Jim Cramer: Atheros, Broadcom, Verigy, Novelis, Alberto-Culver
Atheros Communications and Broadcom Corp. (BRCM) are worth buying because they are similar to Freescale Semiconductor Inc., whose shares have risen 30 percent since the company agreed this month to be bought by Blackstone Group LP, Jim Cramer said on his ``Mad Money'' television program on CNBC.
Atheros, a maker of chips for wireless-communications gear, and Broadcom, which produces semiconductors used in communications, should be bought because their growth rates exceed next year's price-to-earnings ratios, said Cramer, a market commentator and former hedge-fund manager.
They also may be targets of private-equity companies that lost out on the bidding war for Freescale, Cramer said.
Verigy Ltd. and Novelis Inc. are worth buying because, like Freescale, they were spun off from larger companies and may be takeover targets of companies such as Advantest Corp. (6857) and Teradyne Inc. (TER), Cramer said.
Verigy, a maker of semiconductor-testing equipment spun off from Agilent Technologies Inc. (A) in June, is likely to rise over the next 20 months, Cramer said. Novelis, the aluminum-sheet spun off from Alcan Inc., may receive an acquisition offer by January, Cramer said.
Alberto-Culver Co. should also be bought, Cramer said.
International Paper Co. (IP), North America's biggest paper maker, is worth buying because it's selling land to buy back as much as 20 percent of its outstanding shares and cut its debt, Cramer said.
The company has also been cutting employees and may boost its dividend, Cramer said.
Cramer recommended LifeCell Corp., Cisco Systems Inc. (CSCO), Ciena Corp. (CIEN), Dynamic Materials Corp. (BOOM), Scana Corp. (SCG), Motorola Inc., Best Buy Co., Ford Motor Co. (F), Rackable Systems Inc., Hittite Microwave Corp. (HITT) and Abercrombie & Fitch Co. (ANF) in response to questions during the show's ``Lightning Round'' segment.
He also told viewers to avoid Tellabs Inc. (TLAB), Lucent Technologies Inc., Nortel Networks Corp. (NRTLQ), Smith Micro Software Inc. (SMSI), Chartered Semiconductor Manufacturing Ltd., NVE Corp. (NVEC), Nokia Oyj (NOK1V) and RadioShack Corp. (RSH)
He said owners of First Data Corp. will ``do OK, but not great,'' while McDermott International Inc. (MDR) should be acquired if the stock price falls to $40.
In response to e-mailed questions, Cramer recommended Toll Brothers Inc. (TOL), Lennar Corp. (LEN), KB Home (KBH), IAC/InterActiveCorp (IACI), Sara Lee Corp., Hanesbrands Inc. (HBI) and Google Inc. (GOOG)
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