Tuesday, 06/10/08
Posted 06/10/08,  8:43 pm ET

(Scroll down to see Jim's comments below)

 
 
Today's date:  Tuesday, 06/10/08

  Dow Jones: 12,289   + 9
  NASDAQ:   2,448   - 10
  S&P 500:   1,358    - 3
 
 
 
 
 
First Segment
 
 
Final Segment 1 Title: 'Unfiltered Profits'

.  .  .  .  .

Featured Stock(s):

Donaldson Company Inc. (DCI)

See DCI's official website here.

See the Yahoo! Finance profile for DCI here.



See Final Segment 2, below...

 
After this segment, you can see Jim's Sudden:Death picks here...


.  .  .  .  .

JJC:    We talked endless about the difference between "old tech"... the Silicon Valley based companies you traditionally think of as tech... and Cramer's "new tech" companies... "Old Tech" companies work tirelessly to build a more sleek cell phone, or a more realistic-looking video game, that will train your children to be better felons... But, in order to be included with my "new tech" companies, the industrial companies that tend to be based in the rust belt... "new tech" is about solving actual problems facing all of us, around the world... not just teenagers starved for new ways to text... or different versions of Guitar Hero, with custom songs built in...

So far, I've generally focused on big picture, mankind-saving problems... and that's renewable energy, cutting carbon emissions, ending famine... but a company doesn't have to be saving the world to be a "new tech" name... It just has to use technology to create better ways of doing things... to offer other companies... not just humanity... more efficient and useful equipment. In other words, it can solve other companies' problems. It doesn't necessarily have to solve them itself.

And that's why I am recommending a company that reported a beautiful earnings forecast very recently... and it has now had a chance... it's pulled back...

And that company is... Donaldson Company Inc. (DCI).

That's the second-largest maker of filters in the world...

.  .  .  .  .

Now, I know you're thinking... okay, I've got to change the channel... filters... I mean, how could it be more boring...

Listen up! Money... and particularly making money... is not boring... and a stock that's up 71% since I recommended it a long time ago, on September 21st of 2005... 71%... I'd be bored and rich...

.  .  .  .  .


Filters... well Pall Corp. (PLL), another manufacturer of filters, just reported a great quarter, and the stock was up 4.7% today. Sill bored? Oh, and by the way, not to toot my own horn or anything, but I have liked filters on this show since we started. I recommended PLL on January 4th of 2006, when the stock was $26.90... a 55% gain... of course, better than a sharp stick in the eye...

.  .  .  .  .

DCI, which makes filters for all different kinds of engines, vehicles in construction, machinery, filtration systems... they collect dust, they remove impurities from all sorts of gasses and liquids for gas turbines... which need clean air to work properly. Again, it doesn't sound all that sexy. But that's because we don't think about filters... they're just there.

Of course, they're a necessity for every industrial or automotive application. But we've had filters forever. What could be new or interesting about them or a company that makes them?

That's the mistake that people who don't understand the "new tech" thesis make...

Sure, filters aren't new like the new iPhone that came out yesterday, okay... But that doesn't mean you can't come up with new ways to make better, more efficient filters that really matter. You can't just think a filter is a filter is a filter... If you do, DCI is indeed a real snooze.

But if you embrace the embrace the idea of "new tech," you might notice that this company is a real leader in this important technology... filtration technology. Is it as important as cell phone technology?... I say yes! Is it as important as video game technology?... Not even an issue.

.  .  .  .  .


You might see that DCI's products create huge savings by decreasing energy consumption, either by reducing pressure loss or by determining and indicating - as many of DCI's products are designed to do - the best time to change the filter elements for optimal energy savings.

With oil at $120 (cost per barrel), this is key technology...

DCI makes a device called the "economizer"... that they put in some of their compressed air filters. It uses a microprocessor to figure out when the filter elements should be changed to maximize energy savings, and then LEDs signal the user that it's time to make the switch.

DCI is developing power core engine filters that are a third the size of the current ones, making this stuff smaller and lighter... always, therefore, making it more energy efficient.

The company also makes turret dust collectors that are 50% smaller than current collectors, and make it easier to change filters. DCI is also developing a liquid filter that's highly efficient, and has a longer filter life than previous models... it saves energy.

All right... the stuff's not going to save the world, but it is designed to help companies do better in a higher oil environment, just like what we have.

These filters are what the engine makers and what the turbine makers are asking for, because they keep the dust and gunk out, and let engines and turbines run better than ever.

DCI, like many of my "new tech" companies is a ROW-er... 55% of its sales coming from the rest of the world, which is important, because the rest of the world isn't nearly as slow growth as we are.

DCI is expanding with new plants everywhere, from the Czech Republic to India to Brazil to Thailand... When I look at these great American "new tech" companies, you would think that they don't know anything other than the United States, and then you hear where they're opening, and you say, boy, our companies are greater than ever.

Now, it's most recent quarter was phenomenal. DCI beat earnings-per-share estimates by 6 cents. It was one of the leading gainers that day... the biggest gainer on the New York Stock Exchange... and it has since trickled down, which is our opportunity.

Its gas turbine filtration business, to me, seems to be on fire. Its engine filtration business is being driven by international demand for construction and mining equipment. This is a stock that's tapped into the global themes we love so much on Mad Money...

DCI has taken some hits from truck filter sales, but the company said they're seeing a pick up in orders from last year. That's going to do it. I think it signals a bottom but, albeit, in a pretty weak market.

I know these stocks aren't sexy. I know it would be more fun to come out here and recommend Activision (ATVI), or recommend NVIDIA (NVDA), or Rambus (RMBS), or Juniper (JNPR)... I know those are exciting, but they don't make you money.

.  .  .  .  .

The Bottom Line!:      I believe that Donaldson Company Inc. (DCI), with its energy-saving filters, international growth, and the turnaround in the weaker North American truck business is a terrific buy right here, especially if you think, as I do, that energy's not going to get much cheaper anytime soon.

.  .  .  .  .

 

   
 

Stock Snapshots - Includes all stocks mentioned above

 

 

Jim
Cramer's
rating on
this stock

STOCK
SYMBOL

Closing
price
that
day

Opening
price
next
day

Full Company Name/Comments
(see comments above for each)


DCI

49.65

50.40

Donaldson Company Inc. (DCI)


 

 

 



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Second Segment
 
Final Segment 2 Title: 'Quiz Cramer'...

General questions from the live studio audience that were at the show tonight.

.  .  .  .  .

Featured Stock(s): See comments below...
 
After this segment, you can see Jim's Sudden:Death picks here...

.  .  .  .  .

 

   
 

Stock Snapshots - Includes all stocks mentioned above

 

 

Jim
Cramer's
rating on
this stock

STOCK
SYMBOL

Closing
price
that
day

Opening
price
next
day

Full Company Name/Comments
(see comments above for each)

na

na

na

Question from the live studio audience:

Q:  
  How do you relax?

JJC:
     I don't relax during the week.  I just don't.  Monday through Friday is just work.