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If you take a look at the military's big, new budget, you'll find Jim Cramer's two defense department picks, he told his "Mad Money" TV show viewers on Wednesday.
En route to his bull market, Cramer cooked up a big bear souffle.
, which he said are not your run-of-the-mill defense contractors.
," he said, because they specialize in "future combat systems."
While the military budget might look bloated to some, it doesn't automatically guarantee a bull market in all defense stocks, Cramer said. Instead, the money will go to those companies that can beef up our existing military system.
Cramer believes that Edo, which makes unmanned aircraft, is a company that will be tapped to enhance military performance. It also makes high-tech equipment for missiles and the V-22 Osprey, which can function as a helicopter and as a plane.
The company's revenue has risen 40% since 1999, he added, and Wall Street is always looking for this kind of accelerated revenue growth.
Axsys is a nano-positioning stock, Cramer said, meaning that it makes thermal-imaging devices and really powerful precision-optical components.
These companies are making money now, and they will make more money in the future, he said.
Today is a speculation day, Cramer told viewers, adding that he loves to speculate on cheap stocks when they're not cheap companies.
You don't need to buy a call to get some serious leverage on these stocks because they're so volatile that they can make some money very quickly, he said, adding that his last $2 miracles,
, made people who played them correctly some mad money.
The battered stock of the day that's making a comeback is
, said Cramer, adding that it has great pin action off the upbeat
It's a speculative play, meaning there's plenty of risk involved, he said. And if you buy it north of $3.75, he said he would have nothing to do with your judgment as a trader.
Over the past two months the company reported an awesome fiscal first quarter, Cramer said, pushing the stock toward $3. But he added that Vitesse is still a money-loser in turnaround mode that's trying to narrow its deficit.
He believes that Vitesse will start making money soon because it designs and develops semiconductor solutions for storage networks, which is part of the infrastructure side of the gadget-based tech rally.
Plus, there are upgrade trends that will benefit the company, Cramer added.
Networks are improving their speed 10-fold, Cramer said, and that will necessitate technology made by Vitesse.
He also said there is an incentive to bridge the gap between Ethernet systems, which are used in offices, and Sonet systems, which are used for communications worldwide, because they were so expensive to install in the first place.
Bridging the gap will be the next thing, and Vitesse will be there to help, Cramer said, adding that there is a lot of incentive to connect offices to larger international communications systems.
, Cramer said that he has long suffered from liking the distributor businesses way too much.
Don't be part of that affliction, he told a caller. Cramer would stay away from Avnet because the distributor business is second-rate and has low margins.
A Hot Cup of Coffee
Wall Street loves growth, Cramer said, which is why
has been a darling for so long, recently hit a new trading high at $35 and posted strong quarterly earnings.
So he welcomed the company's founder and chairman, Howard Schultz, to talk about the company's expansion plans.
Schultz said that the company plans to eventually open 30,000 stores worldwide, including 15,000 internationally. He said that the company expects to open 1,800 stores worldwide at the end of this fiscal year.
The fact that the company's acceptance has been the same worldwide is the key to Starbucks' enormous expansion plans, Schultz said. "They love the coffee. They love the experience. ... We feel we're at the embryonic stages of our international expansion," he said.
Schultz said that expansion in China was essential to this plan. Starbucks estimates that the country has more than 200 million young people who are affluent and core customers, a number that is just under the entire population of North America.
He also said that the stock's tremendous rise has shown Wall Street that you can do well by your employees and still make money, citing company policy to extend stock options and health insurance to all employees.
To view Cramer's interview with Schultz, click here.
Playing With Food
Finally, Cramer said that money could soon be make in genetically modified foods, now that the WTO has just struck down the European Union's moratorium on genetically modified crops and food.
That's good news for Switzerland's
, he said, one of two companies set to make money on bioengineered crops.
, the other obvious play, is an American company. And Cramer believes that European nations affected by the WTO ruling would not "further debase" themselves by going with the U.S. producer.
The company just had an entire continent opened up to its genetically modified seeds, Cramer said. But with this play he gave a serious caveat.
The company reports earnings Thursday, and while Cramer thinks it'll do OK, he said not to buy the stock before the announcement.
If the quarter is a stinker, you get a deal, he said; but if you buy before it reports, you could lose a lot of money.
Cramer was bullish on:
Cramer was bearish on:
Isle of Capri Casinos
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At the time of publication, Cramer was long UnitedHealth Group.
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