SLM Corporation (SLM)

[DAD2]

HMMMM if it's gonna run then where is a good place to get in??





In a bold and unexpected call, Cramer named student loan giant SallieMae (SLM Quote) as his speculative stock of the year.
He said while many are already writing the obituary for this once great company, the stock has simply gotten too low for all the wrong reasons.
According to Cramer, SallieMae has fallen to just $6 a share based on comments from President Obama that he may abolish the private student lending in favor of a government run program through the Department of Education. In addition, the credit agencies has lowered the company's debt ratings.
But Cramer pointed out that SallieMae currently has $2 of earnings power and is trading at just 3 times earnings. Even if the company were to close up shop today, he said, it still has $14 to $15 a share worth of run off value from its loans already on the books.
Cramer said even if Obama has his way and takes over student loan originations, there will still be a need for loan services and debt collection, two businesses SallieMae does better than anyone. In reality, he said, most colleges are not prepared to provide direct financing, making Obama's plan very unlikely to materialize, he said.
Cramer predicted shares of SallieMae could double in the coming months, thus making it worthy of his speculative-stock-of-the-year title.