This Action Alerts PLUS alert was originally sent to subscribers on June 19 at 10:53 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.

Even though I've added several new stocks to the portfolio in the last month, I still have plenty of new ideas that I've been watching for a while. One of those, Inverness Medical Innovations ( IMA), has pulled back recently after a nice run -- it's trading around $49.28 as I write this -- and I want to use this opportunity to initiate a position.

After you read this Alert, I'll make my first purchase in the name by picking up 1,000 shares. As always, I will look to add to my position as the opportunity to improve my cost basis comes up. My goal is grow Inverness to 4%-5% of the portfolio.

Inverness is a health care diagnostics company, both professional and in-home, as well as a manufacturer of vitamins and nutritional supplements. The vitamins business provides the company with a stable revenue stream.

But what excites me are the incredible opportunities for Inverness in the diagnostics field. The company has recently agreed to acquire two companies -- Biosite ( BSTE) and Cholestech ( CTEC) -- that will drastically improve the company's product portfolio and distribution capabilities, specifically in the fast-growing cardiology diagnostic market.

The deals also offer incredible financial synergies from both a cost-cutting and revenue perspective. The Biosite transaction alone could prove to add more than 50 cents to 2008 earnings. Cholestech should add 5 cents to 10 cents to 2008 earnings.

... Count the Ways

The professional diagnostics side presents the greatest opportunity, but the company's consumer diagnostics group, set up as a 50/50 joint venture with Procter & Gamble ( PG), is also interesting. The transaction provides Inverness with a much-needed cash infusion of around $300 million (after taxes) to help offset the debt it took on to finance its recent buys (and lower interest expenses).

It also allows Inverness to leverage P&G's substantial marketing and distribution capabilities. The venture currently markets digital pregnancy tests under the ClearBlue label, but is also rumored to be working on an over-the-counter strep test, which would have an enormous end market.

Not all analysts have updated their earnings estimates to reflect the recent transactions. But I'm confident that Inverness will earn north of $2.50 in 2008, meaning the stock currently trades for only 20 times next year's earnings. Given the incredible growth opportunities in the markets Inverness serves, I believe this is way too cheap. I expect that as investors become more comfortable with the ongoing integration of Inverness' recent acquisitions and realize its earnings power, the stock will trade much higher -- north of $60-$65.

Speaking to the larger view of the portfolio, this does increase my health care exposure but isn't a field bet on the sector. This is an event-driven decision -- the recent deals and the opportunity to buy on a pullback made me say "I've got to be part of this."

At the time of publication, Cramer had no positions in any of the stocks mentioned in this Alert.

Jim 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. Watch Cramer on "Mad Money" weeknights on CNBC. Click here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click here to order his 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." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.

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