GO
Loading...

Cramer's strategic buy ahead of earnings

(Click for video linked to a searchable transcript of this Mad Money segment)

To maximize profits, pros often time their buys. And Jim Cramer thinks the time to buy this stock is before earnings, on a pullback.

"Harman reports on April 28th and I would look to acquire shares before the release," Cramer said. "Don't chase it, but for the last four consecutive quarters, Harman has blown away the numbers. When the company reported its most recent quarter at the end of January, Harman vaulted higher after the release."

The "Mad Money" host thinks there's every reason for the pattern to repeat itself.

If you're not familiar with Harman, the company makes audio products and electronic systems used at events as prestigious as the Super Bowl and the Grammy's.

However, it's the company's car business that really excites Cramer.

Adam Jeffery | CNBC

In the car sector, "Harman makes dashboard interface systems that integrate everything from navigation and safety to media and smartphone connectivity, all of which are bundled together into what's known as an infotainment system."

Although Harman systems are already used by nine of the world's fifteen largest auto-makers, "I can see demand spreading," Cramer said.

"Here's just one reason why. Apple just rolled out their CarPlay system, which lets you synch up your iPhone to your car's built-in display, a much safer way to use your smartphone while you drive. Butt the thing is, CarPlay requires an embedded infotainment system in order to work, so it should boost demand for Harman's technology."

That kind of development could boost guidance.

Of course, a better than expected earnings report is hardly the only reason Cramer likes Harman. He also likes it for growth.

Although Harman's technology was once only found in high-end luxury cars, automakers are now including it in models that sell at much lower prices.

"In the not too distant future, I bet every car will come equipped with an infotainment deck, and Harman will continue to dominate the market," Cramer said.

And Cramer doesn't think the opportunity is priced into shares.

"Harman sells for just 19 times next year's earnings estimates despite having a 24% long-term growth rate. I think that's darn cheap. Again, don't chase. But we've seen Harman trade as high as 30 times earnings within the past decade, so I think it could have a lot more room to run."

In fact, Cramer is so enthusiastic about Harman he's named it has his favorite stock trading between $100 and $500.

------------------------------------------------------------
Read more from Mad Money with Jim Cramer
Cramer goes behind Nasdaq sellof
Cramer's cheap $1000 stock
Insider insights: Cramer goes behind the solar story
------------------------------------------------------------

*All week long on "Mad Money," Jim Cramer has been looking at favorite stocks based on dollar amounts. On Monday Cramer said that over $500 his pick was Priceline. On Tuesday he profiled Harman, as you can see above.

"On Wednesday I will anoint a winner in the $50 to $100 space, Thursday you'll get my $10 to $50 call and finally, Friday, I will get down and dirty with my favorite stock under $10," he said.


Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

Symbol
Price
 
Change
%Change
HAR
---
AAPL
---

Featured

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Cramer's New Book