Cramer Speaks - Again

Seeking Alpha - Miriam Metzinger

Hewlett-Packard (HPQ): 'I know a lot of people are saying, 'Jim, shouldn't you run tail; shouldn't you just admit that HPQ wasn't a good quarter?...' No! HPQ was a good quarter. The guidance was good. Mark Hurd has done a great job ... I am telling you to back up the truck HPQ - right here at $40. I see good quarters out for the next 8 quarters ... triple buy!'


He must be taking peyote to be able to see that far. I see a stock that is poised to drop - it's a 60% probability of 36 before 46. If you "triple buy" I'd keep a tight stop.

Quest Diagnostics (DGX): 'People think the margins are bad ... The quarter is going to be good! The margins are good! The stock is cheap! I would buy, buy, buy DGX!'


Another triple buy. This stock isn't cheap - and it is being run out of Dodge by the insurance companies who can't take its charges any longer. That's the problem with a company that relies on insurance to get its bills paid - they tell you how much you can make.

Here's their main competitor - which chart looks better?


Frontline (FRO): 'I say ix-nay on the FRO.'


I don't know why. I doubt that he knows why. Something to say I guess - here's the pivot picture


The guy is a menace and someday someone is going to sue his butt off and win. And it won't be someone who bought one of his recommendations and lost money because he always covers it there - but someone who lost a bundle because of one of his throwaway lines - I say ix-nay on the FRO.

I want you to remember I didn't recommend any stocks to buy in this post - I only reprinted what Jimmy Crack Corn Pone said to do. Do your own due diligence and always keep in mind - Jimmy is at best a 50-50 picker - proven.

Funny Business

Back when I was in industry making bid and proposal we would determine a competitor's efficiency in a very quick and dirty manner - we simply divided their revenues by their numbers of employees (both readily available) and that would give us an idea of how good they were at what they were doing. A low number and they were pretty bad - a high number and they were pretty good.



Here are four industry leaders and their contribution per employee (C/E) values. The last column is a rough estimate of how much the company needs on a daily basis to maintain their staff. That's right IBM requires about 187 million dollars a day 7 days a week 365 days a year to keep their staff happy, housed, warm and dry. And it is obvious that the most efficient company of all is MSFT. That's because their contented employees each generate 638732 dollars each on an annualized basis.

I show you this only to give you an idea of how much money we are talking about when we discuss these various companies. They are estimates of course and are acmitedly rough - does it really cost IBM 187 mill a day? Probably not - but they do own a lot of real estate and they do have a lot of employees and they are world-wide in scope - so maybe it's only 167 million a day. Does it really matter - it is a big number.

So I ask you - why don't these little numbers such as employee contribution and the large numbers such as "nut per day" filter into the stock price? Because all that Wall Street is interested in is "beat by a penny" accounting. The rest just doesn't matter.

So if you read an article that suggests that you look at EBITA, and GAAP, and GAP, and Bladdiblah Blah Blah Blah and projected future revenue growth vs past 6 months and crapita crapita crapita - just say - "Oh bull snot, did they beat by a penny or not?" And you won't go wrong. Because if they didn't all the rest of that crap is just that - crap.

You can make these estimates for any company vs. any other company but try to stay in the same industry - it wouldn't make sense to compare WMT to IBM. I use an average annual income in the software sector of about 80K per year including benefits. This is burdened by 2.5 (you need to make 2.5 bucks for every one buck you pay an employee). As I said quick and dirty and it is probably higher these days because I'm basing on figures I last used in the mid-90's.