Trading the Droid’s Success (Not With Google)

The Droid smartphone may be selling incredibly well, but investors aren’t buying Google, which developed the device’s Android operating system, as a result. Instead, they are choosing wireless-equipment maker Qualcomm , whose stock has steadily risen throughout September.

That move “is all Droid,” Cramer said during Friday’s Stop Trading!, “and people should recognize that this is a concept that is not going away.”

Google , with its open-source operating system, hasn’t yet found a way to capitalize on the Droid’s success. If the company can, though, Cramer said, the stock “goes up a hundred points.”

Therein lies the problem for GOOG. Its main revenue source is advertising, rather than charging fees for its other services. That will be hard to change, Cramer said, given that customers rarely agree to pay for services after they have been receiving them for free for some time. Case in point: charging for news content on the Internet. Cramer thinks Google needs to unlock these kinds of revenue streams in order to catalyze its stock

Also in the cell-phone space, Cramer said there has been “a lot of chatter” that Skyworks Solutions will raise its guidance at its Sept. 21 analyst meeting. Though the stock is “already through the roof,” he said, “it’s not expensive.” Cramer called SWKS “the best ancillary play out there” for investing looking to trade this industry.

CenturyLink has suddenly become popular, thanks to its health dividend. Where the Street had ignored the stock, and others like it, for lacking growth, the stability of that dividend has become more and more attractive.

Lastly, people seem to have disregarded home-furnishings store Ethan Allen , saying a turnaround here isn’t likely. But that’s just what they were saying about Pier 1 Imports 18 months ago, Cramer said. He endorsed ETH, saying a similar turn is coming.

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