Think of IGT as the arms dealer to all of the casinos, and right now casinos are on the march, Cramer said. IGT designs, develops and manufactures all types of computerized gaming products and systems: video poker, spin-reel slot machines, etc.
Cramer has been waiting to recommend IGT, and the stock is down 23% since January – its lowest valuation in well over a year. But he thinks IGT hit a floor at $35, which is only a dollar less than where the stock is now.
A big catalyst for IGT is the coming replacement cycle for server-based games, Cramer said. He called this an untapped market that should hit in late 2008/early 2009. Put simply, server-based gaming streamlines and better manages gambling for casinos, which boosts margins and profits for the house. So IGT should expect some of that business.
Again, this isn’t a stock that’s levered to the Fed, Cramer said. Also, any money IGT doesn’t spend on research and development, it pours into its buyback – one that’s worth 50 million shares, or 15% of shares outstanding.
As far as Cramer is concerned, investors don’t need to own a casino to ride the worldwide growth in gambling. They just have to consider buying IGT.
Jim’s charitable trust owns International Game Technology.
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