What do Ford, Honeywell, Caterpillar, Bucyrus and Joy Global all have in common? Other than being among Cramer’s favorite American manufacturers, that is? Well, all of their products need special coatings to protect against the elements. And that’s where DuPont and PPG Industries, two more American greats, come in.
These two were the final additions to Cramer’s weeklong “Made Here” series, celebrating the best US industrials. This is a market that, despite all macroeconomic evidence to the contrary, is thriving right now.
“If anything,” Cramer said Friday, “right now we are witnessing the first stages of its rise, with our best of breed industrial companies … poised to make fortunes as the recovery in the world's economies really begins to heat up.”
DuPont made the cut because right now it’s sitting smack dab in the middle of two bull markets: one in chemicals and the other in agriculture. The company makes everything from performance coatings for those other industrial names to performance chemicals like Teflon, among many other things. On the ag side, DuPont produces both genetically modified seeds and crop-protection chemicals like insecticides and weed killers.
The company earns 59% of sales from outside the US, giving it great placement in key overseas markets. It pays a nice 3.7% dividend yield. And even despite hitting a new high on Friday, Cramer said DD still looks cheap.
PPG , meanwhile, is the number two player in the coatings business, which has helped fuel the stock’s growth as end markets like the autos sector rebound. The company’s also moving into aerospace, where Boeing’s 787 Dreamliner should drive a multiyear bull market in this industry, too. Also, PPG enjoys pricing power in the caustic soda business, a chemical used to make alumina, soap and other cleaning products. So far this year, caustic soda prices are up 64%.
Like DuPont, PPG is doing well overseas, with sales in Asia up five times higher than they were in 2001. Overall, 55% of PPG’s sales are international. As for the stock itself, this one, too, is trading cheaply, Cramer said. And it also offers a solid 3% dividend yield.
DD and PPG are both at or near their highs, Cramer said, and look to be going higher.
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