ARM Holdings: Overvalued or Underrated?

"The mobile Internet tsunami's alive and well," Cramer said Tuesday.

Take chipmaker ARM Holdings , for example. The Cambridge, U.K.-based company posted "fabulous" fourth-quarter earnings thanks to strong demand for smartphones and other mobile devices, Cramer noted. With ARM's technology in roughly 95 percent of all mobile phones and MP3 players, it is "the brains of the smartphone revolution." In addition, ARM's processors are in Apple's popular iPhone and iPad devices.

In turn, ARM's stock has had a tremendous run. Cramer first got behind it on Oct. 16, 2009, when it traded at $7.54 a share. Since then, it's skyrocketed 231 percent higher. Despite its outperformance, Cramer said the stock has little sponsorship on Wall Street. Of the seven analysts who cover ARMH, three rate it a "buy," three a "sell" and two a "hold." Cramer called this lack of bullishness "absurd," saying he thinks the number of devices using ARM's technology will only continue to grow.

With the stock trading at 50 times 2011 earnings estimates, some worry ARM's valuation is stretched. Cramer, on the other hand, thinks the potential market opportunity exceeds ARM's sub-$12 billion market cap. To learn more about this company, Cramer invited President and co-founder Tudor Brown onto "Mad Money." Watch the video to see the full interview.

When this story published, Cramer's charitable trust owned Apple.

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