7 Stocks Worth Speculating On
Published: Monday, 10 Jan 2011 | 9:32 PM ET
By: Drew Sandholm
Qualcomm's plans to buy Atheros Communications for roughly $3.2 billion in cash opens the door for a slew of other mergers and acquisitions, Cramer said Monday.
In the wake of this deal, many investors are betting on companies that could be taken out. Cramer highlighted seven companies that not only have potential to be acquired, but sport sound fundamentals that give them upside potential:
Acme Packet [APKT 56.55 -4.11 (-6.78%) ]: This $3.86 billion company makes equipment known as session border controllers, which enable better delivery of voice, video and data services over converged networks. It has a 60 percent market share in this business and is expected to grow by 25 percent for the next 3-5 years. The stock is trading at 55 times earnings, but that's not unreasonable considering its 32 percent long-term growth rate.
Netgear [NTGR 35.05 -1.99 (-5.37%) ]: This is one of just two companies that make home networking equipment, like modems, routers and wireless adapters. Atheros makes chips for this kind of equipment, so Cramer thinks Netgear could get taken out, too. The stock is selling for less than 17 times earnings, which is lower than its 17.5 percent long-term growth rate.
Cirrus Logic [CRUS 17.89 -0.81 (-4.33%) ]: CRUS makes chips that help convert data into sound, which then go into Apple's [AAPL 338.84 -1.81 (-0.53%) ] iPad and iPhone, for example. The stock has been very volatile, but Cramer said investors are coming back to the stock on the belief Cirrus' products will go into a new batch of Apple products. Right now, this stock is trading at 12 times next year's earnings with a 20 percent long-term growth rate.
Motricity [MOTR 18.96 -0.74 (-3.76%) ]: This stock has pulled back 10 points after a huge-up since its initial public offering in June. The company operates mobile Web portals for four of the biggest U.S. wireless carriers, including AT&T [ATT 26.49 0.05 (+0.19%) ], Verizon [VZ 34.60 0.24 (+0.7%) ], Sprint [S 4.28 -0.08 (-1.83%) ] and T-Mobile. It boasts an 80 percent market share and profits from a subscription business model. The stock sells for 25 times earnings, but Cramer thinks it's cheap considering its 25 percent long-term growth rate.
Akamai [AKAM 51.51 -0.73 (-1.4%) ]: This company speeds up and improves the delivery of all kinds of content over the Internet, Cramer said. The stock has been climbing lately and he thinks it has more room to run. It's selling for 29 times next year's earnings with a 17 percent growth rate.
NVIDIA [NVDA 22.41 -0.625 (-2.71%) ]: This technology company makes a host of products for netbooks, tablets and smartphones. Cramer said the stock is a little pricey, though, being as it's trading at 28 times next year's earnings with a 14 percent long-term growth rate.
ARM Holdings [ARMH 25.74 -0.18 (-0.69%) ]: The intellectual property company designs and licenses chips to major technology companies, Cramer said. Its products are in 95 percent of all mobile phones and MP3 players, including the iPhone and iPad. The stock trades at 50 times 2011 earnings with a 20 percent long-term growth rate.