American Woodwork: A Show of Strength

American Woodmark

American WoodMark should be insolvent, instead it's gradually taking itself private and showing complete confidence with a dividend boost. Mad Money's Jim Cramer calls the stock a buy.

When a company raises its dividend even though its stock is hurt, Cramer takes notice. Especially when that stock is levered to the awful housing industry.

American Woodmark, a cabinetmaker that gets over 60% of its sales from Home Depot and Lowe’s, is down 38% since February, but just increased its dividend by 50%.

Sure, as Cramer said, maybe selling products through those two home centers is like selling subprime mortgages right now, but the dividend boost is just the type of confidence he likes to see. And while the move is only from 6 cents a quarter to 9 cents a quarter, it’s still a statement.

Actually, though, AMWD is profitable, and it’s putting that money to work. The company is taking advantage of the sunken share price to buy back stock. In fact, AMWD is on track to repurchase almost 25% of its shares outstanding. “AMWD is not-so-gradually taking itself private,” Cramer said.

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