Cramer: Spotting the Next Big Mover
If you want to find a stock that's a future winner, look for companies that had tremendous success in changing their models quickly but are still underrated.
“Those are the stocks where people expect the guidance to kept steady or even cut,” Cramer said, “but instead they roar ahead to the point where you’re simply jealous of the people who nailed it.”
Priceline is the perfect example of this, he said. The online discount travel company, which recently ditched spokesman William Shatner and changed its model. The company is moving from a name-your-price business to a fixed-price model. PCLN rallied Tuesday after it forecast a huge increase in earnings despite the rise in gas prices.
Priceline isn’t alone. Apple, which hit an all-time high Tuesday, also increased its earnings estimates. Apple is “simply way too cheap versus the average stock,” Cramer said. When you extrapolate the guidance, he sees the possibility that Apple can earn $55 a share for fiscal year 2012. That means it is trading at only 10 times earnings.
Other underrated names that raised guidance are Garmin and Clean Harbors—which both expanded their businesses, Whirlpool and Ralph Lauren.
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When this story was published, Cramer's charitable trust owned Apple.
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