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Cramer: This Security Stock Is a ‘Major Buying Opportunity’

Many homeland-security stocks ran up in the wake of the attempted bombing of Northwest Flight 253, but not NICE Systems. This name, Cramer said Tuesday, has been utterly ignored. But that’s a mistake, as both the charts and the fundamentals see good things to come.

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“I think you can buy it right here, right now,” Cramer said of NICE Systems .

Before you can catch the bad guys, Cramer said, you have to know who they are and what they’re doing. NICE makes that happen. Among other products, this Israeli company is known for technology that captures, manages and analyzes suspicious communications – whether by phone, radio or e-mail – and analyzes video to allow security services to better anticipate, prevent and respond to all kinds of threats.

One of Cramer’s favorite technical analysts predicted that NICE would revisit its late 2007 high of $40. The stock plummeted 55% over most of the following year, but has since climbed steadily back, finding the higher highs and higher lows that technicians take as a bullish sign of demand. If this theory is right, then NICE should jump another 27%.

As for the fundamentals, NICE has used targeted acquisitions to grow its business, the most recent of which, Orsus, came in November. The company’s sitting on just under $500 million in cash, or about $8 in cash per share, so there’s plenty of money left to keep buying. In fact, NICE expects anywhere from $5 million to $15 million in security deals to close over the next two months.

All this and the stock is cheap, too, according to Cramer’s calculations. He defines cheap as a one-to-one ratio between the price-to-earnings multiple and the long-term growth rate, and right now NICE trades at 18 times earnings with a 17% long-term growth rate.

So while the money’s been made is some of these security stocks, the opportunity in NICE is ahead, not behind you.

“This is one,” Cramer said, “where both the technicals and the fundamentals, frankly, scream that there’s still a major buying opportunity.”

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