Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday July 14.
America is the Caboose of Global Growth
While America used to be the locomotive of global growth, it is now the caboose. Invariably, successful earnings reports mention Latin America, China or other emerging market countries as drivers of demand; “I am not saying we are irrelevant. We still matter,” Cramer said. “I am saying that now we are the world’s drag … the caboose.”
While the Federal Reserve confirmed slow domestic growth with lackluster data, the caboose still gets pulled along. The answer is not to despair, but to buy stocks in American companies that have significant exposure to emerging market countries. He urged investors not to let the train pull out of the station and to jump on board.
Aerospace Will Take Off: Alcoa (NYSE:AA), FedEx (NYSE:FDX), Goodrich (NYSE:GR), Rockwell Collins (NYSE:COL), Precision Castparts (NYSE:PCP), Hexcel (NYSE:HXL), Spirit AeroSystems (NYSE:SPR), Textron (NYSE:TXT), Boeing (NYSE:BA)
With Alcoa's (AA) earnings report that indicated orders from aerospace companies are up and FedEx (FDX) beefing up its fleet of 777s, Cramer thinks the aerospace cycle is headed toward a multi-year cycle. The recession has made the pent up demand in the sector intense, and many fleets are very old and must be replaced soon. "We’re now in a world where air traffic is recovering, airplane orders are coming in better than expected, cancellation rates have declined, and production is on the rise,” Cramer said, “something which, incidentally, should create a lot of new jobs.”
The most obvious pick is Boeing (BA), with a lean cost structure, two new products: the 787 Dreamliner and the 747-8, low price and strong growth rate. The stock is down 15% for the year but has a 13% growth rate. Cramer thinks Boeing is going "much higher," and also recommends Goodrich (GR), Rockwell Collins (COL), Precision Castparts (PCP), Hexcel (HXL), Spirit AeroSystems (SPR) and Textron (TXT). While Cramer is bullish, he doesn't see a reason to rush into these stocks, all of which should have long-term upside.
The energy sector has taken a beating thanks to BP's (BP) oil spill and has fallen 8%. With fears over natural gas causing contamination in water, Range Resources (RRC) is down 14% for the year so far. That might change after statements the natural gas company made yesterday demonstrating that the controversial fracking procedure does not contaminate water supplies. The company released data that 99.86% of its drilling fluid consists of water and sand, with just 0.14% comprising highly diluted chemicals. The stock rose $1 or 2.2% on a flat day for the Dow; "I think this is the beginning of a turnaround in the stock," Cramer declared.
Range CEO John Pinkerton said transparency was necessary because there is widespread misunderstanding about natural gas and the environment. When asked about fluctuating gas prices, Pinkerton said prices are more stable thanks to the new oil shale wells.
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