Looking Closely At Cramer's Technology Buy And Sell Calls

Chris Lau, Kapitall 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:
Screen shot 2013-03-06 at 12.06.49 PM

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

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.

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