Cramer Has $53 Price Target on Woodward Governor (WGOV)

May 15, 2008 8:53 AM EDT

On last night's episode of Mad Money, Jim Cramer highlighted a play that he believes is "levered to everything that's working" right now: Woodward Governor (Nasdaq: WGOV).

Cramer likes that Woodward Governor is focused on creating innovative products that increase efficiency. For example, Cramer points out that the company was involved in building a lower emissions turbine for Boeing's (NYSE: BA) new 787 Dreamliner.

Cramer seemed most excited about Woodward Governor's wind power business, however, which the company estimated could be worth about $100 million by the end of 2008. As the Street is currently estimating this segment at only $60 million, according to Cramer, this could present investors with a substantial opportunity. Jim mentions that Woodward Governor's wind business is growing at a "staggering" 150% per year.

The opening segment concluded with Cramer saying that analysts estimates are way too low on the company. This assumption can be seen in valuation as the stock currently trades at 18x its forward estimates with a 12% long-term growth rate. Cramer places the actual growth rate somewhere around 27%, implying a price of $53.

"The Cramer Effect" seems to be intact this morning: shares of Woodward Governor are up about $2.41, or 7%, to $37.05 in pre-open trading. With a decent "Cramer pop", investors who buy Woodward Governor today could still see upside of about 43% if prices reach Cramer's estimate.

Woodward Governor Company engages in the design and manufacture of energy control and optimization solutions for reciprocating engine, aircraft and industrial turbines, and electrical power system equipment used in various industries worldwide.

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