Cramer’s got a stock that offers you Home Gamers not one, but two ways to win: EMC Corp. .This is a great trade as well as a great investment, he said, but you can’t buy it for both.
First, the trade. EMC owns VMware, a company that lets other companies do the same things with one server that it previously could only do with 10 servers. This subsidiary of EMC owns its market, and EMC has decided to spin it off. But EMC can still make you money because, while it has filed for VMware’s IPO, it is only selling some of the stock and keeping voting control of the company. When all is said and done, EMC will hang on to about 88% of the economic interest in VMware which means any pop for VMware will translate into a pop for EMC. Cramer recommends getting into EMC ahead of the roadshow, which is when EMC goes around pitching the VMware deal to potential buyers – because that is when the hoopla is going to begin and the money will be made.
How much money? VMware’s current average price range is $24. Cramer doesn't think anyone believes it will get taken public at that price. If it prices $10 higher, at $34, then EMC goes to $20.38 – about 8% higher than its current price. If VMware goes to $48, double the current valuation, then EMC should hit $22.60 – up a cool 20% from the current quote. The trade is simple, Cramer said. Buy EMC now and sell it once it creeps as high as $22 off the hype of the coming roadshow.
So you can buy EMC now and buy even more if it comes in before the roadshow ahead of the VMware IPO and the quarter. You can trade this stock or invest in it. It has a lot of catalysts as the next phase of this market - the revaluation of growth in tech companies - spreads to the rest of the group, Cramer said.
Bottom Line: Cramer thinks you can get in EMC ahead of the roadshow and the quarter for a great trade and a great investment.
An earlier version of this story incorrectly stated that EMC would be up 18% from its price on July 11 if VMware opened its initial public offering at $34. It should have read 8%.
Questions for Cramer? email@example.com
Questions, comments, suggestions for the Mad Money website? firstname.lastname@example.org