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Here are the last six stock mentions from Jim Cramer’s Lightning Round on October 4, along with my opinion about them. The O-Metrix Grading System is applied where possible, as well.

Stock Name

Ticker

Cramer's Suggestion

O-Metrix Score

My Take

TriQuint Semiconductor

TQNT

Avoid

14.22

Long-Term Buy

International Business Machines Corp.

IBM

Top Pick

4.00

Long-Term Buy

Cree, Inc.

CREE

Avoid

4.24

Buy, but alternative is better

EMC Corp.

EMC

Buy

4.34

Buy

Red Hat, Inc.

RHT

Buy

1.62

Avoid

Manulife Financial

MFC

Avoid

8.86

Buy

(Data obtained from Finviz/Morningstar, and is current as of October 4 close. You can download the O-Metrix calculator here.)

Cramer is bearish on TriQuint, explaining his opinion with a simple “No.” It was trading at a remarkable P/E ratio of 4.8, and a forward P/E ratio of 7.5, as of October 4. Analysts expect the company to have a 17.5% annual EPS growth in the next five years. With a profit margin of 19.5%, TriQuint has no dividend policy.

Target price is $7.22, which implies a 41.5% upside potential. The stock is trading 66.45% lower than its 52-week high, while it returned -46.1% in a year. O-Metrix score is 14.22. Earnings increased by 994.51% this year, and institutions hold 85.97% of the shares. TriQuint has zero debts for the last four years, whereas its assets are increasing since then. Cash flow seems all right. P/E ratio, P/B (0.9), P/S (0.9), and debt-to equity ratio (0.0) are strong green flags. ROA and ROE are 20.39% and 23.88%, respectively. PEG value is 0.4. Although TriQuint is having hard times, I believe it will outperform in the long run.

Cramer believes that IBM is “terrific,” and it is a great buy as IBM ”got knocked down a couple of bucks.” As of October 4, it shows a trailing P/E ratio of 14.6, and a forward P/E ratio of 12.2. Five-year annualized EPS growth forecast is 9.0%. Profit margin (14.7%) is slightly higher than the industry average of 12.9%, while it offers a 1.72% dividend.

O-Metrix score of the company is 4.00, whereas its target price indicates a 9.4% increase potential. The stock is trading only 5.46% lower than its 52-week high, and it returned 26.9% in the last twelve months. Earnings increased by 14.91% this quarter, and 15.21% this year. SMA200 is 6.35%, while SMA50 is 2.22%. Beta value is 0.71. Yields are awesome, and debts are far from being a threat. Debt-to equity ratio is 1.0, which crushes the industry average of 8.0. ROA, ROE, and ROI are 14.17%, 69.58% and 30.56%, respectively. My fair value estimate for IBM is $198.02 per share, which means that the stock is undervalued by about $24. I believe IBM is an excellent profit maker in the long term. (Full analysis, here).

Cramer rather prefers EMC or Red Hat instead of Cree. Here is a brief comparison between these three stocks:

Current as of October 4 close.

Cree

EMC

Red Hat

P/E ratio

20.7

22.2

74.6

Forward P/E ratio

14.2

12.3

36.4

Estimated EPS growth for the next 5 years

14.8%

15.0%

18.0%

Dividend yield

-

-

-

Profit margin

14.8%

11.5%

12.0%

Gross margin

44.1%

59.5%

83.5%

Upside movement potential

61.3%

47.0%

21.1%

I eliminate Red Hat at first, as it is the poorest in terms of P/E- forward P/E ratios, O-Metrix score, and upside potential. Cree is currently trading 7.89% lower than its 52-week high, while EMC is trading 27.11% lower. O-Metrix scores of Cree and EMC are 4.24 and 4.34, respectively. Cree returned -53.7% in a year, whereas EMC returned 2.5%. Morningstar gives a four-star rating to Cree, and a five-star rating to EMC. Although both are sweet stocks, I believe EMC is a better buy.

Cramer is bearish on all financials, including Manulife Financial. The Toronto-based company was trading at a P/E ratio of 9.7, and a forward P/E ratio of 7.1, as of October 4. Analysts estimate a 10.0% annual EPS growth for the next five years. Profit margin (6.4%) is slightly below the industry average of 7.0%, while it offers an enjoyable dividend of 4.89%.

O-Metrix score of Manulife is 8.86, whereas the stock is trading 43.32% lower than its 52-week high. Target price is $17.11, implying a 58.5% upside movement potential. Manulife returned -15.3% in the last twelve months. Debts are decreasing for the last four quarters, and earnings increased by 117.96% this quarter. PEG value is 0.7. 9 out of 17 analysts recommend buying, and I agree with them.

Source: 7 Buy And 6 Sell Ideas By Jim Cramer: Part II