“Confidence is power,” Cramer told viewers during Friday’s “Mad Money.”
That confidence comes from knowing you’ve made the right investment, bought the right stock. And one of the best ways to attain that surety is by following secular bull markets.
These are the longer-term trends in business that supersede any short-term fluctuations in the market or the economy. Like these Cramer faves taking place right now: the mobile Internet tsunami, agriculture, autos and aftermarket auto parts, cloud computing, shoes, aerospace and trucks.
Now, the benefit of trading these bull markets is that they lend you the confidence you need to weather those aforementioned fluctuations. Oil’s down? A bad unemployment number? China’s raising interest rates? Whatever—just use the weakness to buy your secular bull market stocks.
That’s just what happened in Cummins . But only those who held strong in their convictions made any money. Here’s how it went down:
Cramer recommended CMI, an engine maker, as a play on the resurgence in trucks back on June 2. Six months later the stock’s jumped 63 percent to about $105. Mixed in there, though, was a quarter that the Street viewed largely as disappointing, and that took down the stock as investors who didn’t believe in the bull market shook out.
Sadly, all these investors had to do was dig a little deeper into Cummins’ numbers, and they would have seen the company had merely paused in its eventual push higher. See, the Street freaked out because CMI failed to beat, but that was only because of a delay in heavy-duty truck purchases ahead of a change in emissions standards. They completely missed the fact that management during the report predicted good times ahead in the fourth quarter and 2011.
But Cramer did his due diligence, saw the mistake the Street was making and told viewers to buy CMI at its post-quarter low of $87. With Friday’s close of $105.03, that’s a 20-percent jump from October alone. A nice gain for the faithful.
“That’s the power of knowing you are in a bull market,” Cramer said. “It is the power of knowing your theme and knowing which company is the best-of-breed way to play the theme.”
The truck bull market isn’t done yet. Cramer’s still positive on this trend, and in addition to CMI, he recommended Paccar and Navistar as ways to play it.
When this story published, Cramer’s charitable trust owned Cummins.
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