Stock Smackdown: Cramer vs. CAPS

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 145,000 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 to how the CAPS community sees their future.

Stock

Lightning Round Show

Cramer's Rating 

CAPS Rating
(out of 5)

Amazon.com (Nasdaq: AMZN  )

Monday

Bullish

**

Starbucks (Nasdaq: SBUX  )

Monday

Bullish

**

New York Community Bank

Monday

Bullish

****

Ciena (Nasdaq: CIEN  )

Tuesday

Bullish

***

Goldman Sachs (NYSE: GS  )

Tuesday

Bearish

***

GameStop (NYSE: GME  )

Wednesday

Bearish

****

Echelon (Nasdaq: ELON  )

Wednesday

Bearish

***

PetSmart

Wednesday

Bullish

****

NYSE Euronext (NYSE: NYX  )

Thursday

Bearish

*****

TriQuint Semiconductor

Thursday

Bullish

*****

Cramer Says
It's possible that celebrity chef Rachael Ray makes Dunkin' Donuts delish, but Jim Cramer thinks the service he receives at coffee specialist Starbucks shows it has turned the tables on its rival, making it the tastier investment:

I think it's a buy, buy, buy!... I think they've turned it around. Now, let me just say this... let me just say this... So I'm going to Dunkin' Donuts this morning, and the line is like out the door... so I go to Starbucks and get the Triple Venti Cappuccino with skim, wet... for $4.67... and I am out of there, boom... in three minutes! Starbucks is now faster than Dunkin' Donuts. I think it says something!

CAPS Says
That position might not be everyone's cup of joe over at CAPS, though, where 23% of the community members rating Starbucks think it won't outperform the broader market. justagal2009 believes the coffee giant has lost its way and that Cramer's $4.67 cup of coffee is an overpriced luxury, particularly in this economy:

I believe, even without the state of our economy, Starbucks has lost it's way! I know the mission statement and guiding principles well "in theory" Starbucks has lost the meaning of what it stood for and where it was going. Wasteful training hours and dollars going to "restructuring" , the mere cost of a coffee is ridiculous given the huge markups for the benefit of a profit.

This Fool Says
Is Cramer misreading this situation? He claims it says something that he can get in and out of a Starbucks quickly, while the crowds at Dunkin' Donuts slow him down in the morning. What that says to me is the buying public prefers the fresh brews at the doughnut shop over what's served up at Starbucks. Certainly overcrowding and slow service can create a consumer backlash, but that's correctible. In the meantime, it means Starbucks is losing sales to the competition.

Admittedly I'm not a fan of Starbucks coffee to begin with, but an anecdotal experience is hardly a means for making an investment, even if Peter Lynch encourages investors to buy what you know.

However, I do recognize that Starbucks has lured millions of people who were previously ready to settle for any bland hot drink to the gourmet coffee experience. I'll even grant that founder and CEO Howard Schultz has taken dramatic but necessary steps to revive the chain. Closing stores, offering bargain meals, and introducing branded instant coffee are only a few of the initiatives that would have been unthinkable a few years ago. As Starbucks bear-turned-bull c0ffeen0te notes, it has quadrupled free cash flow over the past year but sports the same market valuation.

Yet there are many places coffee drinkers can go today to get a similar gourmet blend, from doughnut shops to fast-food restaurants. I'd say it's not so much that Starbucks has fallen behind, as that the rest of the coffee world has caught up. And the market has noticed Starbucks' cash-generating capabilities and priced that into the stock, which is up almost 150% over the past year. I find it hard to think it will be able to keep that pace going forward.

Your say
While CAPS members may stand with Jim Cramer or on the opposite side of the field, the investor-intelligence community is more than what some All-Stars think. But what do you think? Is Cramer right or off his rocker? The contents are hot over on CAPS, so why not head off right now to Starbucks' CAPS page and let us know if we can take a venti-sized helping of this stock.

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.

Amazon.com, GameStop, and Starbucks are Motley Fool Stock Advisor recommendations. NYSE Euronext is a Rule Breakers pick. Try any of our Foolish newsletter services today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. Give the Motley Fool's disclosure policy a full check-up.


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