Playing the ‘Ultra-Discretionary’ Consumer
The “ultra discretionary consumer” is back, Cramer said Monday, explaining that people now seem to be spending money on things they don’t really need.
The affluent are doing most of the spending, though. To profit from the profligate spending of the wealthy, Cramer pointed investors to Brunswick . It is the world’s No. 1 maker of boat engines, billard tables, fitness machines and bowling equipment. Boating is its biggest business, accounting for 75 percent of the company’s sales. Cramer feels strongly that the boat business is ready to roar because the average age of the powerboats in U.S. marinas has increased from 15 years up to 21 years. So with the economy improving, especially for people at the top, he thinks there’s a powerful incentive to replace those old boats with new ones.
Last week, Brunswick reported its strongest fourth quarter operating performance since 2007. Given the company’s ability to execute and restructure, management thinks they can achieve “sustainable revenue and earnings growth, even in a relatively flat marketplace.” In other words, even if the boating business doesn’t take off, Brunswick will still be able to move forward as it did last year. If the economy accelerates, though, Cramer thinks Brunswick will really take off.
Brunswick’s stock may have run up about 15.5 percent this year, but Cramer noted it’s barely up 6 percent in the last 12 months. It is close to highs right now, but Cramer still thinks it has room to run.
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