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TheStreet.com's Jim Cramer says the safety theme will come back if only because these companies' earnings will be good in six months.

Editor's note: Jim Cramer will present his 2009 stock outlook for the first time at TheStreet.com Investment Conference on Saturday, Oct. 25. Click for details.

Now they come after the Procter & Gambles (NYSE: Compiled on 5th November 2008 for [fname] [lname]SAP AG (SAP)Index Membership: N/ASector: TechnologyIndustry: Application Software

SAP AG, together with its subsidiaries, develops, markets, and sells enterprise application software products for corporations, government agencies, and educational institutions in Europe, the Middle East, Africa, North America and Latin America, and the Asia Pacific Japan region. The company offers SAP Business All-in-One, which provides preconfigured industry-specific solutions for midsize companies; SAP Business ByDesign that offers an on-demand solution for midsize companies; and SAP Business One, which provides capabilities for various work involved in managing a small business, such as bookkeeping, reporting, sales and marketing, purchasing, and warehousing and inventory. Its business applications include SAP ERP, which consists of SAP ERP human capital management, SAP ERP financials, SAP ERP operations, and SAP ERP corporate services; SAP customer relationship management; SAP product lifecycle management; SAP supply chain management; and SAP supplier relationship management. The company's cross-industry optional applications comprise SAP global trade management, environment, health and safety, duet, and SAP solutions for radio frequency identification, as well as industry-specific applications include the SAP apparel and footwear application for the consumer products industry; and the SAP reinsurance management application for the insurance industry. It also offers custom development, active global support, consulting, and education services, as well as managed services, including application management services and hosting services, and running and managing SAP solutions on behalf of customers. The company serves process, discrete, consumer, service, financial services, and public services industries. SAP AG was founded in 1972. The company was formerly known as SAP Aktiengesellschaft Systeme, Anwendungen, Produkte in der Datenverarbeitung. SAP AG is headquartered in Walldorf, Germany.

We use a combination of Fundamental & Technical analysis in deciding to establish a position, so we first needed to find out that SAP was ‘value’ at its current level, i.e. is the company’s stock worth what we were willing to pay for it. Our analysis reveals that SAP was worth $58.06 based on current EPS and next years projected EPS. SAP was trading at $36.57 when we compiled the position which makes the stock undervalued by 37.01%.

Next we wanted to find out if there was any growth in the company and that the reported EPS (Earnings Per Share) was a true reflection of the health of the company. We establish this by comparing the reported EPS (Earnings Per Share) against the OPS™ (Operational-cashflow Per Share). Our research showed us that SAP had a trailing twelve month (TTM) revenue growth rate of 12.2% and a growth rate of 17.9% in the most recent quarter (MRQ -Q2 2008, Ending 06/30/2008). The OPS was at $0.39 and they actually reported an EPS of $0.54.

OPS™ was created by SAP's share price declined rapidly at the end of September 2008 and into the first week of October 2008, this was due to a downgrade by Morgan, however since hitting a 52-week low on 28th October 2008 the shares have climbed steadily on modest accumulation. The short term and medium term indicators for the stock look as promising as they possibly could in the current market, please click the technical indicators link below for more details.

To view technical indicators for SAP please CLICK HERE   ++ Recent News ++   Software Stocks Look Compelling
Friday October 31, 1:00 am ET
By Abdul Saleh
Zacks senior technology analyst Abdul Saleh met with us recently on the topic of the software market. He gave us his overview on the sector, as well as a few Buy recommendations.
How are you viewing the overall market at this point in time?  
Global markets today appear to be shaking off the recent unprecedented withering of the financial system and are looking for an upturn. But is it sustainable or is it a short-term event? So far, a string of drastic actions by the Federal Reserve and the Bush Administration has yet to turn around a bunker mentality. Banks fear lending money to each other and to their customers. Businesses are reluctant to hire and boost capital investments. Consumers have hunkered down.   All the economy's problems are feeding off each other, creating a vicious cycle that Washington policymakers are finding difficult to break. Even if the turmoil gripping Wall Street were to let up and badly shaken confidence in the banking system fully restored, a 'broader economic recovery will not happen right away,' to quote Fed Chairman Bernanke. In what ways does this inform what the technology industry may have in store?   Obviously, the technology industry is not immune to the current economic downturn. Companies in the technology groups will not only be impacted by the downturn, but overall technology spending may also be curtailed significantly going forward. While lower prices on consumer electronics may help carry the tech industry through a difficult holiday shopping season, corporate spending on computer servers, PCs and business software is entering a period of slower growth that may last well into next year. The impact on businesses is also not encouraging: Forrester is projecting that overall business information-technology sales will grow 5.4 percent this year and 6 percent in 2009, compared with 7.2 percent in 2007. Generally speaking, companies in the tech sector are expected to be impacted negatively, not only from a lack of credit availability to finance their letters of credit, but also from their customers who will have an increasingly difficult time to finance their purchases from these companies. This implies that tech companies with high debt ratios may have a difficult time, while those with high net cash in their respective balance sheets may be able to sustain the credit crunch. In other words, stay away from companies that are highly leveraged. So give us an overview of the software industry, as you see it.   While software stocks have suffered in kind with the market recently, we believe they generally represent a compelling opportunity, even if we are in a recession, especially relative to other technology sectors. Part of this is because many of them cater to corporations, not consumers, and corporations will likely continue spending money on maintenance, even if they reduce spending on new software licenses.