Jim Cramer Recommends JDSU
CNBC Mad Money's Jim Cramer talked on his show about JDS Uniphase Corporation (NASDAQ: JDSU). He recommended this stock on November 11th, when it traded at $7.2. Since that call JDS Uniphase Corporation (JDSU) went 54% up and it is up 387% since last year lows. Cramer said that the common reaction to this huge upside move would be to admit the missed opportunity and move on, but he believes that there might be room for more.
Cramer consulted technical analyst Dan Fitzpatrick to see if the charts back up his bullish opinion. Fitzpatrick believes that there is a big demand for this stock, but it could crash if demand vanishes. JDS Uniphase Corporation (JDSU) has had a strong upwards trend making higher highs, and the trend became even stronger when the stock broke its resistance on a high volume. Fitzpatrick suggests that an entry point is at $9, which is JDSU's support. Its last breakout was at $9, and its 50 days moving average is also around that level. From his experience, Cramer knows that investors often buy at these levels after the pullback in some stocks. That is why $9 could be a good entry point.
Jim Cramer continued by saying that JDSU's biggest enemy is its history. Its peak was at $1227 back at the high of the tech bubble.
Cramer also looked at fundamentals for this company, and he concluded that it started with a transformation which makes him feel sky is the limit for JDS Uniphase Corporation (JDSU). It has a mobile tsunami exposure, 47% of its revenue comes from providing test and measurement equipment and services to telecom carriers and cable networks. This equipment helps telcos to see if their carriers are working and it lowers dropped calls. As telco and cable companies expand their networks, big profit making opportunities are emerging for JDSU. Testing and measurement business was on fire lately, and JDSU had 23% increase in sales from the previous quarter.
The JDSU communication product division accounts for 32% of its sales. It had a growth of 11%. JDSU sells optical components to companies likes Cisco (NASDAQ: CSCO) to transmit video over fiber optic lines. The company is outsourcing the majority of its manufacturing products and it is more focused on propriety optical technology. JDSU also produces 3D glasses, lasers, medical and aerospace gear. It helps against currency counterfeit.
Jim Cramer recommends investors buy half of the position at the current level of $11.11 and then buy the rest at $9 which Dan Fitzpatrick identified as support. Cramer added that he knows that chasing stocks is a terrible sin, but when you hear that Google (NASDAQ: GOOG) wants to build a faster web or when Verizon (NYSE: VZ) talks about less dropped calls, JDSU is making money.
