It's Time for Tech

Sycamore Networks has two important things going for it: It’s in one of the few havens – technology – in this volatile market, and the share price could jump if the company surprises Wall Street.

There’s no question this is a more speculative stock, but Cramer said Sycamore , which operates in the niche optical-switches part of the telco equipment industry, looks to be turning around. The company has been cash-flow positive for six straight quarters, and it’s expected to turn a profit this year. Sales are up, and new products are attracting new customers. Maybe best of all, 60% of Sycamore’s business comes from overseas. That kind of international exposure is imperative considering the U.S. markets lately.

Still, analysts are sleeping on it.

The Street expects a company like Cisco Systems to do well. That’s not the case for a firm like Sycamore Networks. A halfway decent quarterly report from a company in which the Street has low expectations can send the share price skyward, Cramer said. He thinks this could happen to Sycamore very soon.

Sycamore has $903 million in cash, which sets up a nice floor for the stock. Not to mention, the book value – what the business would be worth if it were liquidated – is roughly $3.49 a share. So Cramer doesn’t expect this $4 stock to drop more than 15%-20%, if it does at all.

Tech is one of a few refuges for investors right now, Cramer said. As people bail on bankers, homebuilders and, increasingly, retail, there’s a good chance they’ll move to tech. For every year in the past 16 years except one, tech has enjoyed a bull run from mid-summer until Christmas season. That’s just another reason to consider Sycamore. Plus, the speculation should keep investors’ interest in the game.

Bottom Line: When the market breaks your heart like it did today, cherish stocks with low expectations like Sycamore.

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