NEW YORK (TheStreet) -- TheStreet's Jim Cramer says the video game industry is under tremendous pressure, which is why GameStop (GME - Get Report) missed its estimates when it reported fourth-quarter results on Thursday; however, Cramer is waiting for the "washout" GameStop, which has yet to come.
Cramer recommends buying Baxter International (BAX - Get Report), which announced its plan to split into two separate businesses. In his book Get Rich Carefully, Cramer suggested Baxter split into a "slow-motion" company for medical devices and a fast-growing biotech company, which is what the company has decided to do.
Cramer also called Wells Fargo (WFC - Get Report) the winner of the federal government's bank stress tests, but Bank of America (BAC - Get Report) also qualifies as a winner. But Cramer is tired of Citigroup's (C - Get Report) excuses for not raising capital. Must Watch: Jim Cramer on GameStop, Baxter's Split and Bank Stress Tests
"We rate GAMESTOP CORP (GME) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.2%. Since the same quarter one year prior, revenues rose by 18.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 111.41% and other important driving factors, this stock has surged by 51.04% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GME should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 111.0% when compared to the same quarter one year prior, rising from -$624.30 million to $68.60 million.
- Net operating cash flow has significantly increased by 80.29% to $680.60 million when compared to the same quarter last year. In addition, GAMESTOP CORP has also vastly surpassed the industry average cash flow growth rate of -18.94%.
- You can view the full analysis from the report here: GME Ratings Report
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