5 Bullish And 2 Bearish Ideas From Jim Cramer

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Includes: ATML, GG, GLD, GOLD, HL, TEO, VOD
by: Efsinvestment

Despite the long eurozone and U.S. debt crises, the markets have entered into a relatively better environment in Q4, which looks like quite a recovery mode. There’s a risk appetite growing in the markets, and investors are starting to leave their safe havens. While it is important to shape the most profitable portfolio, it is also essential to avoid the dangerous ones, as well. Jim Cramer is helping investors in their stock decisions day by day. In October 25’s Lightning Round program, he talked about seven companies, making five bullish and two bearish 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 these stocks from Cramer's October 25 Lightning Round:

Stock Name

Ticker

Cramer's Suggestion

O-Metrix Score

My Take

Hecla Mining

(HL)

Sell

1.86

Sell

Goldcorp

(GG)

Buy, but alternative is better

3.05

Hold

Randgold

(GOLD)

Buy, but alternative is better

N/A

Avoid

SPDR Gold Trust

(GLD)

Buy

N/A

Do Not Buy

Telecom Argentina

(TEO)

Buy

13.10

Buy

Vodafone

(VOD)

Buy

0.65

Hold

Atmel

(ATML)

Buy Later

9.58

Buy

(Data obtained from Finviz/Morningstar, and is current as of October 26 close. You can download the O-Metrix calculator here.)

Hecla Mining returned -17.0% in the last twelve months, and Cramer is bearish on this mining company. It shows a trailing P/E ratio of 18.7, and a forward P/E ratio of 8.1, as of October 26. Analysts expect the company to have a 5.0% annual EPS growth in the next five years. It pays no dividend, while the profit margin (15.8%) is crushed by the industry average of 43.6%.

Target price is $10.12, which implies a 76.6% upside potential. The stock is trading 50.48% lower than its 52-week high, whereas earnings decreased by 43.48% this year. SMA50 and SMA200 are -12.99% and -29.50%, respectively. O-Metrix score is 1.86, while Beta value is 2.08. Insiders hold only 0.47% of the shares. Cash flow is unsteady, whereas it has a PEG value of 1.6. Operating margin is 6.1%. ROA and ROE are 6.15% and 7.99%, respectively. Hecla Mining is highly volatile, and its O-Metrix score is well below the market average. Since the beginning of this year, it lost nearly half of its value. I don’t think buying or holding this stock would be wise.

That [Goldcorp] is the best of the lot, along with Randgold Resources, but I still like SPDR Gold Shares.

Here is a brief comparison between these two stocks:

Current as of October 26

Goldcorp

Randgold Resources

P/E ratio

20.9

48.5

Forward P/E ratio

14.7

14.9

Estimated EPS growth for the next 5 years

10.0%

-

Dividend yield

0.86%

0.16%

Profit margin

40.5%

26.2%

Gross margin

54.5%

32.2%

Upside movement potential

39.5%

8.7%

Goldcorp is currently trading 14.72% lower than its 52-week high, while Randgold is trading only 3.13% lower. Average analyst recommendation is 2.00 for Goldcorp, and 2.20 for Randgold (1=Buy, 5=Sell). Goldcorp returned 12.7% in the last twelve months, whereas Randgold returned 18.5%.

Besides, gold itself is an unwise play in my opinion. It is still way too far from its fair value range, in spite of the recent downward trend. I am bearish on all precious metals, as well. However, Goldcorp seems to be a relatively better stock, and holding it should do all right. It has been pretty rewarding for long-term shareholders. Read a full analysis of Goldcorp here.

The Mad Money host believes that Telecom Argentina is a “bargain,” as well as Vodafone. Here is a brief comparison between these two stocks:

Current as of October 26

Telecom Argentina

Vodafone

P/E ratio

7.4

11.5

Forward P/E ratio

6.3

9.8

Estimated EPS growth for the next 5 years

7.0%

-5.50%

Dividend yield

10.95%

6.89%

Profit margin

13.8%

17.4%

Gross margin

50.7%

32.8%

Upside movement potential

21.2%

19.9%

Telecom Argentina returned -8.9% in a year, while Vodafone returned 6.0%. O-Metrix scores of Telecom Argentina and Vodafone are 13.10 and 0.65, respectively. Analysts give a 2.30 recommendation for Telecom Argentina, and a 2.00 recommendation for Vodafone (1=Buy, 5=Sell). Telecom Argentina is trading 22.97% lower than its 52-week high, whereas Vodafone is trading only 1.46% lower. Telecom Argentina is a nice buy, but Vodafone is worth holding, as well.

Cramer made the following remarks about Atmel:

This is a tech company with semiconductors...it has everything...here is the problem. We've had a huge run in tech. I want you to wait a few days...tech looks soggy tomorrow...you wait to buy Monday, you'll be fine.

The California-based Atmel was trading at a P/E ratio of 8.6, and a forward P/E ratio of 10.7, as of October 26. Analysts estimate an 18.5% annual EPS growth for the next five years. It offers no dividend policy, while the profit margin (33.0%) nearly doubles the industry average of 17.4%.

The stock is currently trading 35.48% lower than its 52-week high, and it has an O-Metrix score of 9.58. Target price is $14.69, indicating an about 35.5% increase potential. Atmel returned 29.0% in the last twelve months, whereas institutions hold 81.59% of the shares. Earnings increased by 344.24% this quarter, and 471.71% this year. SMA20 and SMA50 are 15.95% and 16.26%, respectively. Debts are buried into the ground within the last five years. Debt-to- equity ratio is 0.0, well below the industry average of 0.5. While ROE is 68.97%, ROA is 39.54%. PEG value is 0.6 and 13 out of 15 analysts covering the company recommend buying. My suggestion is no different.

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