We want a stock like Itron. The dominant player in smart grid; which is the smart grid transformation. When some huge, moldy company talks about how great the smart grid is like GE did Friday and IBM did on Thursday, you go take a look at Itron, because it can actually move the needle for this stock. Smart meters have been the easiest change to get regulatory help to achieve quantifiable energy savings. Smart meters remotely connect to you and read your power meter…

Itron’s the best way to play it. I was wrong on it before. I recommended it back on April 22nd of 2008 at $100. It was a green week play. I got that wrong because it’s down over 43%. We were caught up. We made a mistake. But now that the Obama Administration’s pushing for the timing on this one’s going to be just right…

…Whereas GE is a $170 billion company with its hands in just about everything, Itron is a $2 billion company that is all about smart meters. Which means the smart grid really moves the needle for this stock. Itron has a huge customer base with advanced metering infrastructure, smart meters and advanced meters reading. Slightly less smart readers that still require people to go out in the field and collect deployments to more than 8,000 utility customers in 130 different countries in around the world, companies that have some major smart wins.

…How about a $260 million contract with San Diego Gas and Elec for 2.3 million electric and gas meters running from 2009 through 2011? Itron has broad geographic exposure. 60% to 70% of its sales come from outside the U.S. that means it’s also a big beneficiary of the weak dollar. Itron trades at only 14 times 2011 earnings. I think it’s pretty reasonable given the stock’s projected growth rate of 26% from 2010 to 2011. Thomas Weisel just downgraded Itron based on the valuation, they think the stock’s run up too much. But it’s still down 11% year to date, I think it has room to run given it’s the top player in a that’s still in its early stages. When a big multi-business company like GE says positive things about a major theme like the smart grid on its conference call we step back, find a pure play Itron. Smart grid doesn’t just move the needle for Itron. It is the needle.”– CNBC’s Mad Money 10/19/2009

On Monday, Cramer talked about an emerging theme that he has noticed in the conference calls of such blue chips as General Electric (GE) and IBM (IBM).  Many companies are starting to come around to the idea of smart grid technologies as a way to help use energy more efficiently.  Cramer’s view on the situation is that these conference calls are informative, but there is a much better way to play the smart grid than GE or the like because they are already so involved in other businesses.  If you are interested in investing in smart meters and smart grids, the pure play is Itron (ITRI).

ITRI Cramer likes Itron for a number of reasons among them is the projected growth rate over the next two years, potentially benefiting from a push in green technology from the Obama Administration.  Furthermore, this stock is a weak dollar play with the majority of sales coming from overseas.  He also thinks the stock has room to run as ITRI has underperformed the S&P 500 by a significant amount year to date.

As for Ockham’s perspective, we are not quite as bullish and have the stock currently rated Fairly Valued.  This company currently trades within the historical valuation ranges of price-to-cash earnings and price-to-sales.  The growth in the use of smart meters and in general smart grid technology is exciting, but the company is already receiving a significant premium for expected growth.  Cramer points to the fact that Itron trades at 14x expected 2011 earnings, but that assumes impressive earnings growth.  The estimates Cramer uses are assuming a doubling in earnings by the close of fiscal 2011 which is only about 15 months away.  We are not saying that earnings will not improve from here on, but this is a growth premium that requires conviction to buy into.  For now, we are satisfied with a neutral stance on the shares unless they fall below $50.

Itron: All About Smart Grid Tech