Cramer is one of the most popular stock pickers in the market. I enjoy watching his show on CNBC and analyzing his stock picks from a fundamental perspective. He makes estimates so fast that I can hardly catch up with him. In his Lightning Round on July 19, he made four bullish and two bearish calls. I checked these stocks from a fundamental perspective, and some of them are highly profitable stocks with solid upside potential. Here is a fundamental analysis of these six stocks from Cramer’s Lightning Round mentions on July 19:
Advance America, Cash Advance Centers (AEA): Advance America’s performance is truly admirable. It returned 136% in a year, and it is a “buy” for Cramer. As of the July 19 close, the financial company shows a trailing P/E ratio of 13.15, and a forward P/E ratio of 7.92. P/S is 0.9 and PEG is 0.5. Analysts estimate an annualized EPS growth of 15.00% for the next five years, while it had a -5.14% EPS growth in the last five years. The stock is trading 8.26% lower than its 52-week high. With a profit margin of 6.71%, Advance America offers a 2.92% dividend yield. SMA50 [simple moving average] is 32.21%, while SMA200 is 54.04%. Debt has been decreasing for the last three years, whereas assets are unstable. Insiders have been selling stocks for a while. It seems that Advance America is gaining a slow but solid momentum. Still, a pullback should be waited for.
InterDigital, Inc. (IDCC): IDCC returned 99.1% in a year, and Cramer recommends not buying this stock until the price goes “dramatically lower”. As of the July 19 close, the Pennsylvania-based InterDigital had a P/E ratio of 18.89, and a forward P/E ratio of 19.30. Estimated annual EPS growth for the next five years is 15.00%, which is reasonable given the 13.82% EPS growth of the past 5 years. IDCC pays a dividend yield of 0.75%, and net profit margin is 35.91%. ROE is 42.44%. SMA50 is 29.71%, and SMA200 is 27.83%. The stock is trading 8.77% lower than its 52-week high. However, the target price indicates an approximate 17% decrease potential. Insiders have been both exercising options and selling stocks for a while. The stock is highly volatile, and if you own it, I think it might be the time to enjoy profits.
Temple-Inland (TIN) just rejected International Paper (IP)’s hostile takeover offer. The Memphis-based International Paper has a trailing P/E ratio of 11.77, and a forward P/E ratio of 9.28, as of July 19 close. Analysts expect the company to have a 4.97% annualized EPS growth in the next five years, while earnings increased by 278.78% this quarter. Although its profit margins are thin (3.87%), the dividend yield is acceptable (3.52%). The target price is $36.25, which implies a 21.6% upside movement potential. The stock is trading 9.01% lower than its 52-week high. One thousand dollars invested in IP one year ago is about $1226 now. Debt has been decreasing for the last three years. RBC suggests outperform for International Paper, while Longbow, Deutsche Bank and Argus recommend buying. Overall, International Paper is a profitable stock to invest in.
PNC Financial Services: (PNC): PNC just multiple topped, and Cramer is bullish on it as are many analysts. Compass Point, Standpoint Research, Deutsche Bank, Jefferies, and Stifel Nicolaus recommend buying PNC shares. As of the July 19 close, the stock was trading at a P/E ratio of 9.35, and a forward P/E ratio of 8.75. Estimated EPS growth for the next five years is 6.33%, while earnings increased by 155.71% this quarter. P/B is 0.9, and the stock is trading 13.35% lower than its 52-week high. The target price implies a 28% upside potential. Insiders have been buying stocks since December 2010. Although it has been a rough year for PNC, it will soon mend itself.
AFLAC Incorporated (AFL): AFLAC has been an underperformer this year, and Cramer is bearish on it. One thousand dollars invested in AFL one year ago is approximately $941 now. As of the July 19 close, the insurance company had a P/E of 10.13, and a forward P/E of 7.01. PEG is 0.7, while the target price indicates a 38.4% increase potential. Analysts expect the company to have an annualized EPS growth of 12.04% in the next five years, while earnings increased by 55.25% this year. With a profit margin of 10.12%, AFLAC pays a 2.66% dividend. The stock is trading 23.85% lower than its 52-week high. Although its debt is increasing, assets outrun them. As a stock, AFLAC is likely to be an outperformer in the near future. Aflac is a dividend pick for the next five years. The stock is undervalued, and the current price is a good entry point.
UGI Corp. (UGI): UGI is trading only 2.87% lower than its 52-week high, but Cramer still recommends buying. As of July 19, UGI was trading at a P/E ratio of 13.20, and a forward P/E ratio of 11.94. P/S is 0.6, whereas the target price implies a 14.6% upside potential. Analysts estimate a 3.20% annualized EPS growth for the next five years. Profit margins are 4.60%, while the Pennsylvania-based company pays a 3.31% dividend yield. UGI returned 17.2% in a year. Debt is increasing, as are assets. UGI is is a steady profit maker. However, I would rather buy Southern Company (SO), which returned 10.56% annually (capital appreciation plus dividends) in the last 15 years.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.