7 Buy And 3 Sell Ideas From Jim Cramer

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 |  Includes: AAPL, CTL, GG, GOLD, GSK, JNPR, NFLX, RSO, TRQ, WIN
by: Efsinvestment

Although the markets did terrific within the last seven days, Friday was not a sunny day for investors. It is vital to survive in this environment by profiting from the storm. Therefore, Jim Cramer gives stock advice to homegamers every day. In October 13’s Lightning Round, he made ten calls. Seven were bullish and the rest 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 applicable, as well. Here is a fundamental analysis of these stocks from Cramer's October 13 Lightning Round:

Stock Name

Ticker

Cramer's Suggestion

O-Metrix Score

My Take

Resource Capital

(RSO)

Avoid For Now

N/A

Buy, but alternative is better

Juniper

(JNPR)

Buy

4.94

Buy

Human Genome Sciences

(HGSI)

Avoid

N/A

Avoid

Apple

(AAPL)

Long-Term Buy

6. 23

Top Pick

Ivanhoe Mines

(IVN)

Avoid

N/A

Avoid

Randgold

(GOLD)

Buy

N/A

Avoid

Goldcorp

(GG)

Buy

2.98

Hold

CenturyLink

(CTL)

Buy, but alternative is better

2.29

Avoid

Windstream

(WIN)

Buy

2.10

Avoid

Netflix

(NFLX)

Hold

6.68

Hold

Click to enlarge

Data obtained from Finviz/Morningstar, and is current as of October 14 close. You can download the O-Metrix calculator here.

Cramer is not sure whether Resource’s dividend is safe or not. As of October 14, the REIT has a market cap of $394.6 million. It is trading at a P/E ratio of 11.6, while the current price is $5.24. The 52-week range is $4.20 - $7.70. Dividend yield is 19.08%, and P/B is 0.9, way below the industry average of 2.3.

Resource Capital reported total revenue of $28.54 million in Q2 2011, compared with $24.46 million total revenue in the year-ago quarter. The REIT is paying quarterly dividends since June 2006. It is currently trading 22.26% lower than its 52-week high. This is a nice stock to buy, but I would go with Annaly (NLY) instead.

Cramer commented about Juniper:

This stock has been cut in half. I think it's a buy.

Juniper shows a trailing P/E ratio of 20.6, and a forward P/E ratio of 14.0, as of the October 14 close. Five-year annual EPS growth forecast is 17.1%. It has no dividend policy, while the profit margin is 12.9%.

Juniper is trading 10% lower than its 52-week high, whereas it returned -32.6% in a year. O-Metrix score is 4.94, and its target price implies a 24.4% upside potential. Institutions hold 88.07% of the shares, while earnings increased by 423.88% this year. The company has zero debts since 2008. Debt-to equity ratio is 0.1, which crushes the industry average of 1.9. Gross margin is 66.2%. PEG value is 0.8, and it has a five-star rating from Morningstar. Although it is no match for Cisco (CSCO), I guess it is a nice buy.

Cramer doesn’t think that Human Genome will go higher, and makes a bearish call. It was trading at a P/E ratio of -6.2, and a forward P/E ratio of -11.1, as of October 14. Estimated annual EPS growth for the next five years is 4.0%. It pays no dividend.

Earnings decreased by 39.91% this quarter, and 3502.66% this year. Insiders hold 0.22% of the shares, whereas the stock is currently trading 63.12% lower than its 52-week high. Target price is $26.65, implying a 125.2% increase potential. Human Genome has a horrible Beta value of 4.08, and it returned -58.9% in the last twelve months. The debt-to-assets ratio is climbing up for the last five quarters, while cash flow is doing terrible. Operating margin is -235.3%. ROA, ROE, and ROI are -26.49%, -61.98% and -26.81%, respectively. I would stay away from such speculative stocks.

Cramer stated that the new iPhone is “a winner,” and homegamers should “stay long Apple.” As of October 14, it has a P/E ratio of 16.7, and a forward P/E ratio of 12.8. Analysts estimate an 18.4% annualized EPS growth for the next five years. It offers no dividend, while the profit margin (23.5%) crushes the industry average of 12.9%.

Apple is trading only 0.20% lower than its 52-week high, whereas it has an O-Metrix score of 6.23. Target price implies about a 17.8% upside movement potential, and it returned 32.7% in a year. Apple had a 122.15% EPS growth this quarter, and 66.91% this year. It has zero debts, whereas cash flow is doing excellent. ROA and ROE are 27.53% and 41.99%, respectively. Operating margin is 30.4%. PEG value is 0.7, and it has a four-star rating from Morningstar. While SMA200 is 18.58%, SMA50 is 9.88%. Apple is still a profitable buy. My updated fair value range for Apple is $573 - $648 per share.

Cramer rather prefers Randgold and Goldcorp instead of Ivanhoe. Here is a brief comparison of these stocks:

Current as of October 14 close.

Ivanhoe

Randgold

Goldcorp

P/E ratio

-22.5

45.7

21.3

Forward P/E ratio

-47.6

13.8

15.0

Estimated EPS growth for the next 5 years

-

-

10.0%

Dividend yield

-

0.17%

0.84%

Profit margin

-456.2%

26.2%

40.5%

Gross margin

-13.5%

32.2%

54.5%

Upside movement potential

34.5%

15.5%

38.2%

Click to enlarge

I eliminate Ivanhoe at first, as it is the poorest in terms of average P/E ratio, dividend, profit margin, and gross margin. Randgold is currently trading 10.19% lower than its 52-week high, while Goldcorp is trading 13.96% lower. Randgold returned 0.8% in a year, and Goldcorp returned 9.9%. Goldcorp is a clearly better play. I will rate Goldcorp as hold, and the other two as avoid (Full analysis, of Goldcorp, here).

While Cramer is bullish on CenturyLink, he likes Windstream more. Here is a brief comparison between these two companies:

Current as of October 14 close

CenturyLink

Windstream

P/E ratio

16.9

21.5

Forward P/E ratio

18.7

13.8

Estimated EPS growth for the next 5 years

-0.2%

-1.0%

Dividend yield

8.38%

8.44%

Profit margin

8.0%

6.9%

Gross margin

63.0%

61.7%

Upside movement potential

25.5%

18.5%

Click to enlarge

CenturyLink is trading 22.08% lower than its 52-week high, while Windstream is trading 11.13% lower. O-Metrix scores of CenturyLink and Windstream are 2.29 and 2.10, respectively. CenturyLink returned -13.4% in the last twelve months, whereas Windstream returned -4.6%. Both of these stocks are in my dividend danger zone list, so I would buy neither.

It does feel like it. [Netflix] is too late to sell here.

Netflix shows a trailing P/E ratio of 29.4, and a forward P/E ratio of 18.0, as of the October 14 close. Analysts expect the company to have a 31.7% annualized EPS growth in the next five years. Profit margin (8.0%) is way above the industry average of 3.8%, while it pays no dividend.

Target price is $184.80, implying a 59.2% upside movement potential. The stock is currently trading 61.93% lower than its 52-week high, whereas it returned -24.2% in the last twelve months. O-Metrix score of Netflix is 6.68. Insider transactions have decreased by 92.80% within the last six months, and 15 out of 32 analysts recommend holding. Operating margin and gross margin are 13.8% and 37.4%, respectively. While SMA50 is -36.57%, SMA200 is -47.84%. I agree with Jim Cramer. It is too late to buy or sell Netflix. Holding is the best for now.

Disclosure: I am long AAPL.