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Cramer's 'Mad Money Recap': America's New Tech Stars

TheStreet.com Staff

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"Manufacturers are the new technology companies," Jim Cramer told viewers of his "Mad Money" TV show Wednesday.

These companies are showing organic growth that is as good or better than so-called traditional technology companies such as Cisco>(CSCO) and National Semiconductor(NSM), he said.

According to Cramer, today's manufacturers are using technology to engineer the products the world needs but are cheaper on a P/E basis than just about any other sector.

Harsco (HSC) fits the description of this new breed of technology companies. The Camp Hill, Penn.-based company provides services and engineers products for the steel, railway and energy companies to help them become more efficient and eco-friendly.

Cramer first recommended Harsco on April 10, 2007 at $45 a share. Since then, the stock has risen 31% to $60 a share. Cramer praised the company for consistently exceeding earnings expectations quarter after quarter. He also noted that Harsco now gets 70% of its sales internationally, thus shielding it from the ailing U.S. economy.

Harsco currently trades at just 15 times its expected 2009 earnings, yet maintains a 15% long-term growth rate. Cramer said this makes the company still way too cheap in his book. "This is a real technology company, one that is consistently innovating," he said.

Cramer also reiterated his buys on both railway CSX Corp (CSX) and Cummins (CMI), both of which he said are surging in their respective industries.

A Brand as Worthy as Wrigley

Cramer welcomed William Johnson, president and CEO of Heinz (HNZ), to the show to find out if his company can compare to high valuation Wrigley (WWY) received with its recent takeover bid.

Cramer said Heinz recently beat Wall Street's earnings estimates by a penny a share, with the company's international business the real highlight of the quarter. All of the company's businesses performed well, including ketchup, up 14%, snack foods, up 14%, and infant nutrition products, up 17%.

Johnson said that he wakes up every morning smiling at the opportunities for his company to grow. He said Heinz has powerful brands that have allowed it to raise prices in order to offset rising raw food costs, and is increasing productivity wherever it can to boost the bottom line.

Johnson said the international markets are going "crazy" for not only the company's ketchup products, but also for its potato and infant products. He said that 13% of the company's sales are now derived from emerging markets and noted that the company plans to continue to grow overseas through acquisitions.

Asked if a change in U.S. energy policy toward ethanol would help Heinz, Johnson confirmed that Heinz would benefit from lower corn prices.

Cramer continued to stand behind his buy recommendation of Heinz back on March 20, 2007, despite that call being up just 1.4%. He said Heinz will debut over 200 new products this year and deserves every bit of the 30 multiple Wrigley received in its takeover.

He also cited Heinz' 15 million-share repurchase program as yet another reason to love the company.

Wind Power Blossoms

Cramer welcomed Dan Batrack, chairman and CEO of alternative energy supplier Tetra Tech (TTEK) to the show to discuss what he called the company's "breakout quarter." Cramer last recommended Tetra Tech back on April 19, 2007 at $20 a share.

Batrack said that his company had a very strong quarter, with net income up 30%, revenue up 35% and the company's backlog up 40%. He credited the company's growth to strong demand for wind power.

Batrack believes the U.S. wind power market is growing faster than the consensus forecast of 25% growth. He said his company has booked over $170 million worth of orders for wind products in the past 90 days He called wind power the faster growing energy input in most states across the country. "Wind is ready to go now," he said, "without any trade offs."

Cramer said viewers should "do some homework on wind power... I want you in a wind stock."

Am I Diversified?

Cramer evaluated the portfolios of callers to see if they have what it takes. The first caller's portfolio included Raytheon (RTN), Merck (MRK), Anheuser-Busch (BUD), Apple (AAPL) and Schlumberger (SLB).

Cramer said he liked this portfolio, but would swap out of Anheuser in favor of Molson Coors (TAP).

The second caller's top five holdings included Apple (AAPL), Google (GOOG), Pfizer (PFE), Wal-Mart (WMT) and Allied Waste (AW).

Cramer suggested Schering-Plough (SGP) instead of Pfizer and recommended swapping out of Google in favor of an energy company like El Paso (EP)

The third caller's portfolio included: Apple (AAPL), ConocoPhillips (COP), Mastercard (MA), Foster Wheeler (FWLT) and EMC (EMC) in his portfolio.

Cramer said this portfolio had two of a kind and recommended selling EMC in favor of a healthcare stock.

Sudden Death

Cramer was bullish on Yum! Brands (YUM) and Merck (MRK).

He was bearish on Red Robin Gourmet Burgers (RRGB) and Delta Air Lines (DAL).

Lightning Round

Cramer was bearish on Capstead Mortgage (CMO), Compagnie Gnrale de Gophysique (CGV), La-Z-Boy (LZB) and MEMC Electronics (WFR).

Want more Cramer? Check out Jim's rules and commandments for investing by clicking here.

For more of Cramer's insights during the Lightning Round, click here.