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May.04
7:49 PM ET
Monday, 4 May 2009
Cramer’s Tech Specs

An interesting, yet ironic, trend is driving the tech sector right now: These stocks are getting more attractive the higher they go. Usually, Cramer would steer investors away from every-increasing share prices, but the momentum is begetting still more momentum. Mutual fund managers are pouring money into these names, and that is taking the group higher.

So how do you play it? Well, the bellwethers – Google [GOOG  Loading...      ()   ], Apple [AAPL  Loading...      ()   ], Amazon.com [AMZN  Loading...      ()   ] and Research in Motion [RIMM  Loading...      ()   ] – are the most obvious choices, and they’re all up nicely so far. Cramer thinks they still have room to run, but right now he'd rather see investors in lesser-known companies, such as Tekelec [TKLC  Loading...      ()   ]. This speculative stock has even more upside potential, he said, if the action in some of Tekelec’s peers is any indication.

Back on Dec. 12, 2008, Cramer had recommended AMD [AMD  Loading...      ()   ], Ciena [CIEN  Loading...      ()   ], Skyworks Solutions [SWKS  Loading...      ()   ] and Tellabs [TLAB  Loading...      ()   ] a tech spec plays. They’re up 81% since then, versus just 2.1% for the S&P 500. He expects similar performance from Tekelec, a billion-dollar telco equipment supplier.

More specifically, Tekelec makes equipment for transmitting text messages, controlling voice traffic on wireless networks as well as the technology that allows cell-phone subscribers to keep their numbers if they switch carriers. So this is a play on the future, Cramer said, and the expansion of wireless networks and the increased use of text messages.

In addition to the growth in wireless subscribers and texting, Tekelec counts five of India’s seven largest carriers as customers. That’s good for business, considering India has the fastest-growing wireless market in the world. Business might get even better once the country introduces the personal-number portability that Tekelec makes easy.

While Cramer recommended this as a speculative stock, the balance sheet is pristine, carrying no debt and $4 of cash per share. Not to mention, TKLC trades at just $15 and change, so it’s less likely to blow up in your face, Cramer said. Also, the analysts seem to be sleeping on this one, so there’s room for upgrades here. That should push the stock higher.

One caveat: Don’t buy TKLC before it reports earnings on Thursday, May 7. Gaming the report could cost you money. So wait for the results before starting a position.

Call Cramer: 1-800-743-CBNC

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