Cramer on Friday continued his recommendations on what he sees as the next great product cycle – mobile Internet. He thinks this technology has already become essential in our daily lives, like cable TV, but has yet to reach critical mass. Therefore, there are still plenty of ways to play the trend.
Sure, investors could buy Apple , Research in Motion or Palm , all of which are great long term buys, but Cramer’s tech focus lately has been on the smaller, more speculative names because they potentially offer even more upside. That’s why today he endorsed buying TriQuint Semiconductor .
TriQuint makes components for phones and smartphones, as well as for the other side of the mobile Internet play, wireless networks. The company has some military business, too, but it’s the exposure to Apple’s iPhone that most stands out. TriQuint makes the three transit modules in every iPhone, generating about $3 to $4 of revenue every time Apple sells another unit. Cramer is expecting a bump in those revenues thanks to the phone’s recently lowered $99 price tag. There’s also China exposure here as well, as TriQuint maintains good relationships with the companies involved in the country’s $40 billion 3G rollout.
Let’s be clear, though – TriQuint operates as a commodity business. This isn’t proprietary Qualcomm, which created much of the technology that made mobile Internet possible. At best, this is a third-tier company, Cramer said, that is riding a product cycle so big that it can’t help but benefit. Make no mistake, any number of other chipmakers could easily fill TriQuint’s place. This semiconductor firm just happens to be in the right place (the iPhone) at the right time.
Despite reporting a worse-than-expected quarter at the end of April, TriQuint did raise its second-quarter guidance on increased demand and inventory restocking. Together these two factors could generate revenue growth of 18% to 26% sequentially, which would boost margins for what is a high-fixed-costs company. The balance sheet is in great shape as well, containing no debt but 65 cents of cash per share.
Cramer thinks the next quarter could be the first of many positive reports from TriQuint. He recommended that investors buy the stock before everyone else catches on.
Cramer's charitable trust owns Qualcomm.
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