Lightning Round: 6 Bullish And 3 Bearish Ideas By Jim Cramer

 |  Includes: CBI, CBIO, CHK, CMG, DE, FLR, JCI, WEC, YONG
by: Efsinvestment

Oil prices topped to triple-digit prices, but markets did not perform as well as the commodities due to the pessimism on the eurozone debt crisis. Europeans are hopelessly looking for a solution to this problem, but things are very far from reaching a resolution. Global markets were experiencing losses at the time of writing. However, the new Greek government won a confidence vote, and the new Italian prime minister seems determined to solve its country’s debt crisis. We are currently in a wait-and-see moment.

In November 15’s Lightning Round segment, Jim Cramer made nine calls that are worth a deeper look. Six of them were bullish this time, and the other three 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 eight stocks from Cramer's November 15 Lightning Round:

Stock Name


Cramer's Suggestion

O-Metrix Score

My Take

Johnson Controls





Yongye Int’l










Wisconsin Energy




Buy After Pullback






Chesapeake Energy





Chipotle Mexican Grill





Chicago Bridge










Click to enlarge

(Data obtained from Finviz/Morningstar, and is current as of November 18. You can download the O-Metrix calculator here.)

Johnson Controls (NYSE:JCI)

Despite people's worries, Cramer suggests buying this stock. It shows a trailing P/E ratio of 12.6, and a forward P/E ratio of 8.2. Analysts estimate a 17.1% annual EPS growth for the next five years. Profit margin (3.9%) is lower than the industry average of 5.0%, while it pays a 2.15% dividend.

Johnson Controls is trading 30% lower than its 52-week high, whereas it returned -21% in a year. O-Metrix score is 9.23, and target price indicates a 35% upside potential. Yields are consistent, and debts are far from being a threat. Cash flow is doing all right. Debt-to equity ratio is 0.4, which crushes the industry average of 4.5. Morningstar gives a four-star rating to the company. Johnson Controls will yield a $0.18 dividend on January 3, which has been paying a $0.16 dividend per share for the last four quarters. A dividend increase always signals a healthy trend, and the current price offers a suitable entry point. The stock looks pretty cheap.

Yongye International (NASDAQ:YONG) vs. Deere (NYSE:DE)

Cramer made the following comments on these two companies:

No, no, no. Stay away. Stick with Deere & Company. Don't go with the Chinese ag stocks.

Here is a brief comparison between these two stocks:

Current as of November 18



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

Yongye is currently trading 43.41% lower than its 52-week high, whereas Deere is trading 24% lower. O-Metrix scores of Yongye and Deere are 11.90 and 5.44, respectively. Yongye returned -41.1% in a year, while Deere returned -8%. Analysts give a 3.00 rating to Yongye, and a 2.30 rating to Deere (1=Buy, 5=Sell). Although Yongye has some breathtaking indicators, Chinese stocks should be avoided in general, in my opinion. Moreover, it is extremely volatile. Deere has a solid balance sheet, and it is not suffering from the current crisis. Sales are quite good, as well. Moreover, the company is to expand its production capacity in Russia, which will surely reward its shareholders. I would avoid Yongye and buy Deere.

Wisconsin Energy (NYSE:WEC)

The Mad Money host is bullish on Wisconsin as it has “great growth potential.” The company was trading at a P/E ratio of 14.6, and a forward P/E ratio of 11.3 as of November 18. Analysts expect the company to have 7.5% annual EPS growth in the next five years, which sounds fair when its 8.40% EPS growth of the past five years is considered. Dividend yield is 3.22%, and profit margin is 12.0%.

Wisconsin returned 12.88% in a year, while it is currently trading only 2% lower than its 52-week high. Target price is $30.73. O-Metrix score is 4.18, and Beta value is 0.34. Institutions hold 70.28% of the shares, whereas yields look appetizing. Cash flow is doing OK. Earnings increased by 20.44% this year, and 16.57% this quarter. Wisconsin is doing quite well since its dip August. Moreover, dividends look pretty safe. However, there seems to be no upside potential left for now, and the company will trade ex-dividend this quarter. Wait for a pullback to jump in.

Targacept (TRGT)

Cramer defined this stock as a “house of pain,” and made a bearish call on it. The North Carolina-based biopharma has a horrifying P/E ratio of -270.3, and a forward P/E ratio of -12.4, as of November 18. Five-year annualized EPS growth forecast is -6.90%. It offers no dividend policy, while the profit margin (-0.9%) is crushed by the industry average of 11.5%.

The company returned -67% in the last twelve months. The stock is trading 75% lower than its 52-week high, and earnings significantly decreased in this quarter. Beta value is 3.05, while insiders hold only 0.04% of the shares. Both assets and cash flow are unstable. Operating margin is -0.9%. While ROE is -0.65%, ROI is -0.32%. Two big research firm has just downgraded their call for Targacept. Moreover, the company failed in its antidepressant studies. Therefore, I agree with Cramer on this call.

Chesapeake Energy (NYSE:CHK)

In spite of those worried about the company, Cramer is confident buyer of this stock. The Oklahoma-based Chesapeake shows a trailing P/E ratio of 13.3, and a forward P/E ratio of 9.6, as of November 18. Analysts estimate an annual EPS growth of 10.3% for the next five years. Profit margin (12.2%) is below the industry average of 14.1%, and dividend yield is 1.42%.

Chesapeake has an O-Metrix score of 5.12, while it is trading 30% lower than its 52-week high. Target price is $38.26, which implies around 50.2% upside potential. Institutions hold 74.86% of the shares, whereas it returned 12% in the last twelve months. Yields are consistent. Chesapeake had 126.27% EPS growth this year, and 63.26% this quarter. Gross margin is 86.0%. Chesapeake is extremely undervalued by the market. Debts are not much of a problem, and cash flow is good. According to a report, Chesapeake is going for a $13 billion in cash in 2012. The Director Louis Simpson has just made a big purchase, buying 100.000 shares worth nearly $2.7 million. Chesapeake will stay a winner as long as it maintains its drilling program-- one of the most active in its industry. This company is worth counting on.

Chipotle Mexican Grill (NYSE:CMG)

Cramer is still bullish on Chipotle:

I'm still with Chipotle. There is some collateral damage risk from other high-growth stocks, but I still like it.

Chipotle, as of November 18, was trading at a P/E ratio of 48.85, and a forward P/E ratio of 36.4. Analysts expect the company to show an annual EPS growth of 21.3% in the next five years. It pays no dividend, and the profit margin is 9.5%.

Target price is $336.90, implying an about 8% upside potential. At the time of writing, the stock was trading 11% lower than its 52-week high, while it returned 38% in a year. Earnings increased by 42.73% this year, and 24.51% this quarter. O-Metrix score is 2.50, and insiders hold only 1.68% of the shares. P/B is 10.3, and P/S is 4.8, both of which are well above their industry averages. Gross margin and operating margin are 25.9% and 15.3%, respectively. PEG value is 2.12. Moreover, Chipotle has a one-star rating from Morningstar. Chipotle is extremely overpriced for the time being, returning approximately 50% since January. The company is insanely vulnerable to a pullback currently. Just realize profits while you can.

Chicago Bridge (NYSE:CBI) vs. Fluor (NYSE:FLR)

The Mad Money host rather prefers Fluor instead of Chicago Bridge. Here is a brief comparison of these two stocks:

Current as of November 18

Chicago Bridge


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

Chicago Bridge is currently trading 16% lower than its 52-week high, while Fluor is trading 30% lower. O-Metrix scores of Chicago Bridge and Fluor are 5.34 and 4.43, respectively. Average analyst recommendation is 1.80 for Chicago Bridge, and 2.00 for Fluor. Chicago Bridge returned 31% in the last twelve months, but Fluor returned -6%. Both of their debts-to assets ratios have been going down since 2007. Fluor is much less volatile, and its cash flow is relatively much better. Fluor’s assets are increasing for the last four years, whereas Chicago’s are decreasing. Looking at the fundamentals, they both seem to be doing fine. Fluor is a good contrarian pick, whereas Chicago Bridge is in a solid momentum since October. Both of them are buys for me.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.