4 Buy and 2 Sell Ideas From Jim Cramer

Includes: AKS, GDP, HDY, NI, NUE, S, T, WETF
by: Efsinvestment

As shorting has been banned in some European countries for fifteen days, macro-economic issues are becoming more of a problem day by day. Investors are seeking for safe havens that can save their money throughout this turmoil. Jim Cramer gave names of six stocks, making four bullish and two bearish calls. I have examined 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 Lightning Round (Data obtained from Finviz/Morningstar and is current as of Aug.12):

Stock Name


Cramer's Suggestion

O-Metrix Score

My Take

AK Steel





Nucor Corp.





NiSource Inc.


Strong Buy



Goodrich Petroleum Corp.

















Buy ?



"I recommended AK Steel (NYSE:AKS), it went up, and I did not take any off the table. I feel like a chump. AKS is not as good as Nucor (NYSE:NUE)." Cramer says. Here is a brief comparison between these two companies:

Current as of Aug.12 close.

AK Steel


P/E ratio



Forward P/E ratio



Estimated EPS growth for the next 5 years



Dividend yield



Profit margin



Gross margin



Upside movement potential



AK Steel is trading 49.02% lower than its 52-week high, while Nucor is trading 29.26% lower. AK Steel returned -32.6% in a year, and Nucor returned 18.8%. Nucor’s O-Metrix score is 2.90. Debts are far from being a threat for both of the companies. Analysts give a 1.6 recommendation for AK Steel, and a 1.7 recommendation for Nucor (1=Buy, 3=Sell). AK Steel has a four-star rating from Morningstar, while Nucor has a five-star rating. Nucor is relatively less volatile and more consistent.

Cramer says that NiSource (NYSE:NI) is a “terrific company,” and if you “buy that and reinvest the dividends, you are going to make a ton of money." The Indiana-based NiSource shows a trailing P/E ratio of 18.01, and a forward P/E ratio of 13.76, as of the Aug 12 close. Analysts expect the company to have a 4.0% annual EPS growth in the next five years. Profit margin in 2010 was 4.9%, while NiSource offered a 4.64% dividend. Earnings increased by 36.80% this quarter, and 25.47% this year. O-Metrix score of NiSource is 2.71, while the stock is trading 6.95% lower than its 52-week high. Target price implies a 6.1% upside potential, whereas the company returned 18.9% in the last twelve months. Assets are decreasing for the last three quarters. NiSource is yielding the same dividend since Oct, 2003. None of the analysts covering the company recommend buying or suggest outperform. Moreover, it has a two-star rating from Morningstar. PEG ratio is 3.4, and debt-to equity ratio is 1.3, above the industry average of 1.0. ROE is 6.3%, below the industry average of 10.1%. I am not keeping it just for its dividend.

Cramer believes that Goodrich (NYSEMKT:GDP) will go higher, as oil prices will “snap back”. The Texas-based Goodrich, as of the Aug 12 close, shows a trailing P/E ratio of -2.2, and a forward P/E ratio of 15.2. Estimated annual EPS growth for the next five years is 17.5%, while the stock has no dividend policy. Earnings had a whopping increase of 1115.40% this year, and 93.85% this quarter. Institutions own 94.74% of the stock, whereas target price implies a 60.4% increase potential. ROA, ROE, and ROI are -35.78%, -98.76% and -40.91%, respectively. While Goodrich has a remarkable gross margin of 91.0%, its operating margin is horrible (-175.4%). Goodrich returned 25.2% in the last twelve months, and debt-to assets ratio is climbing sharply within the last five quarters. Insiders have been selling stocks for a year. Rising oil prices will surely have a positive effect on this stock, but I am not interested in Goodrich until I see these indicators normalized.

Wisdom Tree: (NASDAQ:WETF)"That's a good company...they actually do good ETFs...they allow companies to get into markets you couldn't do on an individual basis, and they do it in a cost effective way for people." Cramer says.

WisdomTree is one of the best index-based fund issuer and manager. Their ETFs offer investors an opportunity to have exposure in a large set of stocks. The company also advises to institutional clients. WisdomTree reported solid quarterly results, reporting a $700 million net income. Moreover, it increased its revenue by 79% from the year-ago quarter, With a market capitalization of $929.5 million as of Aug 12, the New York-based company closed the day at $8.05. The stock returned 300% in the last twelve months, and it has a 0.01 EPS value (ttm). ROA is 5.55%. Six institutions and six funds opened a new stake in Wisdom Tree recently. WisdomTree has had increasing momentum since its dip in Feb, 2009. While I think that the company has a great future, the stock returned 300% in a year.

Cramer wishes Sprint (NYSE:S) “the best”, but he says that Sprint has some “financing issues they [Sprint] have to adress.” As of Aug 12, the company was trading at a P/E ratio of -3.0, and a forward P/E ratio of -4.7. Five-year annualized EPS growth forecast is 5.5%. With a terrible profit margin of -9.5%, Sprint offers no dividend yield. Earnings decreased by 37.39% this year, and 11.22% this quarter. ROA, ROE, and ROI are -5.87%, -19.37% and -8.56%, respectively. Target price is $5.51, which implies a 73.8% upside movement potential. It returned -29.3% in a year, and assets are decreasing sharply for the last four years. Institutions hold 85.23% of the stock, whereas it is trading 50.93% lower than its 52-week high. While SMA50 is -36.33%, SMA200 is -31.95%. Moreover, the company is facing a significant downfall since the end of July. I see no reason to invest any money in Sprint for now. With a nifty yield of 6%, and a low P/E ratio of 11, AT&T (T) is a much better alternative. (Full analysis, here).

Hyperdynamics (NYSEARCA:HYD): "That's a $4 call option if you want it and want to have exposure to oil. I will bless it and wish you luck." Cramer comments.

The Texas-based Hyperdynamics has a P/E ratio of -57.8, as of the Aug 12 close. Analysts expect the company to have a 44.40% EPS growth next year, while earnings increased by 32.00% this year. The oil explorer has no dividend policy. ROA is -7.89%, and ROE is -8.43%. ROI is -8.43%. Institutions hold 29.82% of the stock, whereas insider transactions have increased by 137.68% in the last six months. Target price is $8.00, which indicates an about 85.6% upside movement potential. The stock is currently trading 44.60% lower than its 52-week high. SMA50 and SMA200 are -3.43% and -2.87%, respectively. Hyperdynamics returned 295% in a year, and debt-to assets ratio is extremely unstable. I would pick more profitable ones instead.

Disclosure: I am long T.