GO
Loading...

Buy Fuel Systems Solutions?

A natural-gas subsidy bill is working its way through Congress, Cramer told viewers Thursday, that could jump-start the commodity’s use here in the US. Fuel Systems Solutions would be a big beneficiary if the legislation were passed.

Of course, Cramer made a similar call a year ago when Fuel Systems Solutions , which makes the components that allow vehicles to run on nat gas, was trading at $36.50. He expected Congress to take up the cause, but lawmakers balked instead. Then FSYS plummeted to under $10 a share. So what’s different this time?

For one thing, the natural-gas lobby seems to have finally poured money into lobbying Washington. The related companies are making their presence known, and that makes it harder for Congress to ignore them. Cramer said he thinks this is one reason the stocks have been soaring even though the commodity’s price has been trending lower.

If passed, the NAT GAS Act, as it’s called, would extend the tax incentives for those who installed nat-gas refueling pumps by 18 years, double the tax credit for liquefied nat-gas trucks, create a tax credit for companies that produce nat-gas vehicles and require half the vehicles that the federal government produces to run on the fuel. All of this would translate into an increase in business for FSYS, especially considering just 0.5% of American vehicles run on natural gas.

Here’s the back-up plan, though: If Congress balks a second time, then at least Fuel System Solutions has a strong European base to pick up the slack. The European Union has already increased incentives for updating older vehicles to run on natural gas, and the EU is demanding new strict emission standards. So that should spur even more conversions.

FSYS is cheap right now, trading at just 15 times 2010 earnings despite a 22% long-term growth rate. Cramer said that fund managers would be willing to pay 22 times earnings, making this a $43 stock masquerading as a $30 name. And that’s without NAT GAS Act making it through Congress. That makes this a “strong but very speculative buy,” he said.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    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