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Cramer: Ford to Report Best Quarter in Its History

Monday, 25 Oct 2010 | 3:19 PM ET

Ford CEO Alan Mulally will deliver a “superior number” when the company reports its earnings tomorrow, Oct. 26, Cramer said during “Stop Trading.” In fact, it will be the “best Ford quarter in history.”

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That in turn will continue what Cramer calls a “virtuous circle” for the American automaker. The strong earnings prompt the ratings agencies to boost Ford’s credit rating, and that brings down the company’s borrowing costs, which translates into reduced prices for consumers. Cheaper cars then attract more business and drive revenues—and ultimately, earnings—resulting in yet another great quarter for Ford and so on.

Cramer set his price target for Ford at $17.

Goldman Sachs was right to add Citigroup to its “conviction buy” list, Cramer said, and he expects the stock to get a “quick boost” once the government is done selling its stake in Citi. And in the defense sector, it appears investors expect military spending to decrease if stocks like Lockheed Martin, whose dividend yield is up to more than 4 percent, are any indication.

“This is a moment where people say, ‘You know what? These big companies that make money off the military, their time has come and gone,’” Cramer said.

Finally, the “Mad Money” host endorsed Lyondellbasel as a play on rising chemicals prices. At the same time, raw costs for this company are shrinking, helping to expand LYB’s margins. Those opposing movements are “what really drives stocks,” Cramer said, and he thinks the trend could continue “for a long time.” He predicted LYB could climb another “13, 14 points.”

“I really like this story,” Cramer said.

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