JIM CRAMER’S 10 UNDER-THE-RADAR STOCKS FOR 2015 PLUS THREE MORE FAVORITES

Originally published 6/10/2015 All prices reflect adjusted close on 6/10/2015

Jim Cramer here. You are about to be privy to what is most certainly a first in my life, a start from scratch cake sampling of companies that I recently talked to a small group of investors. I have spent months honing lists of stocks: new ones, old ones, large ones, and ones so tiny I typically would not talk about them. In fact, there were no stones unturned in this research effort.

I am about to dive into 10 stocks that have multiple catalysts to go higher in the second half of 2015. All of the stocks I am about to talk about are catalyst-filled and are right for this environment. They range from biotechs to some lesser-known plays and are being given to you in alphabetical order.

Allegion (ALLE) - $61.52

Allegion is a $6 billion Irish inversion spinoff from Ingersoll Rand (IR) that dominates the niche of security with a host of brands that are typically unknown to most of you except the bolt company Shlage and the ubiquitous Kryptonite locks. Allegion is using its low-tax status to be an aggressive buyer of all sorts of lock companies worldwide, and each time it does you get an estimate bump. It is, to some degree, cyclical and, therefore, dependent upon the nascent comeback of residential and non-residential construction, which I think will

continue globally now that Europe is starting to comeback. The catalyst? In December of 2015, this company will be free to be acquired and is a natural fit for the more sizable Stanley Black & Decker (SWK) or the near merger of equals Fortune Brands Home & Security (FBHS).

Amaya (AYA) - $25.37

Here’s a company that literally moved to the NASDAQ and I think it will quickly become a cult stock. Backed by hedge fund kingpins George Soros and John Paulson, it owns Poker Stars and Full Tilt, as well as a sports book that includes NFL wagering. This company had been owned by a shady character who was not going to be given licenses in this country to run a virtual casino. But with its recent acquisition by a squeaky clean Canadian company, I think it will shine as it gets approvals to do business in California and New Jersey.

Catalyst driven—it should rally on each approval—it is a cash flow machine that already dominates the European on-line gambling business.

JIM CRAMER’S 10 UNDER-THE-RADAR STOCKS FOR 2015 PLUS THREE MORE FAVORITES

Originally published 6/10/2015 All prices reflect adjusted close on 6/10/2015

Aptar Group (ATR) - $64.24

Sometimes you find a stock that dominates a niche business and turns into a consolidator for that business and you have to own it. That’s the case with the $4 billion Aptar Group. Here’s a prosaic company that manufacturers the pumps you see in health and beauty, pharmacy,

and food and beverage businesses. This company tries to make one or two smaller acquisitions a year and all are accretive. It has 5,000 customers in the pump and packaging businesses, and no one company accounts for more than 5% of its business. I see two catalysts. First, almost two-thirds of its business is in Europe, so it is a play on the turn there. Second, I think that it is a natural candidate to be acquired by any large packaging company looking to expand overseas even as its home is Crystal Lake, Illinois. It has its numbers bumped fairly consistently and I can only wonder what happens when the dollar has peaked with this one.

Atara Biotherapeutics (ATRA) - $44.49

This is the first of my small biotech companies that I want to talk about. This billion-dollar San Francisco company, established in 2012, is one of those ultra-hot immunotherapy companies that checks out as having some serious blockbusters in the pipe, including

a promising phase two ovarian cancer compound and a drug for end-stage renal disease patients. Why this one? Three reasons. First, it is 6% owned by Amgen (AMGN), which will give the company some lucrative licensing agreements with milestone payments to be given on successful completion of various tests. Two, it has an exclusive agreement with

Jim Cramer is one of America’s most recognized and respected investment

professionals and media personalities. He is the Portfolio Manager for the Action Alerts PLUS Charitable Trust. In 1996, Jim founded TheStreet, one of the most visited financial media websites for individual and institutional investors. Jim also writes daily market commentary for TheStreet’s Real Money premium service and participates in video segments on TheStreet TV. He also serves as the host of the “Mad Money” television program and co-host of “Squawk on the Street”, both on CNBC.

Jim graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. He went on to earn a law degree from Harvard Law School in 1984. From there, Jim joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While still managing his fund, Jim helped start Smart Money for Dow Jones.

JIM CRAMER’S 10 UNDER-THE-RADAR STOCKS FOR 2015 PLUS THREE MORE FAVORITES

Originally published 6/10/2015 All prices reflect adjusted close on 6/10/2015

Memorial Sloane Kettering Cancer center to develop three T-cell formulations, the most promising area of immunotherapy out there. The third reason I like it: it is a huge position of Baupost, the hedge fund with a tremendous presence in the field that has had a series of gigantic takeover wins. It owns 20% of the company, one of its largest endorsements since its magnificent gain when Idenix was taken over by Merck for a 240% premium. Seth Klarman, the manager of Baupost, had 55 million shares of Idenix, the biggest hit I have seen in the space. History tends to repeat itself, hence

my interest in Atara.

Ball Corp. (BLL) - $71.78

This is a prosaic can company that is about to consolidate the industry with its $8.6 billion cash-and-stock acquisition of the European Rexam (REX). The acquisition will double the size of this $9 billion company, and while it will require several billion dollars’ worth of divestitures, it is hard not to see a dramatic increase in earnings estimates when this deal closes next year. The combination, plus the dramatic decline in price for aluminum, should explode the gross margins. In the meantime, it has a $900 million aerospace and defense business that can be sold off fairly

easily, given that it makes key parts for the soon to be launched joint strike fighter for $2 billion to help pay down further debt. When this deal goes through, I don’t know of an analyst who won’t upgrade this stock.

Carlisle Companies (CSL) - $101.42

I like break-up candidates that don’t have to break up if they don’t want to because they have such earnings momentum, and that defines the $7 billion Carlisle Companies. CSL has five discrete divisions, construction materials, technology–chiefly aerospace and defense–food service, braking, and finishing brands that hardly deserve to be under one roof. Its largest business is construction equipment and it is the dominant roofing company, a business that is very strong post a brutal winter. The tech business is levered to two fast-growing areas: fiber optics and defense.

While the braking and food service businesses are being hurt right now because braking business is largely involved in the most giant of trucks for the farming industry. Its new finishing business, bought this year for $590

JIM CRAMER’S 10 UNDER-THE-RADAR STOCKS FOR 2015 PLUS THREE MORE FAVORITES

Originally published 6/10/2015 All prices reflect adjusted close on 6/10/2015

million from Graco (GGG), could be a standout as it provides coatings to all sorts of devices. I think this niche business is the beginning of a whole new acquisition category. That’s been Carlisle’s style, accretive acquisition after accretive acquisition, and it’s been working as each one leads to still higher earnings estimates for this stock.

Level Three Communications (LVLT) - $55.76

Few companies have had a more dramatic comeback from near-death than Level Three Communications, the $20 billion company that

is the consolidator for the over-the-top transmissions systems that are needed by everyone from Netflix (NFLX) and Amazon (AMZN) to HBO to stream products to your home. When you hear about companies going broadband, then you should be thinking about LVLT, which last year bought TW Telecom in a stock-and-cash acquisition giving it a 6.8% share in data traffic. It has a hefty 165,000 route miles worldwide in its secure network, something that might cost double the market cap of this company is right now if you had to build it from scratch. It had a heavy load, multiple billions of loans from when it built out that network back at the turn of this century, and it has steadily refinanced and refinanced to where only about $2 billion in high-cost debt is left. When that last high-coupon debt is paid down, which should be very soon, I think LVLT management will begin to buy back shares of this stock with abandon, and given the hefty cash flow of this company, I believe that it could easily purchase 50% of its shares in a short time. This is another attractive takeover candidate with 22% revenue growth, a natural for any of the majors seeking to have a larger broadband footprint. I love this company, even as its stock has already increased 11% this year.

Live Nation Entertainment (LYV) - $28.93

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JIM CRAMER’S 10 UNDER-THE-RADAR STOCKS FOR 2015 PLUS THREE MORE FAVORITES

Originally published 6/10/2015 All prices reflect adjusted close on 6/10/2015

The most explosive growth area of the economy right now might be live music, including these myriad music gymborees and concert theatres where the large

musical groups are still able to make money. We know from iTunes and Pandora (P) they can’t make it online. Live Nation is the largest producer of concerts with 60 festivals and 168 venues. The $5.8 billion company does ticketing and selling worldwide. These are big businesses, the festivals producing $4.7 billion in sales and ticketing $1.5 billion through its Ticketmaster subsidiary. It is basically a roll-up of concerts. When I met Michael Rapino, the aggressive CEO of the company, he was solidifying a relationship with Salesforce.com (CRM) to mine the millions of names he has to be able to sell more concerts and loot to them. It’s also a natural social media buyer, targeting a youthful audience. LYV is a juggernaut that’s just started taking off.

MSCI (MSCI) - $61.72

Here’s an odd duck company spun off by Morgan Stanley (MS) that has a fabulous niche, decision tools for portfolio managers, including market risk instruments

and analytics used by hedge and mutual funds worldwide. What the $7 billion company is chiefly known as, though, is the arbiter of all things ETF related to countries. You may have heard about the battle raging right now over how funds are going to allocate positions in all of these new companies being created in China. Actually, there’s no real battle. There is just

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JIM CRAMER’S 10 UNDER-THE-RADAR STOCKS FOR 2015 PLUS THREE MORE FAVORITES

Originally published 6/10/2015 All prices reflect adjusted close on 6/10/2015

an awaited determination to be made by MSCI. Yes, this little company is that powerful. With 6,700 clients across 83 countries, it is pretty much the only game in town, a virtual monopoly and I can’t believe it is still independent. The plethora of hedge funds and ETFs has given it a phenomenal earnings boost and it is up 30% for the year. I love the charming non-promotional CEO, Henry Fernandez, who has a beach house near me, and his unassuming nature hides his stature as perhaps the most powerful arbiter of what gets in an index and what doesn’t. It is astonishing to me that neither McGraw Hill (MHFI) nor Moody’s (MCO) has bought this company. I don’t think it will stay public for long but at the same time its earnings momentum is unparalleled in the financial sector.

Zafgen (ZFGN) - $34.76

Our last stock is in many ways the most intriguing to the general public, and that’s Zafgen, a $900 million company devoted to developing therapeutics for patients suffering from obesity. This company, which came public one year ago, has a Phase Three clinical trial with results expected in early 2016, and the preliminary word is the test is very promising. We know obesity is an epidemic, and while its drug’s first indication is very narrow for a particular form of obesity called Prader-Willi Syndrome, it could have much broader uses. I can see spending a lot of time talking about this

ZFGN as the trial progresses because obesity drugs have a habit of catching peoples’ fancy once the tests get closer to fruition. This company’s injectable drug has been showing a 10% decrease in body weight over a 12 week period WITHOUT any diet or exercise, and there could even be more weight loss as the treatment continues.

Three Biotech Favorites

I cannot leave you without talking about three stocks that I know I have discussed on air but I want to make sure you realize that they are my three junior biotech favorites right now.

Receptos (RCPT) - $180.52

Receptos may have the best clinical trials going right now for three different formulations: ulcerative colitis, Crohn’s Disease, and M.S. Few can claim that kind of opportunity. Remember all three of these stocks have not gone unnoticed and RCPT is up five-fold from a year ago and is now valued at $5 billion. But if any of its trials pan out it can choose to partner, be bought, or just go flat out to profitability on its own given that it has raised a ton of money through secondaries.

JIM CRAMER’S 10 UNDER-THE-RADAR STOCKS FOR 2015 PLUS THREE MORE FAVORITES

Originally published 6/10/2015 All prices reflect adjusted close on 6/10/2015

Radius Therapeutics (RDUS) - $49.01

Radius, RDUS, has the most promising osteoporosis formulation that early tests indicate are much better than anything currently on the market. The results so far have been astounding in its achievement to dramatically reduce broken bones for those who take it. This $1.8 billion company wants to go it alone but I don’t know it can if the end results are as strong as they are currently showing.

Alder Biopharmaceuticals (ALDR) - $45.75

Finally, there is the hottest drug company in the world right now, Alder Biopharmaceuticals, ALDR, which is up 59% this year on the strength of what could be the biggest breakthrough in migraine therapy, a drug that literally stops migraines from happening. There are 14 million regular migraine sufferers in this country. Can you imagine what a blockbuster this one could be? And it has raised more than enough money in a recent secondary to go it alone. I am so excited about this $1.7 billion company.

So, there you have it. Ten small to midsize companies with tons of catalysts and lots of self-help coming, not to mention more coverage as each grows bigger, and the three biggest potential homeruns I am following.

What Next?

Now that I’ve shared 10 stocks with multiple catalysts that could climb higher in 2015, let’s talk about some other ways to stay ahead of the market.

What oft-ignored sectors should you watch?

What’s our take on Twitter’s latest shakeup?

How should you play the market on a down day?

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JIM CRAMER’S 10 UNDER-THE-RADAR STOCKS FOR 2015 PLUS THREE MORE FAVORITES

Originally published 6/10/2015 All prices reflect adjusted close on 6/10/2015

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