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May.12
6:01 PM ET
Monday, 12 May 2008
Emerson's a Good Earner

Emerson Electric reported a stellar quarter last Tuesday, May 6, beating earnings per share estimates by 4 cents. Management immediately raised 2008 guidance. The good news pushed the stock up to $56, but that doesn’t seem to be enough for Cramer. During Monday’s Mad Money, he said Emerson deserves to trade at $60.

Emerson [EMR  Loading...      ()   ] is one of those “new tech” companies, like Eaton [ETN  Loading...      ()   ], Dover [DOV  Loading...      ()   ] and Parker Hannifin [PH  Loading...      ()   ], Cramer’s been talking about lately. Instead of being wowed by gadgets like Research in Motion’s [RIMM  Loading...      ()   ] new Bold smartphone, he’s more impressed with inventions that fuel the strong global economy. Emerson plays its part by boosting efficiency in everything from telco networks to nuts-and-bolts manufacturing.

Why’s Cramer so bullish on EMR? Three of the company’s most “new tech” divisions were up anywhere from 15% to over 20% for the quarter. Then there’s the fact that Emerson gets more than half its sales from outside the U.S. And the $2.4 billion in free cash flow expected this year should go toward buybacks and dividends. All that and the stock’s cheap, too.

Other ‘New Tech’ Plays From Cramer:

If Emerson can produce these kinds of numbers during a tough economy, imagine what the company’s capable of during good times. And those good times will come, Cramer said. So maybe it’s a good idea to buy some EMR while it’s still trading at a discount.

Cramer recommended two other “new tech” stocks Monday. Check out his calls on Owens Corning [OC  Loading...      ()   ] and Colfax [CFX  Loading...      ()   ].

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