The U.S. auto industry is on “fire,” Cramer said Wednesday, pointing to recent published reports. To start, “USA Today” indicates the average car and truck on the road is aging and will soon need to be replaced. Meanwhile, Bloomberg claims many U.S. automakers have factories running at full capacity.
To play an auto industry boom, Cramer recommends avoiding the most obvious and direct plays. The automakers, for example, are too tied up with Europe where the slowdown is bad for business. Instead, he would go with the auto parts makers. On Tuesday, he highlighted Magnaand is now setting his sights on Dana .
(RELATED: Why Cramer's Bullish on Magna)
The Maumee, Ohio-based company makes everything from axles and driveshafts to chassis and side rails. Dana emerged from bankruptcy in February 2008 and has been restructuring since the arrival of CEO Roger Wood from rival auto parts maker BorgWarner in April 2011.
“Since coming to Dana, he's restructured the driveline business, overhauled the company's pricing strategy, expanded into the red-hot truck space, and focused on higher margin, fuel efficient power technologies,” Cramer said, adding that Wood delivered 300 basis points of margin expansion in three years at BorgWarner.
Under Wood’s leadership, Dana has posted strong guidance, rolled out new products and is executing better cost controls. Considering its enormous potential and that the stock is trading at a sharp discount to other vehicle parts makers, Cramer thinks DAN is a buy, buy, buy.