Cramer Says KBR (KBR) Could See a $55 Bid
On last night's Mad Money, Jim Cramer highlighted a stock he believes has been so "criminally undervalued" that he can hardly believe it: KBR Inc. (NYSE: KBR). Cramer said he's "never seen a company so cheap" in his life.
Cramer feels KBR's fundamentals are solid, but believes that the market isn't pricing the stock based on fundamentals. Instead, Cramer says traders are bringing down shares of KBR on fears that Obama will cut defense spending if he is elected, as well as hedge funds being forced to cash out their positions in order to cover redemptions.
With shares of KBR closing at $15.13 yesterday, Cramer points out that the company's market cap comes to only $2.5 billion, despite having about $15 billion in its backlog and about $9 per share in cash.
In April of 2009, Cramer notes that KBR will be eligible to put itself up for sale, making it an attractive target for many companies in the construction services industry. The President of Cramerica estimates that KBR could see a $55 bid, or, using more conservative estimates, a $33 bid, which would still mark a more than 100% gain from current levels.
Traders seem to be responding to the Cramer tout this morning: the stock just opened at $16.47, up nearly 10% from yesterday's close.
KBR, Inc. operates as an engineering, construction, and services company supporting energy, petrochemicals, government services, and civil infrastructure sectors worldwide.
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