Seeking Alpha
Profile| Send Message|
( followers)  

Last week has ended with some optimism, even though this week started out as a relatively tougher one. Cramer reserved his optimistic mood as well, making four bullish and two bearish calls on December 12’s Lightning Round. I have examined his boldest 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 the first six stocks from Cramer's December 12 Lightning Round:

Stock Name

Ticker

Cramer's Suggestion

O-Metrix Score

My Take

Netflix

NFLX

Avoid

1.72

Hold

Suncor Energy

SU

Buy

3.64

Long-Term Buy

Global Geophysical Services

GGS

Avoid

N/A

Avoid

Core Laboratories

CLB

Buy

2.95

Buy

Verizon

VZ

Buy

3.78

Buy After Pullback

United Health

UNH

Buy, but alternative is better

6.51

Buy

Wellpoint

WLP

Buy

6.84

Buy

(Data obtained from Finviz/Morningstar, and is current as of December 13. You can download the O-Metrix calculator here.)

Netflix (NASDAQ:NFLX)

Cramer sees no reason to own Netflix, and recommends “scaling out of it.” The company has a P/E ratio of 17.1, and a forward P/E ratio of 131.6. Analysts expect Netflix to boost its earnings by 25.6% in the next five years. Profit margin is 8.1%, and it offers no dividend.

Based on these numbers, Netflix has a poor O-Metrix score of 1.72. P/B (10.2) and P/S (1.4) values are way higher than their industry averages. Insiders hold only 0.21% of the shares, and insider transactions have decreased by 40.76% within the last six months. Despite the strong revenue, assets and cash flow, Netflix is doing terribly for some time. It has a horrifying PEG value of 5.7. Since July 2011, the stock has come from $298 to $75, losing about 75% of its value. Splitting its DVD and streaming business was surely a bad idea. The management team is ruining the company, and investors should not ruin their portfolios as a result. On the other hand, there are take-over rumors, which might or might not be well-founded. Therefore, I rate it as a hold.

Suncor (NYSE:SU)

Cramer made the following comments on this name.

I like SU...they've got a great long-term situation. The stock is headed down short-term because oil is headed down, but I like it.

The oil company is trading at a P/E ratio of 14.7, and a lower forward P/E ratio of 8.7. Estimated annual EPS growth for the next five years is 7.0%. It pays a 1.53% dividend, while the profit margin (9.2%) is higher than the industry average of 7.6%.

Dividends are gorgeous, as well as cash flow and assets. Debt-to equity ratio (0.3) is also appetizing, below the industry average of 0.6. PEG value is 0.6, and it has a five-star rating from Morningstar. Suncor has been one of the most respectable Canadian oil companies, which has been a pioneer in this industry. The company aims for an about 10% growth a year through 2020. At a price of $28, Suncor seems to be a nice bet for long-term. Based on these numbers, Suncor has an O-Metrix score of 3.64.

Global Geophysical (GGS) vs. Core Labs (NYSE:CLB)

Cramer prefers going with Core Labs instead of Global Geophysical. Here is a brief comparison of these two stocks, current as of Dec. 13:

Global Geophysical

Core Labs

P/E ratio

105.3

32.6

Forward P/E ratio

7.3

24.4

Estimated EPS growth for the next 5 years

-

16.0%

Dividend yield

-

0.87%

Profit margin

0.7%

19.7%

Gross margin

22.8%

34.3%

Upside movement potential

123.4%

-1.7%

As you can see, Global Geophysical is not even worth talking about. Core Labs has shown a marvelous recovery since December 2008, until when its dividends have increased by 500%. Revenue and cash flow are consistent for the last four years. Its Relative Strength Index (55.53%) is another buy sign. Core will keep rewarding you as long as oil prices stay above $90-95.

Verizon (NYSE:VZ)

Cramer made the following comments on Verizon:

The dividend is safe and could even go up. I still like Verizon.

The telco shows a trailing P/E ratio of 15.4, and a lower forward P/E ratio of 15.0. Five-year annualized EPS growth forecast is 6.3%. It boasts a juicy dividend of 5.22%, while the profit margin is 6.5%.

With a Beta value of 0.58, Verizon is one of the least volatile stocks in its industry. Dividends are just fine, along with cash flow and revenue. Debt-to equity ratio (1.2) is also good, more than doubling the industry average of 2.6. Verizon has been doing quite well, and dividends are sustainable. Verizon is a profitable play, but Telefonica (NYSE:TEF) offers a better value, as I have mentioned. If you insist on this name, you should wait for a pullback. Verizon has a D Grade O-Metrix score of 3.78.

United Health (NYSE:UNH) vs. Wellpoint (WLP)

Although the Mad Money host likes United Health, he would go with Wellpoint instead. Here is a brief comparison of these two stocks, current as of Dec. 13:

United Health

Wellpoint

P/E ratio

10.7

8.6

Forward P/E ratio

10.1

8.4

Estimated EPS growth for the next 5 years

12.2%

10.1%

Dividend yield

1.35%

1.53%

Profit margin

4.9%

4.8%

Upside movement potential

20.6%

32.0%

Based on these numbers, the O-Metrix scores of United Health and Wellpoint are 6.51 and 6.84, respectively. Both of the companies have strong growth, revenue, and cash flow. As long-term investments, both of these two has trustworthy growth and solid field performance. Moreover, they pay appetizing dividends. Both of them are buys for me.

Source: 4 Buy And 2 Sell Ideas From Jim Cramer