With Cisco's (CSCO) recent announcement of its purchase of Starent Networks (STAR), Cramer said it's time to ring the register on Starent and look for a replacement stock for his Mobile Internet Index portfolio of stocks.
He then said that ARM Holdings (ARMH) is the perfect stock to fill Starent's shoes.
Cramer explained that ARM Holdings is a semiconductor intellectual property powerhouse. The company's high performance, low-power processor designs are licensed to a staggering 95% of all smart phones and mobile devices and have become the new standard for the the red hot netbook computer category.Cramer said ARM's business model makes sense for semiconductor and device makers since it spreads the costs of developing the ever more complicated processors among the entire industry. By licensing ARM's technology, companies and quickly and cheaply roll out new and faster devices. With ARM's practical monopoly on the mobile processor market, Cramer said the company's multiple of 25 times its projected earnings actually makes the stock cheap, especially given the company's 30% projected growth.
Biometric PlaysWhen it comes to securing the homeland, Cramer said no area is more exciting than biometric, the art of identifying the bad guys from their fingerprints, faces and other physical characteristics. For "Speculation Friday," he "identified" not one, but two, stocks that investors should consider. Cramer said L-1 Identity Solutions (ID) and Cogent (COGT) are two leaders in the biometrics field. He explained that L-1 Identity Solutions has technology that moves beyond fingerprints, to identify people by their faces, irises and beyond. The company has equipment in Iraq and Afghanistan, and is working to secure business for driver's licenses in the state of New York as well as the Mexican national ID program. Cogent is a pure play on finger-print technology, as the company mainly administers the U.S. Visitor's Program, which helps speed frequent fliers through customs. This company too has a lot of room for growth, said Cramer, as it competes for contracts from the U.S. Army, the U.K. Post Office and others. Among the two, Cramer said Cogent is the safer bet, with $5.86 a share in cash on the books, while L-1 Identity Solutions is risker with less cash and more debt. Both companies trade around 18 times their earnings and have a 20% growth rate. Cramer said there's no hurry to buy either stock. He said he'd wait for a market pullback to do some homework before pulling the trigger.
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