Engineering Stocks: Build Positions Carefully - Cramer

There are major differences between the engineering & construction names, Cramer said. If you're going to invest in the space, you've got to be careful.

"You need to know that this is a sector where a rising tide does not necessarily lift all boats," he said. "There are major differences."

Cramer explained that the latest earnings reports did a terrific job of separating the best from the rest.

For example, "Chicago Bridge & Iron is in terrific shape," he said.

When the company reported earnings in late February, "they knocked it out of the park," Cramer said.

Chicago Bridge & Iron had income of $89.6 million, or 91 cents per diluted share, compared with income of $70.5 million, or 70 cents per share in the same quarter a year earlier.

Analysts on average had expected a profit of 83 cents per share, according to Thomson Reuters I/B/E/S.

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Cramer also sees future catalysts that look positive for Chicago Bridge & Iron.

"They just acquired Shaw Group for $3 billion in cash and stock, in a transformational deal that closed less than a month ago and gives CBI tremendous multi-year visibility," he said.

"With the deal completed, the combined company should have a $28 billion backlog, made up of 33% power projects, 15% liquefied natural gas projects, and 15% environmental and infrastructure," Cramer added.

Cramer also thinks the P/E is attractive.

"CBI trades at less than 14 times earnings, despite the fact that it has a 23% long-term growth rate. I think this stock is ridiculously cheap, and there's a big catalyst coming up in the form of an analyst day on March 28th, where I bet CBI's management will talk about the benefits of the Shaw Group deal and how the acquisition is unfolding. That's why I think you buy this stock into any weakness ahead of that analyst meeting."

Wesley Hitt | Photographers Choice | Getty Images

By contrast, Cramer said beware of rival Foster Wheeler.

"In early March Foster Wheeler, another energy related engineering and construction outfit, reported abysmal numbers," Cramer said.

Foster Wheeler's fourth-quarter net income slid 84 percent with the company hit by one-time charges and an asbestos-related provision. The results sharply missed expectations and the company forecasted significantly downbeat 2013 earnings.

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Cramer was particularly displeased with Foster Wheeler's reasons for the weakness.

"They blamed the weak state of the global economic recovery for their troubles. Funny, the rest of the industry seems to have a very different view of the world economy," he said.

Here's the bottom line.

"The engineering & construction business may be in bull mode right now, but that doesn't relieve you of your duty to try to pick the best stocks in the industry," Cramer said.

"With Chicago Bridge & Iron, I think the rewards will continue to be enormous. I'd look for a pullback and then pull the trigger ahead of that March 28th analyst meeting. And just stay the heck away from Foster Wheeler."

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