Why FMC's a Buy

Cramer’s always on the lookout for bull markets, and there seems to be a silent one raging in soda ash, he said. No, it doesn’t sound exciting. But Warren Buffett made billions off boring stocks.

FMC’s deep in the soda-ash business. (Soda ash is used to make glass, bricks, develop film, clean swimming pools.) And the company makes pesticides and herbicides, placing it in the middle of the resurgence in agriculture. Cramer likes it especially because, in this uncertain market, he can put a definite number on FMC’s value as a company.

That’s because rival Tata Chemicals took over General Chemicals late last month, paying $486 per ton for the soda-ash production. Once Cramer knew the going rate, he figured out FMC’s soda-ash business was worth $2.3 billion.

The flipside here is that the rest of FMC is worth only $2 billion, meaning the non-soda ash businesses trade at only five times the enterprise value over earnings before interest, tax, depreciation and amortization. A key chemicals analyst has said it should be nine. That would put FMC’s share price at $70, 30% more than its current price of $53.

The company isn’t perfect, Cramer said, and it won’t surge straight to $70. But he’s confident FMC either gets to there eventually on the strength of soda ash and bullish agriculture or it gets taken over for a premium at the same level.

Questions for Cramer? madmoney@cnbc.com

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

Contact Mad Money

  • Showtimes

    Monday - Friday 6p ET
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Mad Money Moments

Cramer's New Book