Fundamental Analysis of Cramer's Lightning Round Picks: July 13

Includes: ARCO, CTL, DGX, ED, F, MCD, SLV, SO, VFC
by: Efsinvestment

James "Jim" Cramer is the most popular face on The Street and has plenty of followers imitating his stock picks. Therefore, it's worth investigating his stock picks further. On yesterday’s "Lightning Round with Jim Cramer," he mentioned some of the most successful companies that are a must for portfolios. In this one, Cramer talked about more companies when compared to his former shows. Here is a fundamental analysis of Cramer’s Lightning Round mentions from July 13:

Southern Company (SO) is trading 1.88% lower than its 52-week high, and Cramer remains bullish on SO. As of July 14, SO has a P/E of 17.74 and a forward P/E of 14.93. Estimated EPS growth for the next five years is 5.60%. Profit margin is 11.36% and dividend yield is 4.69%. Moreover, the company just double topped. Debts are not much of a problem and yields are stable. SO can return serious profits to shareholders, and “that is the stock you want to own as part of a good diversified portfolio," according to Cramer. I like Southern Company. It has been an outperformer so far and I expect it to beat the government bonds with a large margin over the long-term.

VF Corp. (VFC) is a trustworthy and profitable company. One thousand dollars invested in VFC in Nov. 2008 is nearly $2,680 now. The textile company, as of July 14, shows a P/E of 20.76 and a forward P/E of 13.9. Analysts expect VF to have a 10.57% EPS growth in the next five years. SMA50 is 12.55%, whereas SMA200 is 25.65%. Insider transactions for the last six months increased by 21.08%. Dividend yield is 2.19% and profit margin is 7.73%. Debts, assets, and yields are okay. Insiders are both selling and exercising options for a while. It may be the time to enjoy profits.

Consolidated Edison Inc. (ED): After Southern, Cramer recommends picking ConEd. It returned 44% in two years, and double topped recently. As of the July 14 close, ConEd has a trailing ratio of 14.26 and a forward P/E ratio of 13.7. Analysts estimate a 3.65% EPS growth for the next five years, which is reasonable given the 2.65% EPS growth of past five years. With a dividend yield of 4.47% and a net profit margin of 17.06%, ConEd is a charming stock for dividend seekers. Debts are not much of a problem. Insiders have been mostly buying stocks for a while. Although the company seems to have gone up a bit much, it can still pleasure investors.

Arcos Dorados (ARCO) promises a better-than-average profit for investors, but Cramer recommends McDonald’s (MCD) instead. MCD may be better than Arcos Dorados, but still, ARCO has some pros to talk about. Its target price indicates a 21% upside potential, while MCD’s indicates only 2.4%. Estimated EPS growth for the next five years for Arcos Dorados is 26.90% while it is 9.78% for MCD. However, ARCO offers a 0.3% dividend yield, whereas MCD offers 2.87%. As of July 14, ARCO has a 22.4 forward P/E, while MCD has a 15.2 forward P/E. Both are brilliant stocks, and both can beat the market. If I were to pick one, it would be McDonald’s. McDonald’s is a top dividend stock for the next five years.

iShares Silver Trust (SLV): Although SLV is trading 22.38% lower than the 52-week high -- and GLD is trading 0.11% lower -- Cramer prefers GLD over SLV. As I mentioned before, a gold mania drags this century, leading it to be highly overpriced. Although the doomsday situation of the euro is boosting gold again, it is not so wise to see gold as the safest haven. George Soros recently downgraded his gold stocks by 98.95%. What goes up has to come down, and what goes up too high has to come crushing down.

CenturyLink, Inc. (CTL): Although Cramer recently said that he does not like technology for now, he is “not backing away from CTL." CenturyLink has a magnificent yield of 7.48%, which attracts most of its investors. Its P/E (12.9) and forward P/E (13.9) are also admirable. Target price is $45.5, which indicates an 18% increase potential. Insider transactions for the last six months increased by 59.91%. Estimated EPS growth for the next five years is 4.55%. Debt-to assets ratio is stable for the last five quarters. Profit margin is 13.1%. Moreover, the company is trading 14.96% lower than the 52-week high. Five out of 12 analysts covering the company recommends buying. CTL is a brilliant profit-maker.

Quest Diagnotics Incorporated (DGX) is the only healthcare company Cramer wants to hold. Although DGX did not show a significant performance for a while, Cramer still likes it. More or less, I like it too. As of the July 14 close, the healthcare company was trading at a trailing ratio of 20.4 and a forward P/E of 12.03. Analysts expect the company to have an 11.50% EPS growth for the next five years, which is quite reasonable when its 7.78% EPS growth of the last five years is considered. Profit margin is 7.33% and dividend yield is 0.7%. The company is trading 5.09% lower than a 52-week high, while target price implies a 10% increase potential.

On the other hand, insider transactions for the last six months decreased by 97.21%. Earnings decreased by 137.39% this quarter. SMA20 is -2.72%, whereas SMA50 is -0.72%. Debts are at alarming rates while assets are hardly increasing. This company should be dealt with with caution.

Ford (F) is one good old American company. I think it will be an outperformer for the long-term. Those who caught the dip on Ford made huge profits. One thousand dollars invested in Nov. 2008 in Ford is about $9,153 now. As of July 14, the company had a trustworthy P/E of 7.75 and a forward P/E of 6.61. Earnings increased by 92.86% this year, while analysts estimate an 8.58% EPS growth for the next five years. Insider transactions for the last six months have increased by 96.95%. Target price is $19.64, indicating a 50% upside potential. PEG is 0.9 and P/S is 0.4. The company is trading 31% lower than the 52-week high, where, Cramer believes, Ford will hit soon. Ford has a 5.39% profit margin. Although debts are at alarming rates, I believe Ford can handle that. It is a stock to dive into. If the U.S.-based investors were aware of the success of Ford’s global operations and its worldwide brand image, the company would be trading at double digit P/E ratios.

Disclosure: I am long on Ford Turkey (OTCPK:FOVSY)