Last year, Cramer recommended Reliance Steel & Aluminum at $35 – now it’s at $61. He got CEO David Hannah on the phone to see if this trend will continue.
Hannah says the key to Reliance's profitability is the consolidation taking place at the mill-supplier level - "the mills themselves coming together," he says. He credits these suppliers with maintaining a discipline in their pricing structure by keeping production at the proper pace. "The beneficiaries of their new level of discipline have really been our industry, and we're trying to take full advantage of all that," Hannah says.
But when did the industry make its change? Cramer wanted to know. For as long as he's been in the business, the steel industry has been, to say the least, irrational. What has changed, Hannah answered, is the attitude of those managers in charge of the mills. Today's mills, he says, are run by "a different kind of manager," and they're run for the benefit of the shareholders.
The industry as a whole is still a cheap place to be (RS's is trading at 10 times earnings), so Cramer is expecting this stock to go higher, even at $61. "Multiyear move for steel," he says. Cramer also suggests that Home Gamers keep their eyes on Allegheny Technologies and United States Steel.
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