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There was no stopping Shaw Group after last quarter’s earnings beat. It was the biggest of the season: 60 cents a share on an expected 34 cents a share. The stock rose so quickly there was no entry point for new buyers. Then Friday’s 366-point Dow decline happened. Now this play on infrastructure, one of Cramer’s favorite bull markets this year, is on sale.
Shaw Group [SGR
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] builds power plants and is enjoying what Cramer called an “international renaissance” in nuclear power. SGR, which is contracted for the engineering, procurement and construction of these facilities, gets a boost every time China, India or any number of other countries gets approval for a new plant. They’re good catalysts for the stock, and they give investors something to look forward to.
Another plus for shareholders is that Shaw, like Google [GOOG
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] and Intuitive Surgical [ISRG
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], is cheap. The stock trades at 28 times next year’s earnings, which Cramer thinks are way too low considering the beat, with a 20% long-term growth rate. Fluor trades at nearly 30 times earnings with a 17% growth rate. There’s no way, after SGR’s quarter, that this company should be trading at a discount, Cramer said.
Lastly, there’s a chance Shaw Group could get taken over. Cramer thinks this small $5 billion company would make the perfect target as the infrastructure sector consolidates.
Investors who don’t already own Shaw Group should consider themselves lucky, Cramer said. Last Friday’s sell-off made this great stock affordable.
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