Instead of relying on renewable, heavily subsidized energy sources, Cramer has been advocating the "New Green" through energy conservation.
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"We're now in a world where governments can't really afford to subsidize renewables, which means you can't afford to own any stock that depends on those subsidies," he said. "But there are plenty of companies in viable, non-government supported businesses that are making a killing by figuring out ways to reduce their customers' energy bills."
Heating, ventilation and air conditioning companies, for example, have been profiting from a push toward home weatherization upgrades. Residential HVAC plays benefitted from the 'Cash for Caulkers' program, which helped homeowner pay to upgrade their heating and air condition units with more energy efficient ones. With a "huge" replacement cycle happening in the commercial markets, he recommends looking at Emerson Electric , which reported its climate technologies business was up 29%.
Cramer also likes Ingersoll-Rand . He noted that after acquiring Trane in 2007, the Dublin, Ireland company made a "big move" into the commercial HVAC space. Where 45% of the company's 2009 revenues came from Trane, three-quarters were from the commercial space.
Investors should also consider United Technologies , Cramer said. It's Carrier segment is the world's largest manufacturer and distributer of HVAC systems. Carrier represents 21% of UTX's sales and half of those sales come from the commercial markets. The Carrier division recently reported that organic sales were up by 7%, which is the best result since the fourth quarter of 2007.
Sixty-five percent of Lennox International's sales comes from its HVAC business, Cramer noted. On July 27, the Richardson, Texas-based company reported a "terrific" quarterly earnings of 97 cents per share for a 12 cent beat on a stronger-than-expected rise in revenues and provided positive forecasts for both sales and earnings.
Cramer's charitable trust owns Johnson Controls, which may be known as an auto parts play, but also gets 38% of its sales from HVAC systems. With the auto market turning around, he thinks this company could soon be "firing on all cylinders."
"While conserving energy and managing power may not be the be 'all and end all' of these companies, I think it's the growth engine for all of them and that the businesses are just going to be bigger and bigger over time," Cramer said. "They aren't the needle movers yet, but by 2012 they should be."
When this post was published, Cramer's charitable trust owned Johnson Controls.
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