Analyzing Cramer's Stock Picks: A Booyah Lookout

by: Efsinvestment

By Cagdas Ozcan

I find the following of global equity markets and macroeconomic news highly rewarding. This field is extremely active, with many new and interesting things happening every day. As I myself find the monitoring of global markets so enjoyable, I feel that it is important to share this experience, as well as my own thoughts and analyses, with others. However, finding an appropriate vehicle for such thoughts can be a challenge, as well as finding sufficient material to fill a daily article submission. There are simply not enough stocks to warrant covering several different ones every day, nor does it make sense to gather stocks for analysis without a common origin.

Therefore, after some research, I discovered that I could utilize Cramer's daily program, Mad Money, in order to express my thoughts. Though I do not generally intend to write every day, this is a perfect venue to discuss markets and stocks. Furthermore, with Mad Money it is possible to compare my views with those of other analysts.

For the purposes of this submission I have assessed the most recent "Lighting Round," which surprisingly included some well-known names such as Ford (NYSE:F) and Intel (NASDAQ:INTC). Here I have combined the boldest stock mentions from Mad Money and the Lightening Round with my own comments and predictions. For the purposes of comparison, here is a basic analysis of these stocks from Cramer's show on October 16, 2012.

Stock Name


Cramer's Suggestion

O-Metrix Score

My Take

Ford Motor




Avoid for Now








No Calls





Bullish Sign



Johnson Controls





Data from Finviz/Morningstar. You can download the O-Metrix calculator here.

Ford Motor

Ford has lost its way in foggy Europe and Latin America, erasing any gains happening in the United States. The company is in such a bad condition that it even tried to bypass various discounts by self-registering cars to sell them second-hand. While Ford has certainly experienced a certain level of recovery of late, this is likely only temporary. Nevertheless, the stock is currently up five percent since the beginning of the month.

F Chart
(Click to enlarge)

F data by YCharts

Ford seems to be doing everything it can to get bogged down in an already troubling European market. It is currently in the process of unveiling fifteen new models for the continent (including SUVs and Fiestas), which are close to breaking apart due to very low liquidity. Moreover, it has just recalled hundreds of thousands of fresh Fiestas for airbag problems. A market current at Seeking Alpha supports my opinion on this matter: "It's a minor issue, but any recall from an automaker that covers its current year selling line can be a tougher pill to swallow than older recalls if questions over quality resonate."

There's absolutely no way that Ford can benefit from its current activities. Company assets are already alarmingly low. Meanwhile, the company's debt-to equity ratio is 4.2, crushed by the industry average of 1.0. Ford in its current incarnation does not even resemble the Ford that fended off the 1970s fuel crisis. Based on Finviz's five-year annual EPS growth estimate of 7.55 percent, Ford has an O-Metrix score of 10.47. However, in its current state, company performance is nowhere near where it needs to be in order to achieve this goal.

Sirius XM

Sirius was one of the most hated stocks of the financial crisis. It was dumped by most of its investors and treated as merely a penny stock. Now, not a day goes by when Sirius is not a topic of conversation. After all, it is one of the most improved stocks of the year. The stock has grown by more than half its size just since the end of June.

SIRI Chart
(Click to enlarge)

SIRI data by YCharts

Despite being exposed to enormous competition, Sirius has managed to stand its ground and record robust growth. At the moment, a 51 percent stake in Liberty Media (LMCA) seems to be the biggest hindrance to Sirius's upward growth. Despite such challenges, Sirius seems determined to continue its upward trend. According to my analysis, this company still features 40 percent growth potential, and cash flow and assets are both satisfactory. As they have added 446,000 subscribers just in the third quarter of 2012, I can see clear signs that this company's popularity is going to continue to rise.

The main question, of course, remains whether or not this stock is worth buying. The answer: absolutely. Sirius certainly has the potential at present to grow significantly. Based on its current indicators, Sirius has an O-Metrix score of 8.89.


Although Cramer "has not yet listened to the conference call," he did not like "what he's heard about the PC market." While generally in agreement with Cramer, I believe that Intel must be exempted from this statement. The company is presently offering a strong dividend yield of 3.83 percent with a dividend of $0.90 per share. As it is also reporting a better than expected EPS growth, I am still hopeful.

INTC Chart
(Click to enlarge)

INTC data by YCharts

Unfortunately, companies like Intel are operating in a troubling economic environment. While Greece is the most commonly discussed trouble spot in the EU, other European countries seem to be quickly following suit. Meanwhile, the Chinese economy is slowing down while the Middle East is blowing up. In such a low-yield economy, people tend to turn to high and sustainable dividend payers. For this reason, Intel's dividend has managed to offset its recent performance factors. The company has at present an attractive price-to earnings ratio of 9.5, supported by a shining profit margin of 22.7 percent. With regards to this and other key statistics, there are no clear danger signs. As the largest chip manufacturer, Intel will always be a global market leader. Its growth prospects are strong, as is its financial position. There is therefore little cause for concern with regard to Intel.

Intel has a B Grade O-Metrix score of 7.61. (Read my full analysis of Intel here.)


I intentionally added Apple here because I am mostly concerned about this company. This is what Cramer said about Apple on its Mad Money show: "Apple, which had been heading down, seems to be rebounding, as sales are growing for the iPhone 5."

While this may be the case, it unfortunately does not change the fact that the newest iPhone has been the least successful model in the eyes of consumers. As many will know, the iPhone is chiefly valued for its cutting edge features, as well as for its iOS. For as long as I can remember, there has been no moment in this company's history as embarrassing as the issuance of the new iOS 6, as it has been plagued with problems since its release. Furthermore, the iPhone 5 has shown little in the way of new features, with the exception of its screen size. These troubles are in addition to those regarding Foxconn, the Apple's largest supplier.

AAPL Chart
(Click to enlarge)

AAPL data by YCharts

Despite these troubles with regard to the iPhone, this is certainly not the end for Apple. This company has more to show us in the form of a possible new "Mini iPad." The release of such a product would most certainly revolutionize the market for smaller tablets.

Apple has made a name for itself with a large catalogue of high quality electronics. Such a move would bring in massive revenues, especially if the company were to provide GSM support within the device.

Furthermore, Apple offers potential investors a terrific balance sheet and an appealing starting point for dividend hunters. The stock is clearly a retirement type. Even after a 60 percent gain over just a single year, the stock has yet more to offer. I myself have kept Apple shares for years, and have been happy with my decision to do so. Should the company's current innovativeness continue, there is nothing to prevent Apple from achieving four-digit prices. However, it is important to remember that the worst mistakes come when there is no serious rivalry. Laziness would absolutely sign Apple's death warrant.

Apple currently has an O-Metrix score of 8.54.

Johnson Controls

The Mad Money host believes that this is the right time to sell Johnson Controls, as the company has made a recent acquisition that has been advantageous for prices. Furthermore, it is likely that in the near future the company will declare poor earnings, which will bring prices back down. However, looking at Johnson Controls' overall chart, I don't see any particularly promising time for this company. Having already cost investors 16 percent in losses over just the last year, there seems to be little reason to stay with this company.

JCI Chart
(Click to enlarge)

JCI data by YCharts

It is abundantly clear in which direction this company is moving. This stock offers nothing but a mediocre balance sheet, most of which consists of below-the-average indicators. In addition, the key statistics are showing a number of danger signs. This weak company is attempting to save itself by purchasing business from another company under bankruptcy protection in an action that is highly unlikely to work. The short-term projections for this company seem extremely poor.

The two bright spots in this company's portfolio are the P/E and forward P/E ratios, which would allow for an outperformance if the company were dedicated enough to pull itself out of its current doldrums. With this company, it is advisable to wait and see what transpires.

At present, Johnson Controls has an O-Metrix score of 10.02.

Disclosure: I am long AAPL, INTC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Business disclosure: EfsInvestment is a team of analysts. This article was written by Cagdas Ozcan, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.

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