On October 11's Lightning Round, Cramer made fifteen calls. I had to divide my article into two in order to analyze all of them. I have examined all of his stock mentions from a fundamental perspective, and added my opinion about them. Here is a fundamental analysis of the first nine stocks from Cramer's October 11 Lightning Round, after applying my O-Metrix Grading System where applicable.
|Stock Name||Ticker||Cramer's Suggestion||O-Metrix Score||My Take|
|Under Armour||(UA)||Buy After Pullback||2.54||Avoid|
|AnnTaylor||(ANN)||Alternative is Better||5.33||Buy|
|Ross Stores||(ROST)||Buy||5.04||Buy After Pullback|
|TJX Companies||(TJX)||Buy||4.97||Long-Term Buy|
|New Oriental Education||(EDU)||Avoid||3.72||Avoid|
(Data obtained from Finviz/Morningstar, and is current as of October 11 close. You can download the O-Metrix calculator here.)
Cramer wants Under Armour to "come in a little" before buying. It has a P/E ratio of 51.3, and a forward P/E ratio of 33.2, as of October 11. Analysts expect the company to have a 21.5% annual EPS growth in the next five years. Profit margin is 6.2%, while it has no dividend policy.
Target price implies 2.5% upside potential, whereas the stock is trading 9.26% lower than its 52-week high. O-Metrix score is 2.54, and Under Armour returned 62.2% in a year. Cash flow is not doing so good, and the company has a one-star rating from Morningstar. P/B is 7.2, and P/S is 3.2, both of which are alarming red flags. Operating margin is 10.1%. Beta value is 1.47, and PEG value is 1.5. Insiders have been mostly selling stocks for a while. Long-term EPS growth estimates seem beyond Under Armour's reach under these circumstances.
Veolia returned -46.5% in a year, and Cramer is bearish on the stock. It was trading at a P/E ratio of -23.0, and a forward P/E ratio of 10.0, as of the October 11 close. Estimated annual EPS growth for the next five years is 7.0%. Profit margin of (0.4%) is crushed by the industry average of 7.1%, while it offers a tremendous dividend of 9.86%.
Veolia is currently trading 53.35% lower than its 52-week high, and earnings decreased by 247.92% this quarter. Target price is $21.45, indicating an about 43.6% upside movement potential. Debts are increasing for the last four years. Beta value is 1.84, and PEG value is 1.4. Gross margin and operating margin are 15.2% and 3.4%, respectively. ROE is 1.83%, ROA is 0.28%. ROI is 0.48%. I see no reason to buy this stock.
Cramer likes Ross Stores and TJX Companies instead of AnnTaylor. Here is a brief comparison between these three stocks:
|Current as of October 11 close.||AnnTaylor||Ross Stores||TJX Companies|
|Forward P/E ratio||10.9||13.9||13.1|
|Estimated EPS growth for the next 5 years||14.2%||14.3%||13.9%|
|Upside movement potential||24.3%||-1.3%||5.8%|
I eliminate TJX, as it is the poorest in terms of average P/E ratio, long-term EPS growth estimate, O-Metrix score, and gross margin. AnnTaylor is trading 25.88% lower than its 52-week high, while Ross is trading 0.79% higher. O-Metrix scores of AnnTaylor and Ross are 5.33 and 5.04, respectively. AnnTaylor returned 9.2% in the last twelve months, whereas Ross returned 51.2%. I believe all of these three stocks are buys. However, you should wait for a pullback if you want to buy Ross.
I like Westport. I think our Congress needs to catch up, but I think Westport is a call on using more of our own natural gas.
Wesport shows a trailing P/E ratio of -24.3, and a forward P/E ratio of -66.2, as of October 11. Analysts expect the company to boost is earnings by 30.0% in the next five years. It pays no dividend, while the profit margin (-31.3%) is crushed by the industry average of 5.0%.
Target price is $25.32, which implies a 12.0% downside potential. The stock is trading 15.95% lower than its 52-week high, whereas it returned -43.3% in a year. P/B is 7.6, and P/S is 7.6, both of which are hopeless red flags. Gross margin and operating margin are 37.9% and -18.3%, respectively. While ROE is -39.22%, ROA is -25.53%. ROI is -34.26%. I wouldn't put any money in Westport, until I see these indicators normalized.
Cramer is bullish on Alkermes, as their "method of drug delivery is excellent." The Massachusetts-based Alkermes has a P/E ratio of -32.3, and a forward P/E ratio of 47.2, as of the October 11 close. Profit margin (22.0%) is crushed by the industry average of 11.3%, while it offers no dividend policy.
Target price is $21.55, indicating 41.1% potential. The stock is currently trading 23.65% lower than its 52-week high; it returned -2.7% in a year. Insiders hold 0.90% of the shares, and earnings decreased by 14.0% this year. SMA20 and SMA50 are -1.50% and -2.12%, respectively. Cash flow is terrible, while operating margin is -22.5%. ROA and ROE are -9.62% and -11.38%, respectively. Moreover, it has a two-star rating from Morningstar. I would stay away from Alkermes.
Baidu is the only Chinese stock that Cramer likes, and made a bearish call on New Oriental Education. Here is a brief comparison of these stocks:
|Current as of October 11th close.||New Oriental Education||Baidu|
|Forward P/E ratio||26.4||29.7|
|Estimated EPS growth for the next 5 years||28.3%||41.7%|
|Upside movement potential||16.9%||45.1%|
New Oriental is trading 14.96% lower than its 52-week high, while Baidu is trading 21.99% lower. O-Metrix scores of New Oriental and Baidu are 3.72 and 4.71, respectively. New Oriental returned 32.0% in the last twelve months, whereas Baidu returned 29.9%. Baidu is among my high fliers list, and I am not interested in New Oriental, either (full analysis of Baidu here).
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.