9 Buy And 1 Sell Ideas By Cramer, Part 2

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Includes: ALL, GG, GOLD, PRU, S, SBGL
by: Efsinvestment

<<Click here for Part 1
Here are the last five stock mentions from Jim Cramer’s Lightning Round on October 11, along with my opinions about them. The O-Metrix Grading System is applied where possible, as well.

Stock Name

Ticker

Cramer's Suggestion

O-Metrix Score

My Take

Stillwater Mining

SWC

Avoid

N/A

Avoid

Randgold Resources

GOLD

Buy

N/A

Avoid

Goldcorp

GG

Buy

3.04

Hold

Allstate

[[(ALL]]

Buy, but alternative is better

4.25

Risky Buy

Prudential

PRU

Buy

9.47

Risky Buy

Sprint Nextel

S

Avoid

N/A

Avoid

(Data obtained from Finviz/Morningstar, and is current as of October 11 close. You can download the O-Metrix calculator here.)

The Mad Money host does not like Stillwater Mining, He suggests Randgold Resources or Goldcorp instead:

If you're going to own metals, I'm sending you to Randgold Resources or Goldcorp..

Here is a brief comparison of these stocks:

Current as of October 11th close.

Stillwater Mining

Randgold Resources

Goldcorp

P/E ratio

9.5

45.2

20.9

Forward P/E ratio

11.5

14.0

14.8

Estimated EPS growth for the next 5 years

-

-

10.0%

Dividend yield

-

0.18%

0.86%

Profit margin

14.9%

26.2%

40.5%

Gross margin

22.9%

32.2%

54.5%

Upside movement potential

86.3%

17.0%

40.9%

Among these three stocks, Randgold seems like the most expensive one. It has the highest trailing and forward P/E ratios. Therefore, I would eliminate Randgold from this list. Stillwater, a palladium and platinum refinery company, lost 54.15% since January. It is trading 63.32% below its 52-week high. On the other hand, Goldcorp returned 5.06% in a year, and it is trading at 15.19% below its 52-week high. I think the precious metal prices are highly inflated. The speculations and the low-interest environment pushed the prices well-above their real equilibrium prices. Therefore, I do not recommend any precious metal stocks. Even though Stillwater looks cheap with a trailing P/E ratio of 10.64, it is still too risky. However, Goldcorp is one of the safest plays among the gold miners. The company has a great growth history. Holding Goldcorp is okay. (Full analysis of Goldcorp, here)"

Although Cramer likes Allstate, he would rather go with Prudential, as it has better assets. Here is a brief comparison between these two stocks:

Current as of October 11 close.

Allstate

Prudential

P/E ratio

23.3

8.5

Forward P/E ratio

6.6

6.5

Estimated EPS growth for the next 5 years

9.3%

11.9%

Dividend yield

3.43%

2.31%

Profit margin

1.8%

7.1%

Gross margin

-

-

Upside movement potential

33.9%

40.4%

Allstate is trading 27.71% lower than its 52-week high, whereas Prudential is trading 26.36% lower. O-Metrix scores of Allstate and Prudential are 4.25 and 9.47, respectively. Allstate returned -24.7% in a year, while Prudential returned -7.9%. Both of them are risky buys in my opinion.

Cramer made following remarks about Sprint Nextel:

It needs money and I don't like the capital structure...the common stock is vulnerable. Don't buy.

The Kansas-based tech stock shows a trailing P/E ratio of -2.3, and a forward P/E ratio of -3.0, as of October 11. Analysts expect the company to have a 5.5% annualized EPS growth in the next five years. Profit margin (-9.5%) is crushed by the industry average of 9.2%, while it offers no dividend policy.

Target price is $5.28, which implies a 121.8% upside potential. Sprint Nextel is currently trading 63.10% lower than its 52-week high, whereas it returned -46.2% in a year. The debt-to assets ratio is climbing up since 2006, while cash flow is doing terrible. Earnings decreased by 37.39% this year, and 11.22% this quarter. SMA20, SMA50, and SMA200 are -21.18%, -27.93% and -46.91%, respectively. Insiders hold only 0.03% of the stock, while Beta value is 1.17. ROA is -6.11%, and ROE is -20.97%. ROI is -9.11%. Sprint Nextel is extremely risky, and I can only recommend investing at your own risk.

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

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