The homeland security rally is about to lift Cubic ( CUB), 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 Lockheed Martin ( LMT) 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 Google ( GOOG) 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.


  • Citigroup ( C): OK, but Wachovia ( WB) is better.
  • KLA-Tencor ( 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.
  • Visteon ( VC): "Not a fan. Sell."
  • Amgen ( AMGN), Comcast ( CMCSA), Genentech ( DNA), Intel ( INTC), Johnson & Johnson ( JNJ): "Like tremendously."
  • Lucent ( LU): The balance sheet is getting better, which is why the stock is up. "I think it goes higher."
  • Red Hat ( RHAT): Sell. "Haven't liked it since the CFO left."
  • Consolidated Edison ( ED): "Darn good" company, but prefers KeySpan ( KSE).
  • Exxon Mobil ( XOM): "Not my favorite" oil company, but very well run.
  • Alleghany ( Y): Very well run.
  • 3M ( MMM): "Not my favorite conglomerate" since the company lost its CEO to Boeing ( BA). Would prefer Textron ( TXT).

Going Upscale

Finally, Cramer said he would swap out of Applebee's ( APPB) into Ruth's Chris Steak House ( RUTH). 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.
At the time of publication, Cramer was long Boeing, Comcast, Intel and Lucent.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here. Listen to Cramer's RealMoney Radio show on your computer; just click here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict."

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