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?

The Fool's free investing community, Motley Fool CAPS, aggregates the opinion of more than 125,000 members to assign ratings for each stock's likelihood of outperforming or underperforming the market. For the first 20 months since we began tracking the CAPS community's collective intelligence in late 2006, the data showed that newly minted five-star stocks offer the best opportunities for investors, while lowest-rated companies fared the worst.

Cramming for Cramer
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.

Source: CAPS and Mad Money Recap.

Cramer says
As difficult as retail is these days, there is a convergence coming between television and computers, and Jim Cramer says the place you're going to buy these technological innovations is at Best Buy:

I like your idea. I am not a big believer in retail. But I like Best Buy. By the way, I think Best Buy may have ... There is a new broadband TV that is going to be revealed at the consumer electronic show ... I want to go buy one of these ... This is broadband goes right to your PC, it is HD ... I gotta tell you, I think this is going to be a whole new product cycle that no one is talking about ... and it will be purchased at Best Buy. I think you have got horse sense, I want to own that.

CAPS says
With more than 85% of the CAPS members rating Best Buy to outperform the market, you'd think that CAPS members would agree with Cramer's assessment, but in reality, they've assigned it a lowly two-star rating. Perhaps it's the bankruptcy filing at Circuit City that has them pessimistic, since the electronics retailer is keeping a promotional environment going in an economy that is already pressured. More to the point, Circuit City may have to go through liquidation if it can't generate more financial backing, and that will only keep margins falling.

CAPS member ponyfan81 thinks that Best Buy also has to worry about the discount retailers expanding their selections and making their offerings more compelling:

[Best Buy] opened too many new stores over the last year, and fixed costs increased substantially as a result. The company has a more significant level of debt than even most of the "experts" seem to realize, and during 2009 they are going to feel the pain.

Competition from [Wal-Mart Stores] and [Target] will further impair their business, as will increased price competition from online companies like [Amazon] with lower overhead.

Best Buy will survive long term, but they are going to take their lumps like everyone else over the next 24 months or so. Expect store closures and lower sales forecasts soon.

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? Why not head over to CAPS right now and sound off with your thoughts on Best Buy, or any other 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!

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