Tech's Back

IBM announces a fantastic fourth quarter and the market rallies. Is it really that simple?


“The truth is nothing was wrong with tech in the first place,” Cramer said during Monday’s Mad Money. The sector’s drop was just a matter of indiscriminate selling by panicked investors. So when IBM offered a reason to believe in tech’s recovery, Wall Street jumped at it.

Now, tech’s en fuego, and Cramer said he expects it to stay that way. So all week he’ll be highlighting some of the best, but overlooked, stocks in the sector. Sure, he could talk about the continuing success of Apple or Google , but that’s just too easy.

Besides, IBM’s success overseas – the strength behind the quarter – is a sign that a company with similar clients is set to outperform as well. That’s why Cramer likes EMC. International makes up as much as 45% of the storage-hardware maker’s sales.

A new first-of-its-kind Flash-based product should help the stock as well, he said. Basically, EMC now offers memory that uses less energy and takes less time to access.

But the best reason to own EMC is for its stake in VMware. EMC spun the company off last summer, and is just a month away from being free of its six-month lockup period. When EMC can finally sell its VMW shares, Cramer said he thinks the former “starts to soar.”

EMC gets a paltry $4 a share when VMware’s value is taken out, and the core business is only getting a five or six multiple despite having the growth to warrant bigger numbers. But when those VMW shares start to go, Wall Street will be forced to adjust EMC to the same level as its peers, Cramer said. That means this $17 stock could go to $24.

Cramer knows that EMC is down 35% since the end of October, but EMC has been “overlooked and mistreated for far too long and is ready to make its comeback,” he said.

Jim’s charitable trust owns EMC.

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