There’s a common and bankable theme among all these manufacturers that Cramer has recommended on Wednesday. Whether car or airplane or tractor or mining equipment, they all need coatings. This is a $90 billion market with the potential to reach $110 billion by 2013, Cramer said, and “that’s probably a low-ball number.”
And who makes these coatings? Chemical companies, of course. And Cramer’s two favorites in the group are DuPont and PPG Industries .
These two companies make more than just coatings, though. For DuPont, it’s performance chemicals like Teflon, performance materials like polymers and resins for the autos, aerospace and oil industries, and even products such as the Kevlar used in bullet-proof vests. DuPont’s also known for its electronics and communications business, where it produces materials used in solar panels and flat-panel TVs.
DuPont is also a play on a second bull market as well, namely agriculture. In this space, DD makes everything from genetically modified seeds to crop-protection chemicals like insecticides and weed killers. The seed business in particular has been growing, with DuPont now the number-one soybean supplier in North America. And the company has matched Monsanto —“the king of genetically modified seeds,” Cramer said—when it comes to yield per acre in corn.
Cramer also likes DuPont’s international business, as it gets 59 percent of sales from outside the US. And he’s a big fan of the dividend, which yields north of 3.5 percent.
What about PPG? Well, the number-two player in the coatings business benefits from both the bull markets in autos and aerospace. Cramer thinks the launch of Boeing’s 787 Dreamliner plane launched a seven-year rally in that sector, and it’s one PPG will ride as well. The company’s content per airplane in the 787 should be twice what it was in previous Boeing models.
There’s a commodity chemicals business here as well. PPG makes caustic soda, which is used in alumina, soap and other cleaning products, as well as chlorine, and the company holds what Cramer described as “an enormous amount of pricing power” in this space.
Other things to like about PPG: Low prices for natural gas, an important raw material, help boost margins. Asian sales, a big driver for this international company, are up five times higher than those in 2001. And the dividend, after 39 consecutive years of increase, is solid. It yields 2.8 percent.
“PPG and DuPont [are] two more made-here stocks that belong on your shopping list,” Cramer said, “to be bought the next time we catch a marketwide 3-percent to 5-percent sell-off.”
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