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Jim Cramer issued 69 buy and sell stock opinions in the week between 11.14.2011 and 11.18.2011:F

Ticker

Cramer's Call

Market Cap

P/E

P/B

P/S

Div Yield

EPS Growth Past 5 Years

EPS Growth Next 5 Years

Insider Transactions

M

Buy

11.14.2011

12967.06

11.2

2.18

0.5

1.3%

-8.9%

10.7%

-26.8%

KO

Buy

11.14.2011

153058.2

12.41

4.61

3.33

2.8%

20.0%

6.4%

0.2%

FDX

Buy

11.14.2011

25764.61

16.82

1.64

0.64

0.6%

-4.7%

15.3%

7.7%

UPS

Buy

11.14.2011

66719.41

16.78

8.57

1.27

3.0%

0.1%

11.3%

107.5%

UNP

Buy

11.14.2011

49293.48

16.2

2.66

2.61

2.4%

23.5%

12.1%

-13.8%

ETN

Buy

11.14.2011

14678.06

11.9

1.9

0.94

3.1%

1.5%

10.8%

-1.2%

MX

Buy

11.14.2011

310.55

34.3

1.94

0.4

0.0%

0.0%

0.0%

0.0%

NAT

Buy

11.14.2011

672.08

N/A

0.74

8.29

8.4%

-26.4%

0.0%

0.0%

CLNE

Buy

11.14.2011

882.11

N/A

2.16

3.05

0.0%

0.0%

28.3%

-7.5%

IBM

Buy

11.14.2011

218327.6

14.66

9.8

2.05

1.6%

18.6%

10.8%

-9.6%

JNPR

Buy

11.14.2011

11866.79

23.75

1.71

2.63

0.0%

14.5%

16.2%

-0.5%

WFM

Buy

11.14.2011

11591.77

33.9

3.91

1.15

0.9%

6.6%

16.6%

-85.2%

JEC

Buy

11.15.2011

5190.01

15.65

1.65

0.5

0.0%

9.7%

13.2%

5.6%

SAM

Buy

11.15.2011

1220.62

21.97

7.17

2.51

0.0%

26.9%

9.1%

-1.6%

CLH

Buy

11.15.2011

3022.3

27

3.6

1.63

0.0%

27.3%

13.8%

-3.0%

FLR

Buy

11.15.2011

8910.54

16.67

2.7

0.4

1.0%

8.5%

12.9%

-51.8%

CHK

Buy

11.15.2011

16040.04

13.08

0.98

1.47

1.4%

0.0%

8.0%

9.0%

CMG

Buy

11.15.2011

9736.18

48.45

9.75

4.52

0.0%

31.6%

23.0%

-1.9%

DE

Buy

11.15.2011

30741.84

12.24

4.09

1

2.2%

8.7%

11.4%

-52.4%

WEC

Buy

11.15.2011

7546.34

14.7

1.9

1.69

3.2%

8.4%

8.1%

-78.2%

T

Buy

11.15.2011

169720.6

14.54

1.49

1.35

6.0%

17.8%

4.5%

-0.4%

JCI

Buy

11.15.2011

20229.06

12.61

1.83

0.5

2.4%

6.1%

16.8%

-5.4%

BUD

Buy

11.15.2011

92695.33

19.12

2.5

2.4

2.1%

0.0%

15.4%

0.0%

AMZN

Buy

11.16.2011

89649.41

103.76

11.56

2.06

0.0%

26.4%

21.8%

-0.1%

WPRT

Buy

11.16.2011

1399.54

N/A

7.46

6.87

0.0%

0.0%

30.0%

0.0%

TGT

Buy

11.16.2011

35787.19

12.38

2.33

0.52

2.3%

8.1%

11.7%

-42.2%

DLTR

Buy

11.16.2011

9041.52

20.26

6.25

1.41

0.0%

23.8%

17.6%

-19.4%

COST

Buy

11.16.2011

35415

24.76

2.96

0.4

1.2%

7.5%

13.0%

1.0%

SNA

Buy

11.16.2011

3034.09

11.77

1.95

1.08

2.6%

16.2%

13.0%

-13.5%

CELG

Buy

11.16.2011

27985.35

26.38

5.01

6.04

0.0%

60.3%

25.0%

7.5%

CHK

Buy

11.16.2011

16040.04

13.08

0.98

1.47

1.4%

0.0%

8.0%

9.0%

CRM

Buy

11.17.2011

15347.08

5671.5

10.83

7.34

0.0%

14.5%

27.0%

-9.9%

CFX

Buy

11.17.2011

1244.54

53.98

5.08

2.14

0.0%

3.2%

19.6%

19.2%

SBUX

Buy

11.17.2011

31351.12

25.94

7.15

2.68

1.6%

17.1%

17.5%

2.4%

QCOR

Buy

11.17.2011

2666.03

51.2

15.45

15.51

0.0%

41.6%

42.3%

-76.8%

GTLS

Buy

11.17.2011

1693.95

37.58

2.82

2.31

0.0%

16.1%

29.4%

-11.3%

AMRN

Buy

11.18.2011

914.63

N/A

N/A

N/A

0.0%

65.2%

0.0%

17.3%

COST

Buy

11.18.2011

35415

24.76

2.96

0.4

1.2%

7.5%

13.0%

1.0%

DE

Buy

11.18.2011

30741.84

12.24

4.09

1

2.2%

8.7%

11.4%

-52.4%

DECK

Buy

11.18.2011

3866.41

24.07

5.41

3.21

0.0%

37.9%

21.8%

-9.3%

DSW

Buy

11.18.2011

1761.54

13.14

2.81

0.91

1.3%

19.2%

12.5%

-54.5%

FL

Buy

11.18.2011

3423.24

14.53

1.62

0.63

3.0%

-8.4%

11.6%

6.0%

ORCL

Buy

11.18.2011

154364.8

17.39

3.78

4.23

0.8%

21.1%

13.1%

-4.9%

SNY

Buy

11.18.2011

89554.65

13.97

1.27

1.93

5.5%

20.0%

2.0%

0.0%

SVU

Sell

11.14.2011

1721.19

67.58

1.15

0.05

4.3%

-16.0%

4.7%

32.6%

OSG

Sell

11.14.2011

426.28

N/A

0.27

0.42

6.3%

11.6%

-2.5%

467.6%

BKS

Sell

11.14.2011

1033.43

N/A

1.24

0.15

0.0%

30.4%

0.0%

68.1%

TAP

Sell

11.15.2011

7165.73

12.14

0.91

2.1

3.2%

19.9%

12.0%

1.1%

CTL

Sell

11.15.2011

23005.97

20.93

1.05

1.85

7.8%

4.8%

6.2%

28.2%

YONG

Sell

11.15.2011

241.08

2.84

0.65

0.65

0.0%

36.7%

10.0%

0.0%

TRGT

Sell

11.15.2011

243.67

N/A

1.34

2.38

0.0%

0.0%

-6.9%

-14.5%

CBI

Sell

11.15.2011

3694.13

15.18

3.16

0.87

0.5%

66.3%

15.0%

-14.6%

PFE

Sell

11.16.2011

150126.5

15.38

1.67

2.2

4.1%

0.0%

3.1%

-7.2%

MPC

Sell

11.16.2011

11700.99

4.36

1.17

0.15

3.1%

0.0%

39.6%

0.0%

LUK

Sell

11.16.2011

5449.24

3.51

0.9

2.93

1.1%

7.4%

0.0%

-1.5%

GMCR

Sell

11.16.2011

7800.58

38.81

4.08

2.94

0.0%

75.4%

37.2%

-2.5%

RIMM

Sell

11.16.2011

9534.47

3.33

0.96

0.47

0.0%

58.3%

6.0%

0.0%

PBI

Sell

11.16.2011

3689.35

10.04

0

0.69

8.0%

-5.9%

1.4%

0.0%

WMT

Sell

11.16.2011

197251.2

12.89

2.94

0.45

2.6%

9.0%

9.6%

-99.3%

DNKN

Sell

11.17.2011

3032.08

360.57

4.14

4.97

0.0%

0.0%

15.0%

0.0%

FTR

Sell

11.17.2011

5274.19

35.33

1.11

0.99

14.2%

-16.1%

6.1%

1.1%

AKAM

Sell

11.17.2011

5018.66

27.42

2.37

4.48

0.0%

-15.6%

13.3%

53.5%

VHC

Sell

11.17.2011

1063.02

N/A

14.82

35434.17

0.0%

63.3%

25.0%

-0.9%

NIHD

Sell

11.17.2011

4007.09

13.23

1.24

0.6

0.0%

13.5%

18.6%

-34.2%

CA

Sell

11.18.2011

10084.89

12.24

1.77

2.18

1.0%

42.6%

9.6%

-13.2%

HPQ

Sell

11.18.2011

55615.29

6.57

1.44

0.43

1.7%

35.0%

7.7%

14.4%

IL

Sell

11.18.2011

306.83

141.5

0.92

1.44

0.0%

0.0%

20.0%

4.0%

MDR

Sell

11.18.2011

2623.05

14.13

1.61

0.83

0.0%

1.3%

17.8%

-29.9%

TECD

Sell

11.18.2011

2078.86

9.9

0.98

0.08

0.0%

61.8%

10.2%

1.8%

Contrarians can utilize Cramer’s popularity by viewing his picks as consensus views, and carefully selecting recommendations to counter. In 2008, my MBA classmates and I investigated this investment strategy and found the following:

  • Buying Cramer’s picks after he recommended them underperformed the broader stock market. There seems to be a “bump” relative to the market for his picks that has happened faster than you could conceivably trade.
  • Cramer’s mid- and large-cap picks did not outperform the market, and “shorting the bump” would be an interesting strategy for high-frequency traders.
  • Cramer’s small- and micro-cap picks do a little better than small cap indexes after he discusses them.
  • Cramer might be trying to do the impossible by making daily stock picks. He provides entertainment, relays business news, interviews executives, and displays an impressive, encyclopedic knowledge of publicly traded companies. He is like Stone Phillips, Oprah, and Bloomberg News combined. However, these talents did not translate into alpha for his mid and large cap picks.

Exploiting any persistence of these effects is fairly simple. Contrarians should review large- and mid-cap stocks recommended by Cramer and consider whether there is merit to taking the opposite positions. From this week’s picks AMZN, CRM, MPC, LUK, RIMM, and HPQ are challenged.

What could an investor expect from following Cramer’s calls? We can model total returns over a three-year holding period for each of these stocks. (I use a 3-year holding period since above-average growth estimates are not reliable further out.) Giving Cramer the benefit of the doubt for buy recommendations, the stock is assumed to be sold at a generous growth stock price to earnings multiple of 17 and the maximum of historical and analyst estimate values for earnings growth are assumed. On the contrary, we will use more conservative values to give Cramer the benefit of the doubt for his sell recommendations. For his sell calls, a bargain value stock price-to-earnings multiple of 10 and the minimum of historical and analyst estimates values for earnings growth are assumed. These assumptions are used to project an annualized total return over the next three years and terminal price-to-earnings ratios, that is, price paid today divided by earnings at the end of the holding period for each stock:

3 Years Growth

Ticker

Cramer

g (past)

g (future)

Terminal P/E

Annualized Return

AMZN

Buy

26.4%

21.8%

51.3

-31%

CRM

Buy

14.5%

27.0%

2768.8

-82%

MPC

Sell

0.0%

39.6%

4.36

33%

LUK

Sell

7.4%

0.0%

3.51

42%

RIMM

Sell

58.3%

6.0%

2.80

53%

HPQ

Sell

35.0%

7.7%

5.27

25%

Even with assumptions that would favor Cramer’s sell recommendations for MPC, LUK, RIMM, and HPQ, sell recommendations cannot be supported given current valuations. After holding these stocks through three years with the lesser of historical growth or analyst estimates for growth and then selling at a paltry 10 price-to-earnings multiple, investors would reap healthy annualized returns. Daring contrarians ought to consider researching these stocks as a buy pick, not selling them.

Conversely, Cramer’s buy recommendations for AMZN, and CRM are not supported even by a rosy scenario. Buyers of these stocks who enjoy the greater of historical growth and analyst growth estimates and are able to sell at a growth stock P/E ratio would still suffer negative total returns. Intrepid contrarians should research AMZN and CRM as a sell picks, rather than trusting Cramer’s buy recommendation on each stock.

Bear in mind that challenging the consensus requires a strong will. Each of MPC, LUK, RIMM, and HPQ have issues that need to be sorted out before they appreciate in value. For example, RIMM is trading cheaply because of its service outages and because there are doubts that its BlackBerry brand will be able to compete against other brands in the smartphone era.

A strong will is also required to resist the siren’s song of CRM and AMZN. Both stocks are very exciting growth stocks with amazing prospects in the future, but are trading at unfathomable price multiples. I shop at Amazon.com and I use Salesforce.com on a weekly basis. In addition to countering Cramer, contrarians have to shut out familiarity bias, the allure of stories, and other distractions in order to focus on valuation.

Disclaimer: This article was written to provide investor information and education, and should not be construed as a guarantee or investment advice. I have no idea what your individual risk, time-horizon, and tax circumstances are: please seek the personal advice of a financial planner. This article uses third-party data and may contain approximations and errors. Please check estimates and data for yourself before investing.

Source: Countering Cramer's Picks From Last Week