Cramer: Lennar Homebuilders (LEN), KB Homes (KBH) and ConAgra Foods (CAG)

NEW YORK (TheStreet) -- TheStreet's Jim Cramer says Lennar Homebuilders  (LEN) has not risen on its positive quarterly earnings report because KB Homes  (KBH) essentially told the same story as Lennar recently, and a company "can't go up twice on the same information."

Cramer notes that Lennar is up from the mid-$30 range when many felt there was little hope and had written off the homebuilders. Now, he suggests pausing after the last three months of growth and waiting to see how the spring selling season unfolds.

Cramer also says ConAgra Foods (CAG) should be out of favor because Janet Yellen said the market could be accelerating; however, if the guidance lowers to the point that it is beaten, then buyers will always be there. He says this is the case with ConAgra and compares it to General Mills  (GIS). He believes in natural and organic foods and, though this is not ConAgra's lineup, he recommends the company because it was well run before it overpaid for Ralcorp and is well run again today.

"If you thought the economy is slowing, it's a logical place to go," Cramer says.

Must Watch: Jim Cramer on Lennar Homebuilders, KB Home, ConAgra Foods

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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Separately, TheStreet Ratings team rates LENNAR CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate LENNAR CORP (LEN) a BUY. This is driven by a number of 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 robust revenue growth, good cash flow from operations, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 28.9%. Since the same quarter one year prior, revenues rose by 41.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 218.90% to $210.03 million when compared to the same quarter last year. In addition, LENNAR CORP has also vastly surpassed the industry average cash flow growth rate of 59.09%.
  • LENNAR CORP has improved earnings per share by 30.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LENNAR CORP reported lower earnings of $2.14 versus $3.10 in the prior year. This year, the market expects an improvement in earnings ($2.42 versus $2.14).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Household Durables industry average, but is greater than that of the S&P 500. The net income increased by 31.9% when compared to the same quarter one year prior, rising from $124.34 million to $164.08 million.
  • The gross profit margin for LENNAR CORP is currently lower than what is desirable, coming in at 25.82%. Regardless of LEN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, LEN's net profit margin of 8.56% compares favorably to the industry average.
  • You can view the full analysis from the report here: LEN Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Separately, TheStreet Ratings team rates KB HOME as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate KB HOME (KBH) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • KB HOME reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, KB HOME turned its bottom line around by earning $0.41 versus -$0.76 in the prior year. This year, the market expects an improvement in earnings ($1.22 versus $0.41).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 264.0% when compared to the same quarter one year prior, rising from $7.72 million to $28.12 million.
  • KBH has underperformed the S&P 500 Index, declining 14.50% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • The debt-to-equity ratio is very high at 4.01 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • You can view the full analysis from the report here: KBH Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Separately, TheStreet Ratings team rates CONAGRA FOODS INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CONAGRA FOODS INC (CAG) a BUY. This is driven by several positive factors, 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 robust revenue growth, reasonable valuation levels, good cash flow from operations, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 2.1%. Since the same quarter one year prior, revenues rose by 26.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food Products industry average. The net income increased by 17.5% when compared to the same quarter one year prior, going from $211.60 million to $248.70 million.
  • Net operating cash flow has significantly increased by 151.84% to $389.60 million when compared to the same quarter last year. In addition, CONAGRA FOODS INC has also vastly surpassed the industry average cash flow growth rate of 53.43%.
  • CONAGRA FOODS INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, CONAGRA FOODS INC increased its bottom line by earning $1.87 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($2.23 versus $1.87).
  • You can view the full analysis from the report here: CAG Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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