Jim Cramer on Why Apple (AAPL) Would Buy Beats, Gap's (GPS) Strong Numbers and Ralph Lauren's (RL) Advertising Deal

NEW YORK (TheStreet) -- TheStreet's Jim Cramer says Apple  (AAPL) would buy Beats Electronics to be "cooler." Moreover, Beats is a company that wants to be in cars beyond Chrysler and Fiat  (FIATY) and Apple also wants to be in cars, though its CarPlay has been slow out of the gate.

Cramer adds he would buy Harmon  (HAR) because he thinks it will go down on this deal and contends Apple should consider buying the company.

Cramer says the numbers for Gap  (GPS) were strong but cautions investors not to get too excited because the figures were up against easy Easter comparisons.

Finally, Cramer believes Ralph Lauren's  (RL) advertising deal will not work. The apparel company wanted to compete with Google  (GOOG) in programmatic advertising, but Cramer notes this is an "old line ad company" and believes the deal breakdown is for the best.

Must Watch: Jim Cramer on Apple, Beats Deal; Gap, Ralph Lauren Earnings

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 APPLE INC as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate APPLE INC (AAPL) a BUY. This is driven by some important positives, 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, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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

  • AAPL's revenue growth has slightly outpaced the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 4.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although AAPL's debt-to-equity ratio of 0.14 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Computers & Peripherals industry and the overall market, APPLE INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • 43.45% is the gross profit margin for APPLE INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.39% is above that of the industry average.
  • Net operating cash flow has slightly increased to $13,538.00 million or 8.26% when compared to the same quarter last year. In addition, APPLE INC has also modestly surpassed the industry average cash flow growth rate of 7.67%.
  • You can view the full analysis from the report here: AAPL 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 GAP INC as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GAP INC (GPS) 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 notable return on equity, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, GAP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has slightly increased to $752.00 million or 5.76% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.81%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • GAP INC's earnings per share declined by 6.8% 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, GAP INC increased its bottom line by earning $2.75 versus $2.32 in the prior year. This year, the market expects an improvement in earnings ($2.90 versus $2.75).
  • The current debt-to-equity ratio, 0.46, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
  • You can view the full analysis from the report here: GPS 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 RALPH LAUREN CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate RALPH LAUREN CORP (RL) a BUY. This is driven by a few notable 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 growth in earnings per share, increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • RALPH LAUREN CORP has improved earnings per share by 11.3% 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. During the past fiscal year, RALPH LAUREN CORP increased its bottom line by earning $8.00 versus $7.13 in the prior year. This year, the market expects an improvement in earnings ($8.38 versus $8.00).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Textiles, Apparel & Luxury Goods industry average, but is less than that of the S&P 500. The net income increased by 9.9% when compared to the same quarter one year prior, going from $215.70 million to $237.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 15.0%. Since the same quarter one year prior, revenues slightly increased by 9.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • RL's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RL has a quick ratio of 1.97, which demonstrates the ability of the company to cover short-term liquidity needs.
  • You can view the full analysis from the report here: RL 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.

More from Markets

Online Retailers Hit by Supreme Court Ruling Requiring Sales Tax Collection

Online Retailers Hit by Supreme Court Ruling Requiring Sales Tax Collection

U.S. Drillers at Mercy of Iran, Saudi Production Spat as OPEC Meeting Begins

U.S. Drillers at Mercy of Iran, Saudi Production Spat as OPEC Meeting Begins

Stocks Tumble as Dow Heads for Eighth Straight Drop

Stocks Tumble as Dow Heads for Eighth Straight Drop

This Is What's Hot Thursday - Stocks Slide, Intel's CEO Woes & Major Movers

This Is What's Hot Thursday - Stocks Slide, Intel's CEO Woes & Major Movers

Video: Jim Cramer on Netflix, Disney, Intel, Micron and Goldman Sachs

Video: Jim Cramer on Netflix, Disney, Intel, Micron and Goldman Sachs