FEATURED SLIDESHOW
Who Is The Worst CEO?Mad Money needed new inductees for its
Wall of Shame, so we asked viewers for
nominations.
RECENT POSTS
- Lightning Round: Toyota, Ford, Colgate-Palmolive and More
- Lightning Round OT: Hudson City Bancorp, Duke Energy and More
- Is This the Next 3Com?
- John Mack: Hero of the Credit Crisis?
- Cramer: Buy This New Gold ETF
- Cramer Tackles Toll Brothers Report
- Lightning Round: Priceline.com, Citigroup, Transocean and More
- Lightning Round OT: STEC, ICICI Bank and More
- Herbalife Vs. Hedge Funds
- Cramer Jeers J&J, Applauds Abbott
Text Size 
When a company holds a secondary offering and the share price still goes up, that’s probably stock investors want to own.
LKQ Corp. [LKQX
Loading...
()
] has been enjoying that kind of momentum lately. The company sold 12 million shares at $31 a piece, and the price has climbed $3.60 since then. It was up even more, but Cramer said he wanted to wait for a pullback before he recommended it.
LKQ is the number-one supplier of recycled auto parts, thanks to a buyout of Keystone that closed Monday. Cramer is guessing the deal will force analysts to raise estimates and send this stock even higher.
Believe it or not, there’s a quiet bull market in auto junk, Cramer said, and LKQ is one part of it. Damaged cars get replacement parts from two places: the automakers and then companies like LKQ, which deal in refurbished, aftermarket and recycled parts. The market-share split is 70%/30%, respectively.
At least for now it is. The insurance companies that pay for post-accident repairs are becoming more and more cost conscious, so that should give LKQ a chance to take market share. This is Cramer’s reason to own the stock long term.
There’s a catalyst too. State Farm, the largest auto insurer, had stopped allowing aftermarket parts because of a class-action lawsuit filed against the company. But that lawsuit was thrown out, so LKQ could stand to benefit enormously now.
Cramer said LKQ should become a dominant player in the market as it rolls up smaller outfits through acquisitions. His risk-reward for the stock is four points down, 15 up, “the kind of risk/reward I dream about,” he said.
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website?
Data is a real-time snapshot *Data is delayed at least 15 minutes