Looking Closely at Cramer’s Technology Buy and Sell Calls

Looking Closely at Cramer’s Technology Buy and Sell Calls

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For the week of February 25 2013, Jim Cramer mentioned 63 companies, of which 79.4% were bullish call. The bullish sentiment comes at a time when the equal-weighted Nasdaq 100 (QQQE) is up 9.93% for the year-to-date, while the S&P 500 index (SPY) is up 6.81%.

In the technology sector, 5 of the 8 calls were companies mentioned were favorable. Groupon (GRPN), Hewlett-Packard (HPQ), and EMC Corp. (EMC) were companies implied as a sell:

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Using Kapitall’s number cruncher tool to vet out notable calls, investors may analyze the above companies more closely. The analysis is below.

Stock Analysis Using Kapitall Tools

Apple, Inc. Salesforce.com, and Amazon.com

One company whose financial numbers do not tell the full story of the company is Apple (AAPL). Apple is the most widely-watched company, but shares cannot catch a break ever since peaking at $700 in September, 2012. More irrational is that Apple’s Price of Profit (or “POP” as it is known on Kapitall) is just 9. By comparison, Salesforce.com (CRM) has a forward P/E of 93 and Amazon.com (AMZN) has a forward P/E of 73.61 (figures provided by finviz.com).

Apple’s valuation hints to investors that the sentiment turned negative on the company. The market is frustrated with the excessively low valuation. In the hedge fund space, this was apparent because Einhorn’s lawsuit against Apple to issue preferred shares was successful. Einhorn dropped the suit after Apple eventually unbundled a proposal that would have complicated this preference share possibility. Second, media continues to speculate about new products from Apple, despite the recently successful release of iPhone 5. The rumors include iTV, am iPad Mini, and an iPhone 5S.

Cisco Systems, Inc. (CSCO)

Widely-held Cisco Systems was ranked a buy. Shares are within 4% of a 52-week high, and pay a dividend of 2.69%. Cisco is expanding its product line with success. The company is now ranked #6 by sales for its UCS blade server. IBM (IBM) is ranked #1 and HP (HPQ) is ranked #2.

Cramer ranked HP a “sell” as shares continued to march upwards. HP bottomed below $12 and closed recently at $20. The company is slowly but surely, turning around its weak businesses and disrupting its reliance to Microsoft’s operating system. HP will be releasing an Android tablet ($169) at a price that under-cuts the price of Google’s Nexus 7.

Cisco (CSCO) reported quarterly results on February 13, and guided EPS of $0.48 – $0.50, in-line with analyst estimates. Its only weak segment was a decline in router sales, which dropped 6% from last year.

EMC Corporation (EMC)

Ranked a “sell,” EMC recently launched a software framework for Hadoop. This will benefit companies employing big data projects.  EMC shares are 22.5% below a 52-week high, and are hovering near annual lows.

Other Picks

Qualcomm (QCOM) was rated a “buy.” Qualcomm continues to provide dominate solutions for the mobile market. For now, the company is poised to stay well-ahead of NVIDIA (NVDA). NVIDIA is challenging Qualcomm by building a Tegra 4-based mobile solution.

Cramer thinks Groupon (GRPN) is a “sell.” The call was made after the company reported quarterly results. Groupon revealed its share received for daily deals was cut by 5% to 35%. Daily deals revenue fell 14% compared to last year, while costs related to its international expansion could be in-line for being cut. 

 

Kapitall Contributor, Chris Lau

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