Mad Money

Buy Western Union

Cramer: State of the Union

When a company in a strong industry’s self-destructing, Cramer said, buy the stock of its top competitor.

That’s why he recommended Western Union. What might be the most recognized wire-transfer service in the U.S. has a great opportunity to capture the market share left behind by Moneygram International .

Moneygram took a major hit when the collateralized debt obligations and subprime-backed securities in its $5.6 billion portfolio went south. To stay afloat, the company struck a deal with Thomas H. Lee Partners and Goldman Sachs that seems to have done more harm than good. Newly issued shares, expensive dividends for preferred stock, high interest rates on company bonds and an additional $200 million in senior debt dropped MGI, which opened the year at $15.37, to $3.29 Tuesday.

Enter Western Union. WU’s now in a position to steal MGI’s business and boost earnings, Cramer said. The requisite fundamentals are here, too: earnings beat, inline guidance, stellar execution. Analysts are even noticing WU’s new focus on growth, so that just adds to the “pros” column another reason to buy this stock.

As Cramer said, Moneygram’s pain is Western Union’s gain right now. Could be yours, too.

Jim's charitable trust owns Goldman Sachs.

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