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Cramer: Stock with serious upside potential?

A better connection?

(Click for video linked to a searchable transcript of this Mad Money segment)

A recent merger has Cramer looking at a very niche area of the industrials. And he's found something intriguing.

Even with the stock flirting with 52-week highs, he thinks that TE Connectivity may have serious upside potential.

The Mad Money host drew the conclusion after carefully examining a move by Koch Industries to acquire rival Molex for $38.50 a share, a 31% premium.

Molex is a manufacturer of connectors commonly found in electronic devices raging from phones and cars to heavy pieces of equipment.

And the acquisition suggests to Cramer that this niche area of electrical component manufacturing could become very hot.

"The importance of the Molex takeout is that it tells us there is real demand for these connector players, and very savvy private investors are willing to pony up serious money to buy them."

Therefore Cramer thought it prudent to scour the space in an attempt to identify another company similar to Molex.

He found TE Connectivity.

Filograph | E+ | Getty Images

In fact, Cramer thinks TE Connectivity actually has a better business than Molex. "It is a much stronger company that caters to stronger end markets," Cramer noted. "Also, it sports strong profit margins, stronger than Molex and margins have been rising," Cramer said.

In addition, Cramer likes the way in which the business has been structured. "TE Connectivity gets the largest component of its sales, 40%, from the auto industry, which appears to be in tremendous shape. After that, TEL gets most of its sales from industrial and networking end markets, both of which are improving right now."

On top of that, Cramer likes that a third of the company's business comes from Europe.

"Not long ago, this would have been a negative, but with Europe's economy now turning, I think it could be a major source of upside for some time."

And he added that as compared to rival Amphenol, TE Connectivity is cheap.

"Amphenol trades at at 18.7 times next year's earnings estimates with a 12.65% growth rate. TE Connectivity sells for just 14.4 times next year's numbers with a slightly higher long-term growth rate of 12.73%."

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All told, Cramer thinks TE Connectivity has potential to go a lot higher.

"If you believe as I do that the global economy is finally returning to growth mode, then just like Koch, a connector company is exactly the type of industrial company that you want to own."

Call Cramer: 1-800-743-CNBC

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