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Pink-Sheet Profits?

Wednesday, 26 Sep 2007 | 3:23 PM ET

Navistar may look like a risky stock, but Cramer said it could be a real moneymaker.

Star Power
Eyeing investment moves with Navistar International, with Mad Money host Jim Cramer.

The truck-engine maker trades on the pink sheets, but only because it was removed from the New York Stock Exchange until it restates some old financial statements. Those reports are expected to start Oct. 25, which means Navistar should be back on the Big Board soon enough. Cramer said the guys from CRT Capital Group gave him the idea for this segment and, more importantly, the confidence that these regulatory issues will soon be solved. So the stock isn’t as risky as some might think.

Part of the Navistar’s business is the making of mine-resistant MRAP vehicles. If the Department of Defense gets its budget approved tomorrow, the U.S. MRAP fleet could jump from 2,000 to 14,000. That’s a great catalyst for the company with 44% of the orders.

But Navistar’s main business is truck engines, and it controls about a third of that market. The company trades at a discount compared to competitors Cummins and Paccar; 12.1 times next year’s numbers versus 15.1 and 14.8, respectively. According to Cramer, that 12 multiple is a bit low. He said 14 is probably a more appropriate number, which would add 10 points to the stock.

Add to all this the fact that Cramer also said Navistar is an attractive takeover target, and there are plenty of reasons investors should consider this stock.

Questions for Cramer? madmoney@cnbc.com

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

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