Cramer's 'Mad Money Recap': Emerson's New Tech Look

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"Why trade in fads when you can invest in long standing greatness?" Jim Cramer asked viewers of his "Mad Money" TV show Monday.

He said that he's tired of hearing about the Blackberry and the recently released Grand Theft Auto 4 video game. Cramer said he's more interested in what really matters to the U.S. economy.

On that note Cramer recommended Emerson Electric (EMR Quote), calling the company "one of the top five best manufacturers in the world."

Emerson, he said, is one of only a handful of innovative industrial manufacturers committed to giving the world the products it needs. "Emerson makes money in good times, and in bad," he said.

Cramer said he liked Emerson's portfolio of products including its industrial automation, network power systems, appliances and tools, and climate control systems. He said the whole company is firing on all cylinders, making the products the world needs.

Cramer last recommended Emerson on Aug. 24, 2007 at $47 a share. Since then, the stock is up a brisk 19%. Despite recent gains, Cramer said Emerson is still cheap. The company derives 52% of its revenue from overseas, with 30% of its revenue now coming from emerging markets.

Emerson estimates free cash flow from operations to be $2.4 billion in 2008, and Cramer said at least part of that money is likely to be returned to shareholders.

The company has a 2.2% dividend yield, which it has raised an incredible 51 years in a row, and also sports a stock repurchase program of 86 million shares or 11% of the company's current shares outstanding.

Cramer noted that Emerson trades at just 16 times its estimate 2009 earnings, despite its 15% long-term growth rate. He said the company is trading at a discount from where it should be trading.

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An IPO Gem

In his "Know you IPO" segment, Cramer recommended shares of Colfax (CFX Quote), which just went public on May 8.

He said the company is one of the few pure-plays in the fluid management business, an industry that gets little attention but is vital to the new U.S. economy.

Colfax makes pumps and fluid management products for a multitude of bull-market industries, including oil and gas, oil refining, energy and power plants, and chemical production.

He liked the company's diversification, with 44% of the company's sales from general industrial, 24% from commercial marine, 15% from oil and gas, 11% from power generation and 6% from the U.S. Navy.

Cramer compared the new Colfax to Flowserve (FLS Quote) and Robbins & Myers (RBN Quote), two other fluid management companies.

Flowserve, he noted, has risen from around $80 this past January, to as high as $123 on Monday. Robbins & Myers' stock has risen from just $24 in September, 2007 to $42 on Monday. Given these valuations, Cramer predicted Colfax could see as much as a 26% gain if it were to catch up to the valuation of its peers.

Cramer also liked Colfax's international exposure, noting 76% of its sales now come from overseas. He also noted the involvement of the Rales brothers in the company, saying their 44% stake in the company should be money in the bank.

Cramer advised viewers to wait at least a week before picking up shares of Colfax. He cautioned investors to not purchase the shares after hours and not to pay over $21 a share.