A New Look at Steel

Cramer’s been bullish on the steel stocks for a while now.

U.S. Steel , Reliance and Nucor have all gotten the Mad Money seal of approval.

But what about a not-so-obvious play on that sector’s strength? For Tuesday’s show, Cramer offered up GrafTech International. The company doesn’t make steel, but it does make a part that’s crucial to one aspect of steel production.

GrafTech manufactures graphite electrodes, which are used in the electric arc furnaces that steelmakers use to turn scrap into fresh steel. You need one graphite electrode for every eight to 10 hours that you run an EAF. With most steel companies running their EAFs constantly thanks to the industry boom, GrafTech’s enjoying strong demand for its products.

In addition to the price increases that come with that demand, GrafTech looks like it could have some long-term exposure to China. Pollution is forcing that country into the scrap steel recycling industry.

Then there’s GTI’s new-tech focus. The company makes the insulation used to produce silicon for solar panels and graphite molds for deepwater drill bits. This engineered-solutions business is growing at 20%.

GrafTech’s cheap, too. And even though the stock is just under its 52-week high, Cramer doesn’t think it’s done going up. These steel stocks have been on the new-high list for some time, and that probably won’t change. These are still multiyear opportunities, Cramer said.

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