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Tuesday, September 19, 2006

Cramer's MAD MONEY Recap (Sept. 18, 2006)

Main Stock Tickers: Buy ATHR, BRCM, VRGY, NVL, IP

Last Night on Jim Cramer’s MAD MONEY on CNBC, Cramer revisited a name that has been down and is back (later in summary) and he discussed several takeover names after the Freescale buyout he telegraphed.

Cramer said everyone hated Freescale (FSL) and he called it Motorola’s red-headed step child. Cramer said he said to buy that though. Cramer was looking for the next Freescale. Cramer said tech stocks didn’t just bottom, they are on fire. Cramer said the private equity guys fought over the dog, so what happens when they want a good one?

A couple of cheap ones that could get bought out, and even if they don’t get bought they are worth buying on their own. 1) Atheros Communications (ATHR) and 2) Broadcom (BRCM).

ATHR will be a winner in the Wireless Local Area Network space and they will benefit from the new 802.11 standard coming out. He said they sell directly to OEMs. ATHR closed down 1.2% at $17.28 on regular trading, but traded up to $17.88 after Cramer talked it up. In BRCM Cramer said it is now ludicrously cheap and trades under its growth rate. BRCM traded up 1.2% at $28.69, and traded up at $29.09 after Cramer discussed it. Please note that Cramer has called for BRCM to be a buyout candidate back in August. He said Intel (INTC) at one time tried to buy BRCM.

In a call-in Cramer was asked about Semi’s in general and Cramer said the July 26th bottom will stand as the bottom for many months to come. The Semiconductor HOLDRs (SMH) closed up 0.8% at $34.65 on the day, and over the last 52-weeks that is up from the $29.02 lows and under the $40.64 highs.

Cramer says if you speculate do it with discipline, research, and brains. He says gambling is much different than speculating. On event-driven trading you can speculate on others that might be the next takeover.

Cramer wanted to look at spin-offs that haven’t done that well to see where the spin-off company would work well for another company. He wants unloved and easy to understand companies. Two spin-offs he thinks could be the next FSL are 1) Verigy (VRGY) that was spun-off from Agilent (A). He said it is little known and ignored because no one knows it exists in the chip testing unit. He said that Texas Instruments is selling the exact type of business for $3 Billion and VRGY would be valued at a lot higher if it went at the same multiples. VRGY traded up 4.5% to $19.40 after Cramer commented on it, and it closed down 1.3% to $18.55. He said Advantest and Teradyne would be the likely acquirers. He thinks it may take 20 months so it won’t be immediate. He said it might be down $3.00 soon so use limits.

Cramer commented briefly next on Novelis (NVL) saying they could get a bid as soon as 2007, but wait until December. This was an Alcan spin-off. He said that is a short-term play and you might not have to wait as long.

In a call-in, Cramer was asked about Albert Culver (ACV). Cramer said he likes ACV, In another call-in Cramer was asked about brokerage stocks on M&A activity, but he says brokers go higher and M&A won’t stop.

Cramer discussed a forgotten stock. He said International Paper (IP) is a good stock that isn't exciting but fundamentally solid. IP could raise over $11B selling its forestland and properties that will finance its 20% share buyback. He also noted that is still rigorously streamlining. BUY IP. Yesterday IP traded up 0.5% to close at $34.18, and it traded up to $34.51 after Cramer noted the name.

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