Cramer hasn’t exactly been humble about his Four Horsemen of Tech. But why should he be? Google, Research in Motion, Apple and Amazon.com are up big since he made his call back in June. And those are just a few of the names in the sectorwide rally that he predicted this past summer.
But the excitement in tech has been brimming for a while now, and a lot of the so-called easy money has already been made. But that doesn’t mean tech is done. In fact, Cramer thinks he found an overlooked winner in Brocade Communications .
There are a few reasons homegamers might want to buy Brocade. Not the least of which is the storage and networking company’s connection to the ultra-hot VMware . VMware makes a virtualization software that can hurt most tech players because it lets a user get away with buying fewer servers. But virtualization actually increases demand for software area networks. Brocade makes the switches and ports that route data over these networks. So the better VMware does, the better Brocade does.
BRCD is cheap, too. The stock trades at just over one times its growth rate. EMC and VMware trade at over two times their growth rates. And Brocade has some catching up to do, Cramer said. If BRCD gets to just 20 times earnings from where it is now at 16, the stock goes to $12 from $9.50.
Former CEO Greg Reyes is gone, and with him the company’s backdating troubles. Brocade bought up its nemesis, McData, ending a margin-killing price war. Cisco, the giant in this space, isn’t undercutting prices to run Brocade out of business. Even the quarter that ended Oct. 31, which is usually less than stellar, looks like it will be better than expected.
Brocade has been left behind by the tech rally, Cramer said, but now homegamers know why it’s about to catch up.
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