5 Cramer Buy And 3 Sell Ideas Revisited

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Includes: CCL, DE, LVS, MON, MWE, NFLX, PM, RCL
by: Efsinvestment

Cramer, the host of Mad Money, is making tons of stock suggestions since the beginning of this quarter. The markets are in a great recovery mode. It might be helpful to take advices from Cramer to make the most out of this recovery. In the week’s first Mad Money, he made eight calls. 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 applicable, as well. Here is a fundamental analysis of the first six stocks from Cramer's October 10 Mad Money:

Stock Name

Ticker

Cramer's Suggestion

O-Metrix Score

My Take

Las Vegas Sands

(LVS)

Buy

3.85

Buy

Carnival

(CCL)

Buy

7.06

Long-Term Buy

Royal Carribean

(RCL)

Alternative is Better

9.38

Long-Term Buy

Philip Morris

(PM)

Buy

5.49

Buy

Netflix

(NFLX)

Avoid

N/A

Hold

Deere

(DE)

Buy Some For Now

5.38

Buy

Monsanto

(MON)

Sell

3.67

Sell Now and Buy After Pullback

MarkWest Energy

(MWE)

Buy

N/A

Buy After Pullback

(Data obtained from Finviz/Morningstar, and is current as of October 10 close. You can download the O-Metrix calculator here.)

Cramer has more confidence in Las Vegas, as he’s not that worried about its China exposure. The slowdown seems be fading away. It has a P/E ratio of 31.2, and a forward P/E ratio of 18.1, as of October 10. Five-year annual EPS growth forecast is 19.0%. It has no dividend policy, while the profit margin is 12.4%.

Target price implies a 27.8% upside potential, whereas the stock is trading 19.00% lower than its 52-week high. O-Metrix score is 3.85, and Las Vegas returned 16.8% in a year. Earnings increased by 162.59% this year, and 6490.97% this quarter. While SMA50 is 1.84%, SMA200 is 2.22%. The debt-to assets ratio is falling since 2007. Cash flow is doing good, and it has a four-star rating from Morningstar. My fair-value estimate for Las Vegas Sands is between $36.42 and $47.30 per share. Although the stock is extremely volatile, it is a profitable buy under $47. (Full analysis, here).

Cramer would rather go with Carnival instead of Royal Caribbean. Here is a brief comparison between these two stocks:

Current as of October 10 close.

Royal Caribbean

Carnival

P/E ratio

8.7

13.5

Forward P/E ratio

7.2

11.6

Estimated EPS growth for the next 5 years

14.5%

14.7%

Dividend yield

0.43%

3.04%

Profit margin

8.2%

12.5%

Gross margin

34.8%

35.3%

Upside movement potential

75.6%

30.8%

Royal Caribbean is trading 53.14% lower than its 52-week high, while Carnival is trading 30.32% lower. O-Metrix scores of Royal Caribbean and Carnival are 9.38 and 7.06, respectively. Royal Caribbean returned -31.5% in a year, whereas Carnival returned -18.6%. Both of these two stocks have a four-star rating from Morningstar. Although they are having rough times, I guess they will outperform in the long run.

Cramer likes Philip Morris as it is the best tobacco play for its “robust growth.” The company shows a trailing P/E ratio of 15.1, and a forward P/E ratio of 12.5, as of the October 10 close. Analysts expect the company to have a 10.5% annualized EPS growth in the next five years. With a profit margin of 27.5%, and a dividend of 4.66%, Philip Morris is a juicy stock for dividend lovers.

Earnings increased by 21.06% this year, and 26.66% this quarter. Target price indicates a 12.5% increase potential, whereas it is trading 8.13% lower than its 52-week high. O-Metrix score is 5.49, and Philip Morris returned 16.9% in a year. Yields are impressive, and Beta value is 0.85. Debt-to equity ratio is 3.6, better than the industry average of 5.6. Gross margin and operating margin are 65.4% and 42.8%, respectively. ROA, ROE, and ROI are 22.54%, 204.34% and 39.62%, respectively. Philip Morris is a diversified dividend pick for the ultimate retirement portfolio.

Cramer says that there is a “revolt going on in Netflix,” which includes both shareholders and consumers. Due to the erroneous DVD price increase decision, Netflix is totally messed up. As of October 10, it was trading at a P/E ratio of 28.2, and a forward P/E ratio of 17.3. Analysts estimate a 33.0% annual EPS growth for the next five years. Netflix lacks a dividend, while the profit margin is 8.0%.

Insiders hold only 0.22% of the shares, whereas insider transactions for the last six months have decreased by 92.80%. Target price implies a 92.0% upside movement potential, and it is trading 65.26% lower than its 52-week high. Netflix returned -30.8% in the last twelve months, while O-Metrix score is 7.25. Since 2008, the debt-to assets ratio has come from 5% to 25%. P/E ratio, P/B (17.5), and P/S (2.3) are solid red flags. SMA50 and SMA200 are -44.79% and -52.63%, respectively. Since September 14, Netflix has lost 49.0%. I think the sell-off is almost over. It is too late to sell. I would not buy it either, since there is no sign of recovery yet. However, I think at the current prices, it is oversold.

"The stock has been down so long, it is starting to look up,” Cramer commented, suggesting homegamers buy some Deere and “back up the truck when it reaches to mid-60s.” Deere has a P/E ratio of 11.4, and a forward P/E ratio of 9.7, as of the October 10 close. Five-year annual EPS growth forecast is 9.0%. With a profit margin of 8.5%, Deere offers a 2.36% dividend.

The company returned -4.5% in a year, while it is currently trading 27.01% lower than its 52-week high. Target price is $90.54, which implies a 25.6% upside potential. O-Metrix score is 5.38. Deere had a 111.34% EPS growth this year, and 17.35% this quarter. Institutions hold 76.15% of the shares. Yields are awesome, and debt-to assets ratio is going down since 2009. ROE is 37.93%, and Deere has a four-star rating from Morningstar. Although this stock was a risky buy, I have more confidence in it now.

Cramer recommends taking some Monsanto off the table, as it had a “substantial run.” The Missouri-based Monstanto shows a trailing P/E ratio 25.8, and a forward P/E ratio of 18.6, as of October 10. Estimated annual EPS growth for the next five years is 14.7%. It pays a 1.63% dividend, while the profit margin is 13.6%.

Monsanto has an O-Metrix score of 3.67, whereas it returned 43.7% in a year. Target price indicates an about 9.7% increase potential, and it is trading 3.75% lower than its 52-week high. Debt-to equity ratio is 0.2, better than the industry average of 0.8. Beta value is 0.90. Earnings decreased by 20.47% this quarter, and 47.50% this year. Institutions hold 81.61% of the shares. Yields seem all right, while debts are far from being a threat. Operating margin is 20.5%. SMA20 and SMA50 are 11.43% and 9.90%, respectively. Monsanto has gone up too much, so buying after a pullback is the best.

Cramer made following remarks about MarkWest:

MarkWest should now have the capital it needs to finance some truly terrific growth projects. As a result, the company should be able to boost its already hefty distribution by 10 percent or more for years to come.

MarkWest was trading at a P/E ratio of -38.2, and a forward P/E ratio of 21.5, as of October 10. Analysts expect the company to have a 9.9% annual EPS growth in the next five years. Although it has a terrible profit margin of -7.1%, it has a terrific dividend of 6.19%.

Markwest is trading 9.47% lower than its 52-week high, while it returned 20.1% in the last twelve months. Yields are OK, and debt-to assets are going down since 2008. Cash flow is doing all right. Beta value is 0.96, and average analyst recommendation is 1.80 (1=Buy, 5=Sell). Earnings increased by 23.28% this quarter, and 99.39% this year. Debt-to equity ratio is 1.4, far below the industry average of 3.6. A pullback should be waited for before buying.

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