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 opinion of more than 140,000 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 Date

Cramer's
Rating 

CAPS Rating
(out of 5)

Bank of America (NYSE: BAC  )

Monday

Bullish

***

Eastman Kodak (NYSE: EK  )

Monday

Bearish

*

Digital River (Nasdaq: DRIV  )

Monday

Bearish

****

Human Genome Sciences (Nasdaq: HGSI  )

Tuesday

Bearish

*

American Superconductor (Nasdaq: AMSC  )

Tuesday

Bullish

**

Microsoft (Nasdaq: MSFT  )

Tuesday

Bullish

***

Apple

Wednesday

Bullish

***

iRobot

Wednesday

Bearish

***

Eli Lilly (NYSE: LLY  )

Thursday

Bullish

****

Tellabs

Thursday

Bullish

***

Cramer says
Alternative energy investments like wind power aren't holding the imaginations of investors quite as captive as they did a year ago when billionaire T. Boone Pickens unveiled his eponymous energy plan. Although solar remains a popular option and smart grid applications have more immediate appeal, it might help explain why Jim Cramer focused more on American Superconductor's superconductor business when he extolled the virtues of this stock.

I think that American Superconductor is the real deal ... now there is a lot of people who say that it is way too speculative ... high temperature super conductors ... here is what I know, I think that this is a company ... if you want to have a spec and you know that I favor speculation ... I think that this is a darn good one ... it has got a lot of good things ... and I think that it is about to have an earning breakout ... it has a revenue breakout ... earnings breakout ... pull the trigger ... American Semiconductor.

CAPS says
The CAPS community would seemingly be hard pressed to argue with Cramer's commentary, as 80% of the members rating American Superconductor have marked it to outperform the market. However, its low two-star rating suggests they think there are much better places for your money today.

CAPS member souladventurer thinks China will enable American Superconductor to power through future growth spurts. The company would agree, having inked several deals with China's largest wind turbine producer Sinovel Wind.

Extremely well positioned to take advantage of China's investment in wind and smart grid tech. Relationship and history with U.S. DOE will pay off in smart grid updates and completely revamping/updating existing grid with superconducting wire that can transmit 10 times more power with same general thickness and no electromagnetic leakage. Potential ROI is extremely high. Look for net profits to continue to expand each quarter.

This Fool says
While American Superconductor did report a surprise profit last quarter, it continues to tie most of its sails to the mast of a single customer. Sinovel Wind accounted for 67% of American Superconductor's revenues in 2008 (up from 51% in 2007) and the additional contracts signed this year have only served to more closely align it with the wind turbine producer.

Earlier this year it amended its contract for wind turbine electrical components to increase the contract's value over a shorter time span, then last month said it won an additional $100 million contract with Sinovel for electrical components for use in that company's 3 megawatt wind turbine. That makes it the second contract in the past year American Superconductor has received from them for such core electrical components.

Even if a noted online critic hadn't previously warned about the contracts American Superconductor is winning from Sinovel, I'd still urge caution because of the inordinate proportion of revenue the wind turbine producer represents to the company's fortunes. If Sinovel stubs its toe even a little, American Superconductor will feel the pain. Having too few customers, suppliers, or distributors is an easy way to lose a sizeable portion of your company's value.

I think Cramer's got at least one thing right here: an investment in American Superconductor is pure speculation.

Your say
While CAPS members may stand with Jim Cramer or on opposite sides of the field, the investor intelligence community is more than what some All-Stars think, even if they are TV personalities. But what do you think? Is Cramer right or off his rocker? No need to hedge your thoughts on CAPS, so why not head off right now to blow off steam about American Superconductor.

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.

iRobot is a Motley Fool Rule Breakers selection. Apple is a Stock Advisor recommendation. Microsoft is an Inside Value pick.

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


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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 December 21, 2009, at 9:48 PM, edmannato wrote:

    i would ask the question of the caps community; why was a coo recently appointed at amsc and what is the status of ceo and founder greg yurek, does any caps member have info on the patents of amsc said tonumber in the hundreds? thanks anyone

    p.s. i am a long term holder of amsc and am following mort zuckerman's advice hold for five years

    from his lips to gods ear

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