Profits From Petrodollars
There’s been a lot of focus on the upside potential in BRIC – Brazil, Russia, India and China – investing, but now Cramer wants to add the Middle East to the mix. Call it “BRIC-ME.” Petrodollars are flowing in and out of the Gulf states, he says, and even Caterpillar and Cummins recently told investors that the region is the new center of global capital investment.
Just look at the numbers for McDermott and Foster-Wheeler, both of which Cramer recommended buying ahead of their earnings reports this week. McDermott is up 13% since last Friday’s Game Plan, and Foster-Wheeler is up 14 points today alone on its strong numbers. (Take that, Leonard the Monkey!) Cramer says a good part of that growth is coming from the Middle East.
So who’s the next Foster-Wheeler or McDermott? Cramer likes Chicago Bridge & Iron, which is the third-largest petro-focused contractor in the world behind Fluor and privately held Bechtel. He says oil-related engineering and construction is at the heart of the new ME portion of BRIC-ME. The company is now in the Netherlands, though it started in the U.S., but still enjoys the benefit of reporting in what Cramer calls “our wonderfully weak currency.” As an international player, the weak dollar means a strong CBI, he says.
Business seems to be growing for CBI, too. It just opened a new engineering center in the United Arab Emirates to accommodate the increased demand for engineering work. While Cramer can’t say that the biggest chunk of CBI’s business is coming from the Middle East, he does think that the region is by far the largest piece of business for companies in the sector.
The company just reported better-than-expected numbers, though not as stellar as Foster-Wheeler. So the price is still accessible for investors who get “momentum vertigo,” as Cramer puts it.
Bottom Line: Chicago Bridge & Iron is a variation on the same great theme that could be making you mad money in stocks like McDermott and Foster-Wheeler – it’s got the Middle East petrodollar engineering and construction petrodollar connection, and that's why CBI is for Cramer.
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