The Analysts Missed This Strong Spec
The best opportunities for speculation, Cramer said Friday, are small-cap junior growth stocks that have yet to be discovered by analysts at any of the major brokerage firms.
Take InterDigital, for example. Although one of the best plays on the mobile Internet tsunami, Cramer noted that none of the major firms and just four boutique analysts follow this stock. Yet InterDigital gets paid royalties on half of all 3G phone shipments. Four of the five largest handset makers license its products, including Research In Motion , Samsung, LG Display and Apple . And InterDigital makes 40 cents on every iPhone and 3G-enabled iPad sold.
The King of Prussia, Pa.-based company is an intellectual-property firm with 17,000 issued patents and patent applications. InterDigital develops wireless technologies that allows mobile devices to communicate with cellular networks, for example. It also makes bandwidth-allocation technology that manages the handover of signals between cell towers. After developing this technology, InterDigital licenses it to handset makers, among other wireless-communications companies. For every licensed 3G device sold, InterDigital gets paid a royalty that's often 1 percent of the device's selling price.
Although a point off its 52-week high, Cramer said there are a number of potentially major catalysts that could soon send the stock higher. One of is that the company anticipates a settlement to its lawsuit with Nokia , which accounts for 36 percent of all 3G phone shipments. According to InterDigital, the discussion with Nokia is now mostly about what price they need to pay for using their technology. Both companies will meet in court next month.
While Cramer considers this a speculative play, he thinks it's a relatively safe bet. InterDigital has no debt and $13 in cash per share, which is one-third of the share price. On Monday, the company said it will pay a quarterly dividend of 10 cents, which gives the stock a 1-percent yield. It expects to ultimately pay a dividend that yields 2 percent or 3 percent, which is on par with other dividend-paying tech companies.
"IDCC is a cheap and relatively undiscovered way to play the mobile Internet tsunami," Cramer said. "It’s paying a dividend, and I think ... it’s got a very bright future."
When this post was published, Cramer's charitable trust owned Apple.
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