Cramer: These Serial Disappointers to Become Outperformers?
Stocks that may have left you crying in a corner could soon have you jumping for joy – and it's all due to this underestimated catalyst!
Jim Cramer thinks the Street is underestimating super-storm Sandy and the impact it will have on construction.
"The numbers we have seen, $36 billion for New Jersey and $33 billion from New York, according to the respective state governors, may sound like overestimates, but I think they will end up dramatically understating the destruction," he said.
And Cramer's not alone in his assessment. Bill Dudley, the president of the New York Fed, said much the same; that the damage appears to be "more extensive and longer-lasting than first anticipated."
If the Northeast region is looking at damage that's even worse than expected, the resulting surge in construction and reconstruction could be on a scale never before seen.
"I believe that the destruction will provide a level of business to the home construction products that could shock people," said Cramer. "I am talking about the very basic companies like Georgia Gulf for pipe, USG for gypsum board, Louisiana Pacific and Weyerhaeuser for board and wood, Owens Corning for roof and insulation and even Berkshire Hathaway for Acme Bricks and don't forget equipment renter United Rentals."
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"I expect the impact will extend to whole aisles of Home Depot and Lowe's including the tools, think Stanley Black & Decker, and even appliances and paints, including old favoritesWhirlpool and Sherwin Williams."
Cramer thinks the size and scope of projects to come could even drive shares of one of the nation's largest companies. "This one's so big that it could move the needle for Caterpillar," he said.
In fact, he thinks the destruction was so massive that the resulting reconstruction may cause the entire gross domestic product of the nation to spike.
Cramer thinks as weeks turn into months investors will start hearing about companies pumping out as much inventory as possible – to get it where it is needed.
"This event will provide multiple quarters of growth," he speculated.
"Ironically, housing and construction was just beginning to come back on its own. But you layer on Sandy damage? You get sharply better than expected quarters for companies that have been serial disappointers for ages. It's a major change, and one that will become the story for the first half of 2013," he said.
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