Cramer's Black List: 4 Sell and 2 Buy Ideas

by: Efsinvestment

In Lightning Round with Jim Cramer, the most popular part of his show, Cramer makes calls on viewer’s stock picks. I have been writing about Cramer’s daily picks and investigating them from a fundamental perspective for a while. I am glad to see that these articles are drawing a large amount of attention. I will be happy to continue investigating his picks further day by day, adding my fair-value estimations and O-Metrix grades where necessary. In this program, his bearish calls outrun bullish ones 2 to 1. Here, is a fundamental analysis of these stocks from Cramer’s Lightning Round mentions on July 26:

Kodiak Oil & Gas (NYSE:KOG): Although Kodiak is a good speculation, Cramer prefers Chesapeake Energy (NYSE:CHK) instead. Here is a brief comparison between these two companies:

Current as of July 26 close.

Kodiak Oil & Gas

Chesapeake Energy

P/E ratio



Forward P/E ratio



Estimated EPS growth for the next 5 years



Dividend yield



Profit margin



Gross margin



Upside movement potential



Kodiak looks terrible on the sheet, but it has some pros to talk about. Kodiak returned 103% in a year, while Chesapeake returned 60.2%. Kodiak made its first debt last year, while Chesapeake’s debt-to assets ratio is between 25-30% for the last five quarters. Analysts’s target price of Kodiak implies a 22.1% upside potential, whereas Chesapeake’s target price implies 13.5%. Kodiak is currently trading 11.56% lower than its 52-week high, and Chesapeake is trading 4.61% lower. However, a stock with such horrible indicators simply is not my type, and the stock is highly volatile. I think Chesapeake is a sleep-at-night investment when compared to Kodiak.

Imax Corp. (NYSE:IMAX): Although Cramer made a bearish call on Imax, I have my doubts. As of the July 26 close, the company was trading at a trailing P/E ratio of 23.31, and a forward P/E ratio of 16.67. Analysts expect the company to have a 26.22% annual EPS growth in the next 5 years, which is quite conservative given the 62.65% EPS growth of last five years. Profit margin in 2010 was 33.54%. Earnings had a whopping increase of 1485% this year, while the stock is trading 33.76% lower than its 52-week high. $1000 invested in Imax one year ago is about $1715 now. Debts are almost buried into the ground. ROA is 23.90%, and ROE is 61.56%. This stock is dirt-cheap, yet highly volatile. Imax is becoming very popular in global markets. If you like taking risks, then this is a stock for you to dive into.

Riverbed Technology, Inc. (NASDAQ:RVBD): Although Riverbed returned 68.3%, Cramer recommends staying away from this stock until September. The company has a terrible P/E ratio of 107.5 and a forward P/E ratio of 26.68, as of the July 26 close. Estimated annualized EPS growth for the next five years is 27.95%, which is reasonable given the 39.82% of past-5 year EPS growth. It has a profit margin of 7.86% with no dividend policy. The stock is trading 30.76% lower than its 52-week high, while target price implies a 28.3% increase potential. It has an impressive gross margin of 76.36% with zero debts for the last five years. Earnings increased by 342.16% this year, and 57.41% this quarter. However, a P/E ratio of that high does not fit my criteria. The stock is highly volatile, and SMA ratios are terrible. Insiders have been mostly selling stocks for a while. I would stay away from Riverbed Technology.

The Walt-Disney Co. (NYSE:DIS): Walt Disney did not show a remarkable performance this year, and Cramer recommends only holding onto this stock if you own it. As of July 26, the California-based company shows a P/E ratio of 17.85, and a forward P/E ratio of 13.59. Analysts estimate a 14.30% annual EPS growth for the next five years. With a dividend yield of 0.99%, Walt Disney had a 11.2% profit margin last year. Its O-Metrix score is 4.86, while the stock is trading 8.64% lower than its 52-week high. While SMA50 is 2.21%, SMA200 is 2.36%. Target price is $48.39, implying a 19.4% increase potential. One thousand dollars invested in Walt-Disney one year ago is about $1181 now. Debt-to assets ratio is going down for the last three years. Moreover, the stock just double topped. Walt-Disney is relatively less volatile. It has had strong momentum since Mar,2009. I believe the momentum will weaken, but not fade away.

Tempur-Pedic Int’l (NYSE:TPX): Cramer says that this stock has been a “remarkable”, and he thinks you “should buy some." I also admire Tempur-Pedic’s performance. It returned 105.3% in the last twelve months. As of July 26’s close, the Kentucky-based Tempur Pedic has a trailing P/E ratio of 27.17, and a forward P/E ratio of 19.08. Analysts estimate a 17.29% annualized EPS growth for the next five years. Tempur-Pedic has a profit margin of 14.63% with no dividend policy. ROA is 24.00%, while ROE is 133.00%. Earnings increased by 93.16% this year, and 55.47% this quarter. Target price implies a 4.8% increase potential, and the stock is trading 7.92% lower than its 52-week high. SMA50 is 2.69%, while SMA200 is 33.57%. Gross margin is 51.04%. Debt-to assets ratio is decreasing for the last three quarters. Analysts give a 1.80 recommendation for the company (1=Buy, 5=Sell). The stock is an admirable outperformer with a solid momentum. However, its O-Metrix score of 3.75 is below the market average. Waiting for a pullback is the best to do for now.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.