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.

Cramer says
Typically we want to buy low and sell high, but sometimes Jim Cramer makes no sense on his calls. He felt the upgrade an analyst gave Caterpillar last week was unwarranted and the price it was trading at did not justify the action.

I thought it was a bad upgrade ... honestly, I did not think that it gave it any edge at all ... and I like CAT ... but there was nothing in that upgrade that made me feel good about the stock ... I want CAT to come in before I pull the trigger ... it is not a good level to buy CAT right here ... that was a surprising upgrade ... and I did not think that it made horse sense.

That's all well and good, except the week before he was encouraging investors to buy the stock -- when it was trading 4% higher!

I still want to be in Caterpillar ... call me conservative ... MTW has had a big run ... I think they need to redefine their balance sheet ... I am not a buyer of Manitowoc ... I am a buyer of Caterpillar.

Well, for one week he was anyway.

CAPS says
Admittedly Caterpillar's August numbers came in between Cramer's calls and they were not encouraging. Worldwide machinery sales fell 48% for the month, but they were off by similar percentages in the previous two months before so there really hasn't been much of a change. In fact, the heavy equipment maker hasn't posted a month of positive growth in a year.

Yet where CAPS member mw7 sees infrastructure development boosting Caterpillar, BearTill2012 sees further pain in its future: "We're coming to the end of a roughly 30 year commodity cycle and with the second leg of the recession only a quarter or two away, the earnings projections seem too optimistic to me."

This Fool says
I share BearTill2012's gloominess on the economy and think we're poised for another fall. However, I think Caterpillar will benefit from the government's massive intervention in the marketplace. The stimulus spending package hasn't even begun to tap most of its reserves yet -- and isn't supposed to for several years. The cynical side of me that's a way for politicians to claim success as the economy turns up down the road just in time for their reelection campaigns, but it will also have the effect of spreading out the business Caterpillar can reap.

I might not like the government's handouts, but I think there will be beneficiaries from it even if taxpayers are the biggest losers. If the government is pushing infrastructure development, then Caterpillar ought to gain as a result. Add in the heaps of money other governments around the globe are spending on such projects, and I see a long-term winner here.

However, I think Cramer has it right this week. Selling for 14 times free cash flow and 18 times trailing earnings, Caterpillar is looking a little expensive particularly when you compare it to the 9% long-term growth analysts are expecting. Waiting for Caterpillar's price to "come in," as Cramer says, might be the smartest road to build.

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 sound off on Cramer's seemingly ever-changing opinion on Caterpillar.

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.