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Q Division’s Real-World Counterpart?

When investors think of spy technology, they probably conjure images of James Bonds’ laser-shooting wristwatch or X-ray eyeglasses. Well, Applied Signal Technology, of course, makes none of that. But the company’s business is no less exciting – or potentially profitable.

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Applied Signal Tech operates in the signals and communications-intelligence business. The company’s products work to detect enemy communications and electronics in the field and detect and infiltrate enemy communications over telco networks. If a bad guy is on his phone, or he was dumb enough to leave it on after his last call, APSG will find him. This market worldwide reaches $3.5 billion to $5 billion a year.

Applied Signal, which counts the CIA and NSA as clients, is the best pure play on the industry, Cramer said. APSG is “well positioned” and has “a lot of good contract opportunities coming up,” not the least of which are potential deals with both the Army and the Marines. Plus, the company recently won a five-year, $200 million contract to supply an unnamed customer, believed to be the NSA, with communications intelligence.

Applied Signal in Washington is believed to be the best in the biz, Cramer said, “so there’s no open competition.” And that’s always great for profits.

The stock trades at 18 times 2010 earnings, which makes it appear cheap. But Cramer wanted to be sure, so he invited CEO William Van Vleet onto Mad Money. Watch the video for the full interview.

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