Ride the 'Mobile Internet Tsunami'

Nearly one year ago, Cramer introduced his Mobile Internet Index, which tracks stocks in the smart-phone revolution. Since its inception, the Index is up 28% where the S&P 500 saw a 13% increase over the same time period and on Monday's Mad Money, Cramer introduced the newest member to the Index: Acme Packet .

Based in Bedford, Mass., this company makes equipment that provides voice and data services for the Internet. It specifically manufactures session border controllers, which is a kind of networking gear that's placed at the points where the networks interconnect to provide a more secure, seamless flow of information for voice and data. The market for such devices is expected to be roughly $2 billion in sales by 2014. According to Infonetics, the market for SBCs grew by 53% in 2009 and is expected to grow by an annual 44% clip through 2014.

When it comes to SBCs, Acme is not only the leading player, but the product's inventor. The company controls more than 50% of the space, which is almost four times the market share of the next closet competitor, Cramer said.

Acme has also been scoring contracts, especially in China where it recently landed a deal with China Mobile to supply SBCs for its mobile network. In the most recent quarter, the company added 54 new clients for a total of 1,100 clients in countries around the world. Verizon one of its big name customers and accounts for 10% of Acme's business. Cramer said the company gets 66% of its sales from North America, so there's plenty of room for the company to expand internationally.

After Acme reported quarterly earnings on July 29, its stock took a beating. It plummeted from $32.39 at the close before the report to $27.25 at the next day's open, even though Cramer said the company reported a "very strong quarter." It beat earnings by 1 cent with revenues up 62% year-over-year and a record 84% gross margin, which is the percentage of every dollar of sales that becomes profit. The company also raised its full year sales and earnings guidance, so Cramer thinks the stock sold off because the expectations were just too high.

The stock is also trading at 36 times next year's earnings with a 26% long-term growth rate and Cramer said 2012 earnings estimates put the stock at 28 times earnings. For that reason, he doesn't think the stock is expensive.

"Acme Packet’s a buy, but don’t chase it after its big up day today," he said. "You can afford to wait for a pullback."

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