Cramer's Mad Money - The Guardian Angel of Industrial America (1/5/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday January 5.

The Guardian Angel of Industrial America: Alan Mulally CEO Ford (NYSE:F), Boeing (NYSE:BA)

He rescued Boeing (BA) and now he is making Ford (F) into a great American comeback story; Alan Mulally, according to Cramer, is the guardian angel of industrial America. While cynics seemed certain that Cash for Clunkers would cripple Ford's future sales, Ford actually saw a 42% increase in December sales, and is now making more money because Ford no longer has to cut prices to move inventory. Boeing, like Ford, is at its 52-week high and seems ready to take flight now that Dreamliner is getting off the ground and new orders are coming in. Not only will aerospace and autos be major players in the economic turnaround, but retailers J Crew (JCG), Macy's (NYSE:M), Saks (NYSE:SKS), and Sears Holdings (NASDAQ:SHLD) should be reporting strong numbers from holiday sales, predicted Cramer, who says the press fails to report good news.

"You want to participate in the great rebound?” asked Cramer. “Bet on the best we have – Ford and Boeing."

Staying Safe: American Science and Engineering (NASDAQ:ASEI), OSI Systems (NASDAQ:OSIS), FLIR Systems (NASDAQ:FLIR), Cogent (COGT-OLD), L-1 Identity Systems (NYSE:ID)

Continuing his series on investing themes for 2010, Cramer discussed Homeland Security. While security stocks have risen in the wake of the attempted bombing of Northwest flight 253, Cramer would start a position in any of the following stocks and buy more on dips.The stocks that have received the most attention in recent weeks are American Science and Engineering (ASEI), a pure play on X-Ray machines for security and mobile X-Ray equipment and OSI Systems (OSIS) which checks for explosives under clothing. OSIS is a small cap speculative play and has a solid backlog. ASEI is a larger company with a significant backlog, new contracts, most notably from the U.S. government. ASEI's products are mostly proprietary, and the market for its products is 10 times current yearly revenues.

FLIR (FLIR) Systems did not receive as much attention after the attempted terror attack, but has risen 15% since Cramer's October recommendation. The company produces invisible infrared cameras and night vision technology, which is used at all American airports. FLIR's equipment is also used to protect nuclear facilities and U.S. bases in Afghanistan.

Cramer also likes L-1 Identity Solutions for its eye and facial recognition technology and Cogent for its US-Visit program to identify those visiting from abroad. Cogent recently signed contracts with the U.S. Army, the UK post office and the Belgian police. Cramer recommends buying any of these stocks, but to focus on the long-term theme and buy more on pullbacks.

A NICE (NASDAQ:NICE) Opportunity

Nice Systems is a nice investment idea; the fundamentals and charts agree. The stock reached a high of $40 in 2007, but then it was sold off in high volume trading. However, since then, NICE keeps reaching higher highs and lower lows. Technician Dan Fitzpatrick doesn't think the stock will meet resistance until it revisits $40 a share.

The Israeli company intercepts and analyzes suspicious communication through phone, radio or e-mail and also takes a closer look at videos from security cameras. It has recently acquired Orsus and has $500 million in cash for other acquisitions; within the next few months Nice expects to close $5 to $15 million worth of security deals. Cramer thinks the stock is cheap with a multiple of 18 and a long-term growth rate of 17.

“This is one,” Cramer said, “where both the technicals and the fundamentals, frankly, scream that there’s still a major buying opportunity.”

Mad Mail: Fannie Mae (FNM), Freddie Mac (FRE), Kinder Morgan Partners (NYSE:KMP), Range Resources (NYSE:RRC), Encana (NYSE:ECA)

One caller asked Cramer if it was worth buying Fannie Mae (FNM) and Freddie Mac (FRE) on the incipient economic recovery, and Cramer said the stocks are worthless. He told another viewer that there is room in a portfolio for both Kinder Morgan Partners (KMP) and Range Resources (RRC). Cramer says the two companies are vastly different; owning Kinder Morgan (KMP), because of its big yield and low volatility, is like owning a utility. Range Resources (RRC), which was the pioneer in Marcellus Shale drilling, is an excellent growth play. Cramer told another viewer that he was right when he complained that natural gas company Encana (ECA) has been unfairly ignored. The company is a pure play in natural gas, has significant growth prospects in North America, has a solid yield and trades at a fairly low multiple.


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