3 Bullish Large Cap Picks by Jim Cramer

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Includes: AAPL, COP, EOG, SSNLF, XOM
by: Efsinvestment

Cramer keeps seeking the most profitable stocks with strong upside potentials, recommending them to ride out this doomsday situation. He recently recommended remarkable companies like Apple (NASDAQ:AAPL) and ConocoPhillips (NYSE:COP). I have investigated these stocks from a fundamental perspective, adding my O-Metrix Grading System where possible. Here, is a fundamental analysis of these stocks from Cramer's Mad Money (data obtained from Finviz/Morningstar and is current as of August 10):

Stock Name

Ticker

Cramer's Suggestion

O-Metrix Score

My Take

EOG Resources

(NYSE:EOG)

Buy

4.43

Avoid

ConocoPhillips

(COP)

Buy

7.98

Long-term Buy

Apple

(AAPL)

Buy

7.00

Top Pick

EOG Resources: Cramer is bullish on domestic oil producers, including EOG Resources. The Texas-based EOG Resources shows a trailing P/E ratio of 54.6, and a forward P/E ratio of 15.2, as of the Aug 10 close. Analysts expect the company to have a 30.2% annualized EPS growth in the next five years, which sounds truly utopic when its -34.24% EPS growth of last 5 years is considered. With a profit margin of 5.3%, EOG Resources paid a 0.74% dividend yield last year. Earnings decreased by 70.91% this year. Its O-Metrix score is 4.43, which, I believe, should be much lower as its long-term EPS growth forecast seems overdone. Target price is $125.39, which implies an about 44.1% upside movement potential. The stock is currently trading 28.14% lower than its 52-week high, while it returned -9.6% in the last twelve months. Debt-to assets ratio is increasing since 2006. ROE is 3.7%, below the industry average of 6.0%. I would avoid this stock until long-term EPS estimates hold. Moreover, P/E ratio does not fit my criteria.

Cramer also likes high-yielders like ConocoPhillips. As of the Aug 10 close, the company was trading at a remarkable P/E ratio of 7.9, and a forward P/E ratio of 7.4. Estimated annual EPS growth for the next five years is 8.0%. Although profit margin (5.1%) is slightly below the industry average of 7.1%, dividend yield is enjoyable (4.21%). Earnings increased by 28.09% this year. Target price indicates a 33.5% increase potential, while the stock is trading 21.30% lower than its 52-week high. Institutions hold 74.65% of the stock. ConocoPhillips has an admirable O-Metrix score of 7.98, and it recently multiple-topped. Debts are decreasing for the last five quarters, whereas the stock returned approximately 13.9% in a year. Yields are consistent. Debt-to equity ratio is 0.3, better than the industry average of 0.6. P/S is 0.4. I believe that the stock is fairly-priced, and can enter portfolios as a long-term profit maker. Moreover, it has a five-star rating from Morningstar.

Apple, Inc.: Cramer is not actually surprised that Apple surpassed Exxon (XOM) in terms of market capitalization, as Apple owns "the single greatest balance sheet known to man.”

"You [Apple] deserve it more than any company on Earth," Cramer comments. Samsung (OTC:SSNLF), the toughest rival of Apple, has been banned from selling its Galaxy Tab 10.1 in most of the European Union countries until a court decision is finalized. This will make Apple a monopoly in EU.

The tech titan shows a trailing P/E ratio of 14.40, and a forward P/E ratio of 11.6, as of Aug 10. 5-year annualized EPS growth forecast is 18.2%, which sounds conservative given the 57.78% EPS growth of last five years. Profit margin in 2010 was 23.53%, while it offered no dividend yield. The company had an EPS growth of 66.91% this year, and 122.15% this quarter. My fair value estimate for Apple is $430 per share (full analysis here). Although Apple has no dividend policy, it still has an impressive O-Metrix score of 7.00. Target price indicates a 33.2% upside movement potential, while the stock is trading 8.78% lower than its 52-week high. The company has no debts since 2006, and it returned 47.9% in the last twelve months. Institutions hold 70.35% of the stock. PEG ratio is 0.6, and debt-to equity ratio is 0.0. While ROE is 41.99%, ROA is 27.53%. Apple is a screaming buy at the current prices.

Disclosure: I am long AAPL.