Cramer Recommends Axsys (AXYS) as a Speculative Defense Play

Shares of Axsys Technologies (Nasdaq: AXYS) are moving higher this morning on the back of a Cramer recommendation on Friday after the close. The pundit offered Axsys as a speculative defense play to Mad Money viewers, saying, despite the stereotypes about Democrats, Obama will not cut the $600 billion defense budget.

Cramer likes Axsys as it has contracts with numerous heavy-hitters: the Department of Defense, Raytheon (NYSE: RTN), Northrop Grumman (NYSE: NOC) and Lockheed Martin (NYSE: LMT), to name just a few. Cramer also points out that Axsys has several potential contracts on the line, including a large $2.5 billion deal to support the Saudi Arabian border patrol.

The Mad Money host also feels that Axsys's valuation is nearing bargain levels. The stock trades at just 13x estimated FY10 EPS, but the company is growing its earnings at 19% on a long-term basis. If Axsys' earnings multiple were to match its earnings growth, the stock would trade around $56, up about $16 from its closing price of $40.51 on Friday.

Despite the bullishness, Cramer attached a disclaimer to the recommendation, reminding viewers that the stock is a micro-cap play and that it could be volatile. Cramer said if investors do choose to buy, he would not like the purchase until after the company reports its Q4 earnings numbers on February 18.

Shares of Axsys are up 2.4% to $41.49 this morning, bucking the downside trend of the broader indices.

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