/E ratio, profit margin, ROE, and debt-to equity ratio are trustworthy green flags. Since its dip in March 2009, KKR Financial showed an outstanding recovery. What’s more, it never paid the same dividend since then. This stock is a screaming buy.

I like that they [Microsoft] have a 3% dividend but they don't have any high growth. It's OK to hold onto until they get their mojo back.

As of September 29, Microsoft has a P/E ratio of 9.5, and a forward P/E ratio of 8.2. Analysts expect the company to have an annual EPS growth of 11.1% in the next five years. With a profit margin of 33.1%, Microsoft pays a 3.13% dividend.

The company had a 28.20% EPS growth this year, and 34.59% this quarter. Target price implies a 22.6% increase potential, while it has an O-Metrix score of 8.03. Microsoft is currently trading 11.97% lower than its 52-week high, whereas it returned 6.3% in a year. Yields look good, and debts are far from being a threat. Cash flow is awesome. Debt-to equity ratio is 0.2, totally crushing the industry average of 10.6.

Gross margin and operating margin are 77.7% and 38.8%, respectively. While ROA is 23.77%, ROE is 44.84%. ROI is 38.23%. PEG value is 0.7, and it has a four-star rating from Morningstar. My fair-value estimate for Microsoft is $46 per share, which means that the stock is undervalued by about $20. This stock will be highly-rewarding in the long-run.

Cramer remains bullish on Annaly, as they have returned a lot of capital to shareholders. The New York-based Annaly was trading at a P/E ratio of 6.3, and a forward P/E ratio of 6.7, as of the September 29 close. Estimated annualized EPS growth is 3.5% for the next five years.

As one of the best managed mortgage REITs, Annaly has been an outperformer, returning nifty distributions to its shareholders. As I stated earlier, Annaly’s annualized yield on long-term assets was 4.04%, whereas its short-term interest cost was 1.59%. The interest spread was 2.45%. 89% of Annaly's portfolio consists of fixed-rate mortgage-backed securities and agency departures. The profits might be adversely affected by the Fed’s Operation Twist, but it might take several years to see the full effects. As long as the company offers double digit dividends, Annaly is a good buy.

For a list of my past articles that discuss the stocks mentioned in this article, please click here.

Disclosure: I am long AAPL, MSFT.