Here are the last five stock mentions from Jim Cramer’A Lightning Round on October 14, along with my opinions about them. The O-Metrix Grading System is applied where possible. (Part I of 7 Buy And 3 Sell Ideas From Jim Cramer.)
Stock Name | Ticker | Cramer's Suggestion | O-Metrix Score | My Take |
Dendreon | (DNDN) | Avoid | N/A | Avoid |
Sanofi-Aventis | (SNY) | Buy | 2.19 | Hold |
Xerox | (XRX) | Avoid | 4.97 | Buy |
EMC Corp. | (EMC) | Buy | 3.98 | Buy |
UnitedHealth | (UNH) | Avoid | 6.91 | Buy |
Patriot Coal | (PCX) | Sell | N/A | Sell |
(Data obtained from Finviz/Morningstar, and is current as of October 14 close. You can download the O-Metrix calculator here.)
Cramer is bearish on Dendreon (DNDN) as it is “too speculative,” and recommends Sanofi-Aventis (SNY) instead. Here is a brief comparison between these two stocks:
Current as of October 14 close. | Dendreon | Sanofi-Aventis |
P/E ratio | -3.5 | 17.2 |
Forward P/E ratio | -7.6 | 8.5 |
Estimated EPS growth for the next 5 years | 3.0% | 1.9% |
Dividend yield | - | 3.73% |
Profit margin | - | 13.4% |
Gross margin | 40.6% | 70.5% |
Upside movement potential | 70.3% | 24.8% |
Dendreon returned -74.3% in the last twelve months, while Sanofi-Aventis returned 0.7%. Dendreon is currently trading 77.82% lower than its 52-week high, and Sanofi-Aventis is trading 12.72% lower. Average analyst recommendation is 2.90 for Dendreon, and 1.60 for Sanofi-Aventis (1=Buy, 5=Sell). Sanofi is obviously safer than Dendreon, but I would wait until earnings confirm the growth expectations.
Rather than investing in Xerox (XRX), Cramer prefers EMC (EMC) instead. Here is a brief comparison between these two stocks:
Current as of October 14 close. | Xerox | EMC |
P/E ratio | 10.7 | 24.1 |
Forward P/E ratio | 6.4 | 13.5 |
Estimated EPS growth for the next 5 years | 6.0% | 15.0% |
Dividend yield | 2.20% | - |
Profit margin | 4.5% | 11.5% |
Gross margin | 34.5% | 59.5% |
Upside movement potential | 52.6% | 32.4% |
Xerox is currently trading 34.86% lower than its 52-week high, while EMC is trading 19.63% lower. O-Metrix scores of Xerox and EMC are 4.79 and 3.98, respectively. Xerox returned -30.2% in a year, whereas EMC returned 9.4%. Both of them are nice buys for me.
They [UnitedHealth] (UNH) ended up with accounting problems and it was bad. I don't recommend that group with this President.
The Minnesota-based UnitedHealth, as of Friday’s close, was trading at a P/E ratio of 10.6, and a forward P/E ratio of 9.9. Five-year annualized EPS growth forecast is 12.8%. It offers a 1.38% dividend, while the profit margin is 5.0%.
Target price is $57.90, which implies a 22.6% upside potential. The stock is trading 11.44% lower than its 52-week high, whereas it has an O-Metrix score of 6.91. UnitedHealth returned 31.2% in the last twelve months. SMA50 and SMA200 are 2.41% and 3.01%, respectively. Institutions hold 87.53% of the shares, while it has a four-star rating from Morningstar. Beta value is 0.93. ROE is 18.90%, whereas PEG value is 0.8. Consider adding this stock to your portfolio.
Patriot Coal (PCX): Cramer recommends homegamers wait for a “rally, and get out.” It shows a trailing P/E ratio of -14.9, and a forward P/E ratio of 10.5, as of the October 14 close. Analysts estimate a 5.0% annual EPS growth for the next five years. It pays no dividend, while the profit margin is -3.0%.
The company is currently trading 62.91% lower than its 52-week high, whereas it returned -18.4% in a year. Target price is $22.17, implying a 104.7% upside movement potential. Patriot Coal has an awful Beta value of 2.96, and earnings decreased by 135.47% this year. SMA50 and SMA200 are -11.75% and -47.53%, respectively. Gross margin and operating margin are 8.9% and 0.1%, respectively. The debt-to assets ratio is increasing since 2007, whereas cash flow is struggling. While ROA is -1.72%, ROE is -7.43%. ROI is -4.92%. Selling is the best strategy.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
