The homeland security rally is about to lift Cubic (CUB - Get Report), James Cramer said on his
"RealMoney" radio show.
The San Diego contractor makes systems for defense and public transportation. The company and others like it stand to profit in the continuing fallout of last month's London subway bombings, Cramer told his listeners Wednesday.
New York City announced Tuesday it will install 1,000 video cameras and 300 motion sensors in its subways to improve security. But lead contractor
(LMT - Get Report)
is too big a company to see an impact from a $212 million contract, Cramer said.
Subcontractors such as Cubic, with $722 million in revenue last year, are small enough that they could see a benefit. Cramer advised using limit orders to purchase Cubic and said he wouldn't advise purchasing the stock at price much above $17. On Wednesday, the stock rose 5% to $18 and change.
A caller asked whether
(GOOG - Get Report)
is overvalued. Cramer said it is not based on a multiple of earnings. The faster a company is growing, the higher the multiple it deserves, Cramer said, adding that Google is worth $350 based on his "conservative" estimate of $7 per share in earnings in 2006 and an earnings multiple of 50.
Picks and Pans
Cramer then rattled off a list of stocks and what he thinks about them right here.
(C): OK, but
(WB) is better.
(KLAC): Good. Should do well in the coming tech rally.
Polo Ralph Lauren
(RL): Excellent. High-end retailers and manufacturers continue to do well.
Advanced Micro Devices
(AMD): OK. Should do well in the coming tech rally.
(VC): "Not a fan. Sell."
(AMGN - Get Report),
(CMCSA - Get Report),
(INTC - Get Report),
Johnson & Johnson
(JNJ - Get Report): "Like tremendously."
(LU): The balance sheet is getting better, which is why the stock is up. "I think it goes higher."
(RHAT): Sell. "Haven't liked it since the CFO left."
(ED): "Darn good" company, but prefers
(XOM - Get Report): "Not my favorite" oil company, but very well run.
(Y): Very well run.
(MMM): "Not my favorite conglomerate" since the company lost its CEO to
(BA). Would prefer
Finally, Cramer said he would swap out of
Ruth's Chris Steak House
. Applebee's, which reported poor comparable sales last night, said it is suffering from high gasoline prices. Cramer doesn't buy it. He believes Applebee's is suffering because it doesn't have the right business model for this environment. "The menu is the problem," Cramer said.
Ruth's Chris, on the other hand, is a high-end dining play. Cramer believes it has the right recipe for success, with plenty of opportunity for growth.
Downscale restaurant and retail plays are hurting, but "the high end of the economy is still booming," Cramer said.