Jim Cramer's top stock pick in a shutdown

The 'Mad Money' host believes F5 Networks is cheap, and in the event of a sell-off, he says, 'it just gets cheaper.'

By MSN Money Partner Oct 4, 2013 3:24PM

CNBCF5 Headquarters building in Seattle, Wash. (© F5 Networks via Facebook)By Lee Brodie

 

In expectations of a sell-off, Jim Cramer suggests putting together a shopping list of stocks to buy on the way down.

 

"And I want you to put F5 Networks (FFIV) right at the top of your list," he said.

 

The Mad Money host believes the stock is cheap and in the event of a sell-off, he says, "it just gets cheaper."

 

Of course, every cheap stock is cheap for a reason. And in the case of F5, "it's mostly because the company missed numbers in a big way during the spring," he said.

 

Although a big miss is hardly a reason to buy, it may also not be a reason for the stock to slide as much as it did. Therefore, not only could the stock be oversold, also sentiment may be too negative.

 

And when that happens, pros often miss new bullish catalysts that can ultimately drive shares higher. In the case of F5, Cramer thinks the Street is missing these two big catalysts:

 

1. Turnaround story

"As products get older, their sales tend to decline," Cramer explained. To that rule F5 is no exception. "In its most recent quarter, F5 posted a 10 percent year over year decline in product revenues, but that's because it was right at the trough of its key product cycle."

 

However, in this sector, when companies come out with new and significantly improved versions of their products, sales tend to surge.

 

And in the case of F5, "The company now has its biggest product line refresh in four years. I think when those new products start hitting the market, F5 should return to growth."

 

2. Too cheap

"Right now, F5 is sitting on a billion dollars of net cash on its balance sheet, which works out to $16 of cash per share. And the stock is selling for just 17.3 times next year's earnings estimates, but that multiple falls to less than 15 times earnings when you back out the cash," Cramer explained.

 

"Now consider the historical context," Cramer added. "Since 2007, on average, F5 has sold for 24 times earnings. If you gave the stock that multiple right now, it would be trading at $122, or more than 38 percent higher."

 

In any market, Cramer would consider these catalysts compelling reasons to buy. However, he sees something else.

 

More from CNBC

28Comments
Oct 4, 2013 3:38PM
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Wall Street traders manipulated the market to perfection today -- pumping up the markets on the shutdown, then, as expected, dumping as we drew near the close ,,, one day, they will be held accountable.
Oct 5, 2013 7:07AM
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"one day, they will be held accountable."

 

Not until people wake up. The Chicago Mercantile Exchange invests by BORROWING our future as a derivative and at the end of a day like yesterday- keeps part of it. The sum total stupidity for Exchanges that no longer act on the ACTUAL sales and sustainability of the entities they gamble on-- is now $632 TRILLION as of the last assessment in late 2012. LATE 2012!!!! How much are we up beyond that? It's DEBT not profit. No American publicly traded company is sufficient any longer and 999 out of 1,000 don't do any enterprise. We have 90 MILLION under and unemployed people and a Black Hole of total dysfunction. The shutdown is a distraction. The war that follows doesn't cure our ills, it kills us.

Oct 5, 2013 12:01PM
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When your company is slow or broke you look for another job............When a government worker experiences the same.......They squeal like a pig and think voting should equal a pay check. Ever see a government worker just say well I will search for another job.....NEVER the deadbeat losers have no hope of matching such plush slacking conditions.
Oct 5, 2013 11:55AM
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Actually we had a decent week....If Gold hadn't been down, it would have been much better..

 

We hold them accountable "every week."

Oct 7, 2013 12:21AM
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Crack head Crammer wants to suck you into the bottomless pit more than you already are in.  has of the 17th of OCT. Our Stupid Federal Government can't pay its debt. The markets dropped 800 points the last time. That will be childs play this next go around. 
Oct 7, 2013 7:10AM
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Is America insane???? We have a federal debt of 17 trillion; we will have a budget deficit this year of 600 to 700 billion; we have more government programs then we can afford. And we are fighting over adding another government program (Obama care). Are we nuts????!!! Congress voted to pay government employees to sit on their **** while the American people cannot find jobs and what they can find are minimum wage and part time. Are we insane????!!! When the hell does America start facing reality???!!

Oct 5, 2013 7:11PM
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"My best guess is to follow the advice of an experienced warrior like Cramer or Jim Jubak  or Porter Stansberry, and then quit worrying."

 

They get PAID to dish out Kool Aid but then... there's a sucker born everyday and two to hold his hand at the circus. We're likely up to $633 TRILLION in derivative exposure after today. Where so you think this money is coming from? There is NO economy. IDIOTS. You OWE, and it prioritizes ahead of your stock in liquidation.

Oct 6, 2013 2:51PM
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"The CME is a financial and commodity derivative exchange that facilitates the buying and selling of these financial products. As such it is classified as a financial intermediary or the link between buyer and seller of these financial instruments. These products are of paramount importance to the functioning of our financial and economic system. There is nothing inherently evil about them. They allow the hedging of risk and the flow of financial transactions."

 

If there is nothing inherently evil about them... tell THEM to write checks on Monday and reconcile the $632 TRILLION outstanding. The "hedging" of Risk that generates $632 TRILLION in monies owed by people who have no interest or asset in THEM with NO ECONOMY to show for THEM is EVIL. This is the ROOT, folks... it is of paramount importance to arrest this crap, crush those who abuse economy with financial tyranny and free us from obligation to someone else's gambling debt and disease.

 

I know EXACTLY what I am talking about, Cat.

Oct 6, 2013 2:50PM
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A reminder that if we seized the Chicago Mercantile Exchange for Willful Misconduct (creating $632 TRILLION in Derivatives) and shut IT down... instead of having two ridiculously stupid political parties with arms crossed stagnate the nation... every business platform in America would fall apart and be forced to rehire the FORMER experience and skill sets to revive enterprise-- or go out of business- in as little as a day. If Business Degrees ACTUALLY had talent, they wouldn't be driving us to ruin at a 100:1 rate greater than our pathetic GDP. QE was criminal and all involved need to be prosecuted to the full extent of our REAL laws (not Law Biz laws). Gambling using our future is Treason. BURN IT DOWN... they've already got the Torrens System in place.
Oct 7, 2013 7:49AM
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No but we have some leaders that are Insane...

 

And no one should get paid with what I consider "tax dollars", to not be at work.

Oct 6, 2013 9:57PM
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Now that the repukes in congress have passed their idiotic bills and had them thrown back into their faces, the radical cracked teanuts in congress should get back to their main goals-- Ban abortion, Ban contraceptives, Have biblical fairy tale Creationism taught in all schools as a true science, force women to have invasive ultrasounds and provide AR15s with 30 round clips for all teachers.

These are the true goals of the cracked teanut dopes and their bosses Groper Nutquist, John (town crier) Bonehead and the NRA.

Can you imagine what might have happened if the Pope's boy Rick the Dick Sanitarium became V.P. under lyin Willardo, the accused Mexican Mormon Moron tax evading draft dodger, of the right wing radical cracked teanuts, the gay, rapist, pedophile catholic priests and the braindead evangelical nuts that listen to them. Men will no longer have to purchase condoms, as they will no longer be allowed in this country. All mens sperm must be used to create babies. Cameras will be in every bedroom. Catholic priests don't have to worry however, because, according to the testimony of former raped little boys, they don't use them.

The Pope's first order to his boy would be to release all catholic rapist pediophile priests from prison as the Pope is running out of people to continue the process of shearing his sheep. He is running out of collection pot fillers. After all, he needs the money to fight off all of the lawsuits against the church worldwide.

His second order to his boy would be to move the capitol of the U.S. to

Vatican City.

Oct 6, 2013 10:04PM
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It was too bad that Harold Camping did not succeed in taking away the base of the repuke dunce party and people like Larry  Braindead Kudlow and the Chalkboard Clown, Lou Dunce Dobbs.

 

Harold Camping, the evangelical king, got 500,000 of these pathetic radical right wing braindead evangelical Children of the Corn zombies to give up all of their worldly possessions to go meet and stay with the man in the sky. They are so easily brainwashed. They actually believe that the repuke teanuts are going to help them in someway.Camping, considered the evangelical king by many because of his 50 year history of bible study, promised to take away these right wing bible nuts on the last Rapture Day on Oct 21, 2011. All of his calculations were based on "biblical facts" When it did not work, he then realized that the bible in most part is "pulp fiction".

 

Yet these braindead fools continue to believe that there are men and boys with wings on flying around blowing horns.

 

The only thing to do to cure these zombies is to send them all back to the Garden of Eden on Noah's Ark to start over again, unless of course, they fall off the end of the flat earth.

These braindead idiots would still be believing in Santa Claus and the Tooth Fairy, if their parents did not tell them otherwise. Many of them still believe that the earth is flat,  that dinosaurs never existed. and the radical cracked teanuts in the House are going to help them. It is all a liberal conspiracy.

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According to Jack London nature is red in tooth and claw.  That seems to be the type of fiscal environment that we are heading into.  Hard to understand what to do.  My best guess is to follow the advice of an experienced warrior like Cramer or Jim Jubak  or Porter Stansberry, and then quit worrying.
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