Recent Calls By Jim Cramer: 6 Buy, 2 Sell

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Includes: ANF, IMGN, ISRG, JBLU, KMB, SODA, T, VZ
by: Efsinvestment

The eurozone doomsday has been postponed as Greece’s debts have been slashed by 50%, and momentum in the markets got bigger today. While it is not a permanent solution for the crisis, I believe it has created an enormous opportunity to make some money in this positive situation. If you form a logical portfolio, you can get the best out of this environment. Investors might consider taking a look at the stocks Jim Cramer mentions, as he is quite good at what he’s doing. In October 26th’s Lightning Round program, he talked about eight companies, making six 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 26 Lightning Round:

Stock Name

Ticker

Cramer's Suggestion

O-Metrix Score

My Take

Kimberly-Clark

KMB

Buy

3.99

Buy After Pullback

JetBlue

JBLU

Avoid

4.33

Buy

Immunogen

IMGN

Buy

N/A

Avoid

Intuitive Surgical

ISRG

Buy

3.02

Hold

Verizon

VZ

Buy

3.32

Hold

AT & T

T

Buy

5.16

Long-Term Buy

SodaStream

SODA

Avoid

8.07

Risky Buy

Abercrombie & Fitch

ANF

Buy

4.08

Hold

(Data obtained from Finviz/Morningstar, and is current as of October 27 close.)

Cramer made the following remarks about Kimberly-Clark:

The stock didn't make the quarter...it's a great yielder that...it is going to do a terrific job, and I want you to own the stock.

It was trading at a P/E ratio of 16.6, and a forward P/E ratio of 13.4, as of October 27. Analysts estimate an 8.0% annual EPS growth for the next five years. With a profit margin of 8.5%, it pays a 3.98% dividend.

The stock is trading only 3.06% lower than its 52-week high, while its target price implies a 1.7% upside potential. Insider transactions have increased by 28.75% in the last six months, whereas its O-Metrix score is 3.99. SMA50 and SMA200 are 2.49% and 8.19%, respectively. The company returned 13.7% in a year. Yields seem all right, while debt-to assets ratio is going down since 2008. Beta value is 0.37, and ROE is 32.52%. Buy this stock after a pullback.

Cramer is bearish on JetBlue, saying:

Fly it, don't buy it.

JetBlue shows a trailing P/E ratio of 15.2, and a forward P/E ratio of 9.0 as of October 27. Five-year annual EPS growth forecast is 10.5%. Profit margin (2.3%) is better than the industry average of 1.6%, while it offers no dividend policy.

The company is trading 38.55% lower than its 52-week high, whereas it returned -34.5% in the last twelve months. O-Metrix score is 4.33, and its target price indicates an about 53.9% increase potential. Earnings increased by 47.83% this year, while institutions hold 93.11% of the shares. The debt-to assets ratio is falling since 2006. Debt-to equity ratio is 1.7, way below the industry average of 5.0. PEG value is 0.9, and Beta value is 0.97. I agree that airline companies might get into serious trouble, but JetBlue is among the best of them.

Immunogen returned 82.5% in a year, and Cramer is still bullish on this stock. As of October 27, it has a P/E ratio of -16.4, and a forward P/E ratio of -18.2. The stock pays no dividend, and it has a negative profit margin of -301.86%.

Target price implies a 3.1% increase potential, while it is currently trading 10.49% lower than its 52-week high. Assets are unstable, and cash flow is not doing so good. Beta value is 1.77, whereas earnings decreased by 7.87% this quarter. Insiders hold only 0.60% of the shares. P/B is 7.6, and P/S is 49.8, both of which are well above their industry averages. Operating margin is -311.8%. ROA, ROE, and ROI are -32.84%, -48.16% and -44.81%, respectively. Just avoid this stock.

The Mad Money host suggests buying Intuitive Surgical, as it could “go higher.” The healthcare stock shows a trailing P/E ratio of 36.4, and a forward P/E ratio of 30.0, as of October 27. Estimated annualized EPS growth for the next five years is 20.1%. With a profit margin of 28.2%, it has no dividend policy.

Target price indicates an about 6.7% downside movement potential, while the stock is trading 1.64% higher than its 52-week high. O-Metrix score is 3.02, and it returned 68.2% in the last twelve months. Insiders own 0.86% of the stock, whereas insider transactions have decreased by 22.50% within the last six months. Beta value is 1.53. P/B is 6.9, and P/S is 10.2, both of which are way above their industry averages. PEG value is 1.5. Hold if you own it, but do not buy.

Cramer likes Verizon for its yield, as well as AT&T. Here is a brief comparison between these two stocks:

Current as of October 27 close.

Verizon

AT & T

P/E ratio

14.8

14.96

Forward P/E ratio

14.2

11.4

Estimated EPS growth for the next 5 years

4.2%

4.4%

Dividend yield

5.43%

5.98%

Profit margin

6.5%

16.2%

Gross margin

59.2%

56.9%

Upside movement potential

2.9%

11.9%

Verizon is currently trading 0.48% higher than its 52-week high, whereas AT& T is trading 4.99% lower. O-Metrix scores of Verizon and AT& T are 3.32 and 3.86, respectively. Average analyst recommendation is 2.50 for Verizon, and 2.20 for AT& T (1=Buy, 5=Sell). Verizon returned 15.8% in a year, while AT&T returned 3.9%. Morningstar gives a three-star rating to Verizon, and a four-star rating to AT T. AT&T is a nice long-term play, as it has been one of the greatest stocks in my portfolio. (Full analysis of AT&T, here). Holding Verizon is all right, as well.

While Cramer was extremely bullish on SodaStream two months ago, he got on the bearish side now. The Tel Aviv-based SodaStream shows a trailing P/E ratio of 25.6, and a forward P/E ratio of 15.7, as of the October 27 close. Analysts expect the company to boost its earnings by 33.33% in the next five years. It pays no dividend, while the profit margin is 7.8%.

SodaStream has an O-Metrix score of 8.07, whereas it is currently trading 63.08% lower than its 52-week high. Target price is $69.82, implying an about 137.2% upside movement potential. The stock returned 22.0% in the last twelve months. Earnings increased by 54.47% this quarter, and 20.35% this year. Debts are nearly buried into the ground, while assets are increasing by a landslide. However, SodaStream is highly volatile, and P/E ratio is too high for me. If you accept the risk, current price seems to be fair enough for entry.

It [Abercrombie& Fitch] is the only teenage apparel play that I will even tepidly recommend. I do think it will go higher.

The company, as of October 27, was trading at a P/E ratio of 32.8, and a forward P/E ratio of 15.4. Analysts estimate an annualized EPS growth of 18.7% for the next five years. Profit margin (5.3%) is slightly below the industry average of 5.9%, while it pays a symbolic dividend of 0.97%.

Target price is $79.03, which implies a 3.7% upside potential. The stock is currently trading only 2.33% lower than its 52-week high, whereas it returned 77.3% in a year. Abercrombie has an O-Metrix score of 4.08. The company is paying the same dividend since August 2005, and assets are unstable since then. Beta value is 1.61, while insider transactions have decreased by 34.72% within the last six months. Cash flow is struggling. Operating margin is 8.2%, whereas the stock has a two-star rating from Morningstar. ROA, ROE, and ROI are 6.91%, 10.78% and 10.49%, respectively. Insiders have been selling stocks and exercising options for a while. However, Abercrombie didn’t have a major downfall since its dip in November 2008, and I guess holding this stock might be rewarding in the long run.

Disclosure: I am long T.