Off to the Races

If you're losing money or your portfolio just isn't doing much for you, you need to make things interesting. A good way to do that is to get speculative. Not with your entire portfolio, mind you, but Cramer believes it's crucial to keep - at most - a fifth of your money in very risky stocks that could make you a buck.

With 20% of your money in uncertain waters, it'll keep you interested in the other 80% of your portfolio that can be downright boring. It's about gambling, and today Cramer's going to the races: a three-way horserace from $10 to $12. But gambling doesn't mean being reckless, so Cramer advises you to approach these stocks with caution. He's got three cheap, speculative stocks that he thinks could bring you some upside. And in keeping with the horserace metaphor, he's even including a "line," a stock he's spotting a buck to bring it up to $10, the way you would for any underdog.

The three ponies Cramer's got lined up in his race to $12 are Dynegy, Brocade and, the underdog, Qwest. These companies were all almost destroyed, Cramer says, which is why he likes them. Brocade shares went from $135 to $3. Qwest's former CEO, Joseph Nacchio, is on trial for allegedly dumping $101 million in company stock because he knew Qwest's finances were buckling. He has racked up 42 counts of insider trading. And Dynegy went from $58 to pennies before being rescued by a new CEO. But that's the bad. These companies are all now in recovery mode, making them true speculative picks with some very real upside potential.

Dynegy is up big because it's an energy utility, which is the hottest area of the market, according to Cramer. After years of losses, he thinks it could make money this year, maybe even earning as much as 35 cents per share, which would take it to the $12 finish line. Cramer thinks it could also be bought due to the shortage of power plays and the surplus of private equity money floating around.

Then there's Brocade. The stock sold off after the company had a great meeting because investors thought the upside was all gone, but that's shortsighted, Cramer says. Brocade acquired McData, it's biggest competitor, at a great price and has the chance to beat numbers by consolidating costs and bumping up prices, now that it's got one less opponent. That could propel it to $12, but there's also the chance of a takeover by Cisco. Tech companies like Cisco aren't exactly adored by the market, or Cramer, these days, and if Cisco doesn't make a move with Brocade, their margins could get hurt. Brocade's got the momentum, but it's a bit scary, too. That's what makes it exciting, and excitement is what speculation is all about.

Qwest, the underdog, which Cramer had to spot a buck and change to make to the $10 mark, could be the first of the three to make it to the finish line, he says. You might recall that just last month AT&T, Verizon and Qwest were awarded the largest-ever federal communications contract. Qwest stock ran up ahead of that, but then pulled back. Cramer thinks the phone companies are all strong right now – from AT&T to Verizon, even Sprint, which lost the chance to be included in the telecom contract. Qwest is no exception, and with the possibility of buybacks and an upside surprise, this pony could break out again.

Bottom Line: Qwest, Brocade and Dynegy – in that order – are three speculative stocks that Cramer thinks could be on the fast track to $12. They're all great ways to get in the game, or stay in the game if you're feeling like you want out. Just remember to sell when they hit the finish line, he says. Speculators don't want to overstay their welcome.

Questions? Comments?