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Why Cramer Likes Caterpillar Over Joy Global

At a viewer’s request, Cramer on Monday compared Joy Global to Caterpillar.

Caterpillar is the world’s largest manufacturer of construction and mining equipment. In November 2010, it acquired mining equipment maker Bucyrus International. In turn, it became mining equipment maker Joy Global’s top competitor.

Both stocks have run up lately, with Cat up by 25 percent while Joy Global up 27 percent. So Cramer wouldn’t buy either stock at current levels. He does think Caterpillar is better than Joy Global, though. So he suggests investors get ready to buy shares on any pullback.

To Cramer, Caterpillar is the better buy for a number of reasons. For one, it has a lot of diversification. It serves more end-markets than Joy Global does. Being as Joy Global only makes mining equipment, Cramer thinks it’s more risky.

“Before CAT bought Bucyrus, I might have said Joy Global was the better stock. Now, though, CAT can use its vast sales force, financing arm and service division to outshine Joy Global on its home turf, and that’s why I’d be a buyer of CAT over JOY, but only on a pullback.”

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