'Mad Money' Spotlight: Cramer on Sallie Mae

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Don't count Sallie Mae ( SLM) out.

So said Jim Cramer during Friday night's "Mad Money" broadcast. Indeed, while most investors believe the company is wiped out, Cramer said that the company is a winner, especially now that the stock has pulled back.

Shares of Sallie Mae closed down slightly on Friday 1% to $8.97, and are 10% lower from its high on June 30.

In June the company won an important servicing contract, when the government selected Sallie Mae to service existing student loans and future loans.

The five-year contract covers $550 billion in outstanding loans, but does not include loan origination. However, it will be a steady source of income as the standard compensation for servicing these loans can be up to 0.5% of the loan interest payments.

While the company expects losses from bad loans to peak this year and stay high in 2010, Sallie Mae actually narrowed its loss in the first quarter ended March 31.

During the quarter the company recorded a loss of $21 million, or 10 cents per share, compared with a loss of $104 million, or 28 cents, in the year-ago period.

FBR Capital Markets analyst Matthew Snowling raised his full-year earnings forecast in June. He now expects the company to earn $1.18 per share, up from prior estimate of $1.06. His 2010 forecast now stands at $2.06, up from an earlier forecast of $1.72.

Sallie Mae will report second-quarter earnings on July 21.
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