Stock Smackdown: Cramer vs. CAPS

• Email
• Share
• Print

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 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 we compare them with how the CAPS community sees their future.

Stock	Lightning Round Show Date	Cramer's Rating	CAPS Rating (Out of 5)
Priceline (Nasdaq: PCLN)	Monday	Bearish	*
Starbucks (Nasdaq: SBUX)	Monday	Bearish	**
Coldwater Creek	Monday	Bearish	***
Sears Holdings (Nasdaq: SHLD)	Tuesday	Bullish	**
Nucor (NYSE: NUE)	Tuesday	Bullish	****
Linn Energy (Nasdaq: LINE)	Tuesday	Bullish	****
Century Aluminum (Nasdaq: CENX)	Wednesday	Pass	****
Yum! Brands (NYSE: YUM)	Wednesday	Bullish	****
Hexcel	Wednesday	Bearish	*****
Fortune Brands	Wednesday	Bearish	****

Cramer says
If you'd like to see a microcosm of the market in action, then Jim Cramer says you need look no further than Sears Holdings. The Mad Money star thinks this stock will reward investors over the long term.

All right, look, you know it's doubled ... It's been cut in half, then doubled, which is really pretty much a metaphor for this market. I cannot give you any sort of solace right now ... no comfort ... for how the quarter's going. I will say this ... the stock has beaten back the shorts. Eddie Lampert did not make any mistakes by putting a huge amount of money in Sears. He's got a lot of money on the sidelines. He keeps buying back stock. Is it a high-quality story? I can't tell you that. But I remain a long-term believer in Eddie Lampert, who's the chairman so, therefore, I have to maintain a long-term -- not short-term, but long-term -- belief that Sears will turn.

CAPS says
Yet for many of the same reasons Cramer cites, you could pick apart the reasons why Sears Holdings was cut in half in the first place. Sure, Lampert's smart, but at times he's been too smart by half and has been playing total return swaps like the hedge fund manager he is, rather than investing in his stores like the retailing leader he should be. And while he's been buying back large swaths of Sears Holdings' shares, he's often done it at greatly inflated values.

LRMarbitrage would side with Cramer, though. Our highly rated CAPS member points out that Lampert has proved himself to be a smart allocator of capital over the years, and the same should eventually prove true with his handling of Sears Holdings. Even if LRMarbitrage discounts the value of the Sears department-store chain as a retailer, however, other CAPS members see its lack of focus on retailing as the key reason to believe the stock will never turn around. Says CAPS member lemoneater:

I believe that they have effectively alienated their customer base -- items out of stock not a good selection in [menswear] and prettier ladies fashions elsewhere. While Sears was sleeping competition grew, [and] whoever decided to get rid of the catalog years ago was certifiable. I rarely ever shop at Sears not even at Christmas. [J.C. Penney] or [Wal-Mart] gets my business.

Although the 27 stocks making up the Retail tag in CAPS universe have barely advanced by 1% on average over the past month, Sears Holdings has moved forward by more than 14%. Yet its two-star rating means that CAPS members think there's a better-than-average chance it will still underperform the market.

Your say
While CAPS members may stand with Jim Cramer or on opposite sides of the field, the investor-intelligence community is more than just what some All-Stars think, even if they are TV personalities. But what do you think? Is Cramer right, or is he off his rocker? No need to hedge your thoughts on CAPS, so why not sound off on whether Sears Holdings will continue to lead the way?

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, CAPS is free.