Jim Cramer's Latest Buy List

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Includes: BIDU, CNX, FCX, GOLD
by: Efsinvestment

Jim Cramer has been making tons of stock suggestions in the past few weeks, trying to help homegamers protect their money. In the Lightning Round Sept. 27, I was surprised to see that he made only four calls. However, there were no bearish calls this time. I have examined all of his stock mentions from a fundamental perspective, and added my opinion about them. I have applied my O-Metrix Grading System where possible, as well. Here is a fundamental analysis of these stocks from Cramer's September 27 Lightning Round:

Stock Name

Ticker

Cramer's Suggestion

O-Metrix Score

My Take

Baidu, Inc

(BIDU)

Buy

5.01

Avoid

Randgold Resources

(GOLD)

Buy

N/A

Avoid

Consol Energy

(CNX)

Buy

15.85

Avoid

Freeport- McMoRan

(FCX)

Buy

9.43

Buy

(Data obtained from Finviz/Morningstar, and is current as of September 28 close. You can download O-Metrix calculator, here.)

Baidu is the only good stock in the Chinese market, according to Cramer. It shows a trailing P/E ratio of 55.2, and a forward P/E ratio of 27.9, as of September 28. Analysts estimate a 41.7% annual EPS growth for the next five years. Profit margin (46.5%) crushes the industry average of 19.2%, while it has no dividend policy.

O-Metrix score of Baidu is 4.82, whereas it is trading 26.84% lower than its 52-week high. Target price is $183.57, which indicates a 51.1% increase potential. SMA50 and SMA200 are -15.32% and -6.82%, respectively. Baidu returned 17.0% in a year. P/B is 25.5, and P/S is 27.0, both of which are way above their industry averages. Insiders hold only 0.01% of the shares. P/E ratio, P/B, and P/S are hopeless red flags. The stock is highly volatile, and it has a three-star rating from Morningstar. Stay away from it.

Best in show. That [Randgold] is the best run gold company in the world. They'll make a fortune in this market.

Randgold was trading at a P/E ratio of 42.2, and a forward P/E ratio of 13.1, as of the September 28 close. It pays a razor thin dividend of 0.18%, while the profit margin (26.2%) is slightly lower than the industry average of 27.1%.

Target price is $119.20, which implies a 25.1% upside potential. The stock is trading 17.21% lower than its 52-week high, whereas it returned -7.5% in a year. P/S is 11.5, and P/B is 4.7, both of which are way above their industry averages. Operating margin is 21.0%. ROA and ROE are 9.91% and 11.23%, respectively. While SMA20 is -10.97%, SMA50 is -6.39%.

As a stock, Randgold does not fit my criteria. Moreover, the stock is highly correlated with the gold prices, and gold has no chance but to experience a major correction. Current price is still far from being rational. If you want to play gold, Goldcorp (GG) is a relatively better choice. Goldcorp has been paying dividends for the last 10 years. It is trading with a lower trailing P/E ratio of 20.54, and a forward P/E ratio of 14.64. With a P/S ratio of 7.55, and P/B ratio of 1.74, Goldcorp is obviously safer than Randgold. (full analysis here).

Cramer likes Consol Energy as it is dirt cheap, and he would buy it right here. The Pennsylvania-based Consol, as of September 28, has a P/E ratio of 18.1, and a forward P/E ratio of 9.1. Finviz analysts expect the company to boost its annual earnings by 42.00% in the next five years, which is clearly utopic given the -12.59% EPS growth of past five years. With a profit margin of 7.8%, Consol Energy offers a 1.12% dividend.

O-Metrix score is 15.85, which should be much lower as EPS growth estimate sounds completely illogical. Insiders own only 0.39% of the stock, and earnings decreased by 45.88% this year. Target price is $64.83, which implies a 82.0% upside potential. The stock is currently trading 36.47% lower than its 52-week high, while it returned 3.4% in a year. Consol is paying the same dividend since November 2007. The debt-to-assets ratio is climbing for the last five years. P/E ratio, P/B (2.5), P/S (1.4), operating margin (10.1%), profit margin, ROE (14.4%), and debt-to-equity ratio (1.0) are all red flags. Gross margin is 37.4%. ROA and ROI are 3.76% and 6.63%, respectively. While SMA200 is -26.09%, SMA50 is -19.75%. Walter Energy (WLT) is a much better buy, in my opinion.

Everybody thinks the earnings are going to be cut dramatically...3% yield at $31- $32...you pull the trigger...it [Freeport-McMoRan] is ridiculously cheap...Can it go lower? Anything can go lower...this stock has innate value...by this time next year it is going to be up dramatically.

The copper company shows a respectable P/E ratio of 5.5, and a forward P/E ratio of 5.2, as of September 28. Five-year annualized EPS growth for the next five years is 7.0%. It pays a 3.10% dividend, while the profit margin is 25.1%.

Freeport returned –25.1% in the last twelve months, and it has an O-Metrix score of 9.43. The debt-to-assets ratio is falling sharply since 2008. P/E ratio, P/B (2.1), P/S (1.4), and debt-to-equity ratio (0.2) are moderate green flags. Target price indicates a 97.1% upside potential, while it is trading 46.86% lower than its 52-week high. Earnings increased by 103.87% this quarter, and 55.90% this year. Operating margin is 50.7%. ROA, ROE, and ROI are 19.78%, 44.68% and 31.45%, respectively. PEG value is 0.8. 14 out of 20 analysts recommend buying, and I agree with them.

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