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Ormat's Core Business

The race for energy independence is driving business for “green” companies across the U.S. Just look at First Solar . That stock’s up about 340% since Cramer recommended it back on April 17 of last year. Profits like that are just too hard to ignore. For that reason, we’ve recently covered pretty much all the alternative energies on Mad Money, all except the geothermal kind. Well, now we offer you Ormat Technologies, a virtual one-stop shop for the entire industry.

Ormat’s a vertically integrated geothermal power play that Cramer dug up in honor of Israel’s 60th birthday. (See the rest of CNBC’s Israel coverage from this week.) What’s funny, though, is that Ormat’s headquartered in Nevada. Still, 60% of the company is owned by Israel-based Ormat Industries and half of ORA’s employees are there. Maybe you immediately think of Teva Pharmaceutical when Israel’s mentioned, but Cramer said Ormat’s the better play.

What exactly is geothermal energy? Ormat drills wells reaching to the earth’s magma, drawing hot water to the surface and using the resultant steam to power turbines. Any unused water gets returned to the ground. It’s a solid renewable energy source, but unfortunately it’s only viable in a limited number of places, namely those with high geological activity. The bright side, though, is that where geothermal energy is viable, there’s almost permanent capacity, Cramer said.

Despite that small glitch, there’s still plenty of room for growth in the geothermal energy business. Only 9,500 of a possible 148,000 megawatts of geothermal power are currently installed worldwide. Ormat alone is adding 100 megawatts of capacity a year.

But Ormat might end up earning most of its money elsewhere in the industry, since the company makes its own drilling rigs and other equipment. Not only does Ormat sidestep production delays caused by third-party dealers, it’s also set up to supply the rest of the sector.

The stock itself is expensive, trading at 33 times 2009 earnings with a 22% long-term growth rate. But the lack of positive analyst coverage has Cramer thinking that upgrades could be coming, sending the share price higher. He just begs caution from any potential investor. The float’s tiny, so stay away from after-hours trading, and use limit orders when you buy – but not, of course, until the stock pulls back.

Questions for Cramer? madmoney@cnbc.com

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