5 Buy and 3 Sell Ideas by Jim Cramer

by: Efsinvestment

Jim Cramer, the “Mad Money host” talked about eight stocks in Aug 16’s Lightning Round, making five bullish and three bearish calls. He mentioned two speculative plays, Cisco (NASDAQ:CSCO) and SPDR Gold (NYSEARCA:GLD) in this program. I have examined these stocks from a fundamental perspective, adding my O-Metrix Grading System where applicable. Here, is a fundamental analysis of these stocks from Cramer's Lightning Round (Data obtained from Finviz/Morningstar and is current as of Aug.17):

Stock Name


Cramer's Suggestion

O-Metrix Score

My Take





Long-Term Buy

Cisco Systems


Buy at $15



Penn National


Buy, but alternative is better



Wynn Resorts





Riverbed Technologies





Southern Copper




Top Pick






SPDR Gold Shares




Do not Buy

Mylan is not doing good since the end of July, and Cramer is bearish on this stock. Mylan has a P/E ratio of 19.2, and a forward P/E ratio of 8.63, as of Aug 17. Analysts expect the company to have a 17.0% annual EPS growth in the next five years. Profit margin is 6.2%, below the industry average of 11.0%. O-Metrix score of the company 6.10, while it offers no dividend yield. Earnings increased by 100.86% this quarter, and 123.00% this year. Institutions own 91.64% of the stock, while insider transactions have increased by 37.68% in the last six months. Target price implies a 34.8% upside potential, whereas the stock is trading 21.90% lower than its 52-week high. Mylan returned about 10.0% in a year, and debt-to assets ratio is slightly decreasing for the last five quarters. Debt-to equity ratio is 1.3, way below the industry average of 6.2. Although Mylan is facing some problems, I believe it is a solid long-term buy.

Cisco is no longer in the doghouse,” says Cramer, recommending to buy if it falls below $15 a share. The California-based tech stock, as of the Aug 17 close, was trading at a P/E ratio of 12.5, and a forward P/E ratio of 8.47. Estimated annualized EPS growth for the next five years is 9.0%. Cisco offered a 1.50% dividend last year, while the profit margin was 16.8%. O-Metrix score of the company is 5.00, and it has a remarkable gross margin of 61.8%. Target price indicates a 21.7% increase potential, whereas it is trading 35.32% lower than its 52-week high. Cisco returned -28.5% in the last 12 months. Debts have increased more than 200% within the last four years, while assets have increased by about 50%. Earnings decreased by 32.87% this quarter, and 12.16% this year. Insiders have been selling stocks and exercising options for a while. My FED+ fair value range for Cisco is between $15 and $23 per share. (Full analysis, here)

Although Cramer likes Penn National, he prefers Wynn Resorts over it. Here is a brief comparison between these two companies:

Current as of Aug.17 close.

Penn National

Wynn Resorts

P/E ratio



Forward P/E ratio



Estimated EPS growth for the next 5 years



Dividend yield



Profit margin



Gross margin



Upside movement potential



O-Metrix scores of Penn and Wynn are 0.99 and 2.25, respectively. Penn is trading 13.50% lower than its 52-week high, whereas Wynn is trading 14.60% lower. Penn returned 33.7% in a year, while Wynn returned 62.8%. Both of the companies are in serious debt. I would pick more profitable ones instead.

"No no no ... First of all, it is (Riverbed) tech, and you cannot own tech right now ... second it is telco tech, so it really just a nightmare ..." Cramer commented.

As of Aug 17, Riverbed was trading at a P/E ratio of 81.3, and a forward P/E ratio of 21.9. Analysts estimate a 29.1% annual EPS growth for the next five years. With a profit margin of 7.9%, Riverbed has no dividend policy. Earnings increased by 57.41% this quarter, and 342.16% this year. O-Metrix score of the company is 2.81, while it returned 36.9% in a year. Riverbed has zero debts for the last five years, and insider transactions have decreased by 27.26% in the last six months. The stock is trading 45.53% lower than its 52-week high. ROE is 9.3%, below the industry average of 14.5%. Insiders have been mostly selling stocks for a while. P/S is 5.8 and P/B is 6.4; both of which are above their industry averages. Moreover, the stock is highly volatile. I would not risk my money, and pick Google (NASDAQ:GOOG) or Microsoft (NASDAQ:MSFT) instead (full analysis here and here).

Cramer likes Southern Copper’s dividend yield and makes a bullish call on the stock. The copper company shows a trailing P/E ratio of 12.7, and a forward P/E ratio of 8.5, as of Aug 17. Estimated annualized EPS growth for the next five years is 18.5%. With a profit margin of 32.4%, and a dividend yield of 8.33%, Southern Copper is an outstanding stock for dividend lovers. Earnings increased by 110.24% this quarter, and 67.35% this year. Southern Copper has a remarkable O-Metrix score of 12.65, while it returned 2.7% in the last 12 months. Operating margin is 49.9%, and gross margin is 58.0%. ROA, ROE, and ROI are 23.25%, 42.09%, and 27.78%, respectively. Target price indicates a 31.2% increase potential, and it is trading 35.17% lower than its 52-week high. This is a stock to dive into.

Cramer is not recommending Sequans anymore as it had made a huge gain. The Paris-based Sequans has a P/E ratio of 10000.0, as of the Aug 17 close. It closed the day at $6.28. Earnings increased by 213.46% this quarter, and 85.14% this year. Sales rose by 149.46% this quarter. Gross margin and operating margin are 48.9% and 6.1%, respectively. Target price is $9.67, which indicates an about 53.9% upside movement potential. The stock is currently trading 67.79% lower than its 52-week high. The company returned -23.9% since Apr, 2011. Debts and assets are unstable. I would stay away from Sequans for now.

When it comes to Gold, Cramer is still bullish:

It (SPDR Gold Trust) is not done going up. You have it as 10% (of your portfolio) ... take it up to 20%. The only time I tell people to sell is when it is more than 20% of the portfolio ... then you got to skeedaddle, otherwise, you want to stick with the GLD.

Gold is a truly speculative play, and I am not that optimistic about gold. This gold mania is dragging gold to highest peaks uncontrolled, creating a serious downfall threat with extreme volatility. Even SPDR Gold’s largest shareholders have reduced their shares, along with Warren Buffett. I have made brief analysis to support my opinion here, and here. SPDR Gold is trading only 0.41% lower than its 52-week high. 52-week range of the ETF is $118.71- $175.13. I will stay bearish on gold till it drops to reasonable prices. The current price of gold is way above its natural equilibrium. The forces of physical demand and supply is not enough to explain the sky-high gold prices.

Read more information on O-Metrix Grading System here.

Disclosure: I am long CSCO.