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Why This High-Growth Name Flies Under the Radar

Although a major beneficiary of some of the biggest trends in technology, Cramer on Friday said few investors are willing to buy shares of Silicon Graphics.

Why? It's being held back by its name, Cramer explained.

Silicon Graphics is the name of a company that went bankrupt in 2009 and therefore lost some investors a lot of money. Cramer thinks this stock is worth another look, though. In May 2009, Rackable Systems bought Silicon Graphics out of bankruptcy. During the merger, Rackable executives made the decision to stick with Silicon's name because it is loved by customers. Leading into bankruptcy, Cramer said Silicon had a lousy management team, but Rackable's CEO stepped in after the merger. Silicon's enormous debt load went away, too. It now has $3.80 of net cash per share, even though it's trading at roughly $14 a share.

"Because of the name change, the new SGI has been ignored, if not downright despised," Cramer said, adding that just two analysts cover the stock. "I think SGI would be substantially higher if they had only kept the Rackable name, but that’s okay, because their pain is your opportunity. You get to buy this speculative stock at an incredible bargain price, not because their business is bad—it’s going great guns—but because of a nomenclature issue."

Where most servers are based on distributed memory, the Fremont, Calif.-based company specializes in shared memory that uses a super computer called Altix UV. Distributed memory breaks data into parts and shared memory keeps it all together, Cramer explained. If a company is doing data analysis and needs to view the sum of the data, for example, shared memory allows them to do that.

When it comes to high-performance computing, Cramer said Silicon Graphics has little competition. No one rivals its power, either. Super computers are other companies can only scale shared memory up to half a terabyte, but Silicon's super computer can scale up to 16 terabytes. The company has become the solution for high-performace business analysis applications used in Oracle - or Microsoft Windows-powered databases. In its latest quarter, sales in this segment were up more than 48 percent year-over-year.

Silicon Graphics also makes space- and power-efficient servers for datacenters, Cramer said. It's a low-margin, commodity business that competes with Dell and Hewlett-Packard . Being as these servers are the backbone of cloud computing, demand is strong. Amazon.com, a leader in cloud computing, is one of Silicon's biggest customers.

"This is a totally different company—one that’s firing on all cylinders—with a stock that I bet goes much higher as the profits keep getting stronger and people realize that SGI by another name would still generate just as much earnings power," Cramer said. "You've got to get into this speculative name before big brokerage firms start rolling out coverage."

When this story was published, Cramer's charitable trust owned Oracle.

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