5 Cramer Buy/Sell Ideas

Includes: BLK, CAT, HKTV, MET, PRU
by: Efsinvestment

In the week’s first Lightning Round program, Jim Cramer made five calls. Two of them were bullish this time, and the other three bearish. It is crucial to get some investing ideas from the professionals, as well as doing your own research along with it. Therefore, 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 these stocks from Cramer's October 24 Lightning Round:

Stock Name


Cramer's Suggestion

O-Metrix Score

My Take





Long-Term Buy






City Telecom









Risky Buy





Risky Buy

(Data obtained from Finviz/Morningstar, and is current as of October 24 close. You can download the O-Metrix calculator here.)

Cramer believes that Caterpillar will “get back to its high," therefore recommends homegamers buying it right now. The company shows a trailing P/E ratio of 15.2, and a forward P/E ratio of 9.9, as of October 24. Estimated annualized EPS growth for the next five years is 10.3%. Profit margin (7.8%) is above the industry average of 6.7%, while it pays a 2.01% dividend.

Earnings increased by 190.36% this year, and 39.22% this quarter. Target price is $108.06, which implies a 17.7% upside potential. The stock is trading 20.49% lower than its 52-week high, whereas it returned 16.0% in a year. Yields are delightful. Debts are having a free fall since 2008, while O-Metrix score is 4.90. SMA20 and SMA50 are 16.94% and 11.80%, respectively. Institutions hold 66.10% of the stock, whereas ROE is 35.44%. Caterpillar reported great profits, and beat the analyst estimates. I expect it to be a long-term outperformer.

Cramer suggests staying away from BlackRock unless it starts boasting a 4% dividend again. It was trading at a P/E ratio of 12.7, and a forward P/E ratio of 12.4, as of the October 24 close. Five-year annual EPS growth forecast is 13.0%. Profit margin is 26.0%, and dividend yield is 3.49%.

BlackRock is currently trading 23.25% lower than its 52-week high, while it has an O-Metrix score of 6.56. Target price is $187.31, implying an about 18.9% upside movement potential. Institutions own 84.71% of the stock, and it returned -6.5% in the last twelve months. Yields are impressive. The company had a 72.52% EPS growth this year, and 15.91% this quarter. BlackRock has almost no debts for the last five years, while cash flow is doing excellent. Debt-to equity ratio is 0.2, way below the industry average of 1.7. Gross margin and operating margin are 60.0% and 35.9%, respectively. PEG value is 1.0, whereas it has a four-star rating from Morningstar. This stock is a screaming buy to play the recovery.

Cramer made the following remarks about City Telecom:

I give up... This is a company we supported. I thought everything would grow there...it is not growing...it was a mistake. It is not working and I'm not going to defend it all the way down.

The Hong Kong-based telecommunication company, as of October 24, has a P/E ratio of 10.6, and a forward P/E ratio of 8.6. Analysts expect the company to have a 2.0% annual EPS growth in the next five years. Profit margin in 2010 was 16.6%, while shareholders enjoyed a 7.79% dividend.

Target price is $16.00, indicating an about 70.3% increase potential. The stock is currently trading 39.63% lower than its 52-week high, whereas it returned -28.4% in a year. O-Metrix score is 5.09. Earnings increased by 27.86% this year, and it has a remarkable gross margin of 87.1%. Debt-to equity ratio is 0.1, which crushes the industry average of 3.3. Debts are nearly buried into the ground within the last five years, and cash flow is doing all right. Average analyst recommendation for City Telecom is 1.3 (1=Buy, 3=Sell). I still count on this stock. It already formed its dip. It is ready to bounce back to its 52-week highs.

Cramer would rather go with Prudential instead of MetLife in the insurance sector. Here is a brief comparison between these two stocks:

Current as of October 24 close.



P/E ratio



Forward P/E ratio



Estimated EPS growth for the next 5 years



Dividend yield



Profit margin



Gross margin



Upside movement potential



MetLife is currently trading 28.80% lower than its 52-week high, whereas Prudential is trading 19.25% lower. O-Metrix scores of MetLife and Prudential are 6.32 and 8.49, respectively. MetLife returned -17.0% in the last twelve months, while Prudential returned 0.6%. Insurance companies tend to have cheap valuation ratios, and these companies are no exception. They are also trading well below their 52-week highs. I would rate both of them as risky buys.

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