Mad Money

Playing the American Standard Spin-Off

Cramer couldn’t care less about American Standard’s quarter. He’d rather focus on the spin-off.

Here’s the story: When American Standard spins off its vehicle systems business and sells its kitchen and bath business – leaving the heating, ventilation and air-conditioning business – that’s three great companies that are all takeover targets on their own, Cramer said.

American Standard Breakup

They can’t be bought outright because of tax law dictates they be public for a couple of years, but Cramer said they’ll probably trade at a premium because traders will view them as potential takeovers. Deutsche Bank likes the prospects so much it said ASD is a $70 stock masquerading as a $61 stock.

On July 31, American Standard will spin off WABCO, the vehicle systems business, then the kitchen and bath business. The remaining HVAC business, which will rename itself Trane, stacks up quite well against the number-one company in the sector, Carrier. Trane should fit nicely into the machinery bull market in session right now.

Cramer recommends owning the HVAC and the trucking stocks, so get in before the spin-off, he said. WABCO will started trading on a when-issued basis on July 19, and shareholders get one share for every three of ASD. Cramer thinks ASD could go to $65, or four points, in the very short term and much, much higher in the long term.

Bottom Line: ASD reports this week, but Cramer doesn’t care. What he cares about is getting in before the break-up on the last day of the month.

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