Stock Smackdown: Cramer vs. CAPS

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There's no denying that Mad Money host Jim Cramer is entertaining, popular, and passionate. On many occasions, he's even right. So he's smart, funny, and the closest thing to a stock market rock star -- but is he smarter than you?

Cramming for Cramer
The Fool's free investing community, Motley Fool CAPS, aggregates the opinions of more than 135,000 members to assign ratings for each stock's likelihood of outperforming or underperforming the market.

Below, we look at some top stocks that Cramer picked and panned during last week's "lightning rounds" and compare them with how some in the CAPS community rate them.

Stock

Lightning Round Show Day

Cramer's Rating 

CAPS Rating (out of five)

Merck (NYSE: MRK)

Monday

Bearish

***

Johnson Controls

Monday

Bearish

***

Brocade Communications (Nasdaq: BRCD)

Tuesday

Bullish

**

Duke Energy (NYSE: DUK)

Tuesday

Bearish

****

DryShips (Nasdaq: DRYS)

Wednesday

Bearish

***

Home Depot (NYSE: HD)

Wednesday

Bullish

***

Johnson & Johnson (NYSE: JNJ)

Thursday

Bullish

**

Tenet Healthcare (NYSE: THC)

Thursday

Bearish

**

United Technologies

Friday

Bullish

**

Walgreen

Friday

Bullish

***

Cramer says
With President Obama hoping to introduce a sweeping government health-care program, Jim Cramer says an investment in health-care services companies like Tenet Healthcare is just too difficult to make. The company's financials add to the difficulty.

Tenet Health is just OK ... Tenet Health is a very difficult stock to own ... because the balance sheet is not that good ... we are not sure what the health care reform is going to look like ... it has been bouncing between $3 and $4 ... and $2 and $4 ... I say do not buy ... I checked in with my friend [Sheryl Sklolnick] who told me to buy it when it was at $2, it was for CRT Capital ... no longer has conviction, I do not have conviction.

CAPS says
That's a sentiment shared by some members of the CAPS community. Although some All-Stars such as Barebonez like to think Tenet Healthcare will rebound once again after a technical correction, others such as Ewok82 believe a government health-care program would affect the company directly and are skeptical about how hospital groups would manage to prosper.

The Obama health care initiative has given hope to some of these hospital groups, but if the plan will really cut 2 trillion dollars from health care budget over the next few years, where do they think the cuts will come from? Do they think the hospitals will get paid more and everyone else will get paid less? Once the hype fades, "for-profit" hospitals will become the main targets of reimbursement cuts.

Although the 129 stocks that make up the Health care Providers and Services sector in CAPS have advanced 3% on average over the past month, Tenet Healthcare has declined nearly 11%. And though the average company in the sector has an above-average four-star rating, Tenet rates two stars, meaning CAPS members think there's a better than average chance that it will underperform the market.

Your say
While some CAPS members may stand with Jim Cramer or against him, the investor intelligence community is more than what some All-Stars think, even if they are TV personalities. What do you think? Is Cramer right or off his rocker? Why not head to CAPS right now and offer your thoughts on whether Tenet Healthcare will be a success.

Motley Fool CAPS is a great place to start your own research on these stocks. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Best of all, it's free.

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The Home Depot is a Motley Fool Inside Value recommendation. Duke Energy and Johnson & Johnson are Income Investor picks. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey owns shares of Merck but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings. Give The Motley Fool's disclosure policy a full checkup.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 22, 2009, at 6:39 PM, robertf36009 wrote:

    Cramer is an idiot. He had a buy rating on AIG as it crashed and burned.

  • Report this Comment On June 23, 2009, at 10:26 AM, jolaz wrote:

    I say there won't be any health care plan reform. If Hillary couldn't do it back in the 90's, what makes things different now? The healthcare lobby is too strong for any meaningful reform. Now back to the war in Iraq.

  • Report this Comment On June 23, 2009, at 12:37 PM, TexasMadMan wrote:

    I believe Tenet and other for-profit hospitals will benefit from health care reform. Currently charity cases (non-paying patients) make up a significant, and growing, part of all hospital patients. Getting payment, even at an artificially low pricing point, for these will actually improve the revenue stream as those already paying will continue to do so. I don't expect a snap rebound but I see THC as a $4 stock by the end of the year once the brilliant analysts discover that health care reform is a positive move for hospitals.

  • Report this Comment On June 24, 2009, at 10:48 AM, feudi wrote:

    Hey Jim Cramer...You wrote that your "friend Cheryl Scolnick" told you to buy Tenet. The name is Skolnick and you were touting Tenet stock when it was at $14. Now it's down again to $2.70 and suddenly you become a bear on it.

  • Report this Comment On June 24, 2009, at 1:38 PM, oghowie wrote:

    His pick of Brocade has done really well for me. :)

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Related Tickers

11/9/2009 3:12 PM
JNJ $60.66 Up +0.36 +0.60%
Johnson & Johnson CAPS Rating: *****
HD $26.80 Up +0.72 +2.76%
The Home Depot, In… CAPS Rating: ***
THC $5.29 Up +0.18 +3.52%
Tenet Healthcare C… CAPS Rating: **
DRYS $6.36 Up +0.19 +3.08%
DryShips, Inc. CAPS Rating: ***
MRK $33.36 Up +0.77 +2.36%
Merck & Co., Inc. CAPS Rating: ****
DUK $16.26 Up +0.21 +1.28%
Duke Energy Corp CAPS Rating: ****
BRCD $9.23 Up +0.24 +2.67%
Brocade Communicat… CAPS Rating: ***

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