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3 Sells and a Buy View From Jim Cramer

Chris Lau, Kapitall: The highly followed Jim Cramer mentioned 59 companies between March 22 to 28 2013. Similar to previous weeks, Cramer was bullish on nearly 80% of the companies. The calls come at a time when the S&P 500 ends the quarter with a return of 10%, while the Dow Jones Industrial Average rose 11%. Both indices had their best positive first quarter return not seen since 1998.

The technology sector is often a leading indicator for the markets. Investors could look at Cramer’s calls in more detail. Some of the most notable companies mentioned were:

Screen shot 2013-04-01 at 12.11.26 PM

Analysis (Read descriptions for all companies mentioned)

1. Red Hat, Inc. (RHT): Buy. After reporting fourth quarter earnings that missed consensus, Red Hat ended the trading day flat. Red Hat highlighted its strength in winning deals worth over $1 million. Nearly half of the wins included sales for middleware software.

Red Hat reported gross margins of 84.6%. In the current quarter, the company forecasts earnings to be between $0.30 – $0.31 per share on revenue of $358 million to $361 million. For the fiscal year, Red Hat expects to earn $1.31 – $1.35 per share on revenue of up to $1.54 billion.
 

2. Baidu, Inc. (BIDU): Sell. China-based Baidu could be losing market share despite a lack of competition from search giant Google, Inc. (GOOG). Qihoo 360 (QIHU) is gaining market share in search.

A Citigroup analyst forecast paid click declined in growth in the final quarter of 2012. In 2012, paid click grew 64%, but Muzhi Li, an analyst at the bank, thinks growth dropped to around 20% in Q4/2012.

 

3. Nuance Communications, Inc. (NUAN): Sell. Nuance shares are up around 10% from a 52-week low reached after the company reported a weak quarter and lowered its forecast for multiple quarters. Investors were previously enamored the company’s association with Apple in powering Siri. Unfortunately, the licensing does not bring in big revenues for Nuance, though it mostly exposes the company to greater brand recognition. According to Kapitall’s Company Snapshot tool, the price of profit (or forward P/E) for Nuance is 17.
 

4. Stratasys Inc. (SSYS): Sell. 3D Printer maker Stratasys was mentioned unfavorably by Cramer. Competitor ExOne (XONE) issued strong guidance for 2013. ExOne expects revenue to be as high as $52 million, while gross margin will be between 42%-46%.

More recently, Charles Hull, a co-founder of Stratasys, sold more than half of his position. 

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