‘Mad Money’ host bullish on Brunswick

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CNBC News “Mad Money” personality Jim Cramer says “the stock to own is Brunswick.”

In a piece released Monday titled “Super Storm Sandy — The Play Everyone’s Missing,” Cramer said the recent devastation inflicted on the marine industry in particular means there will be “a lot more demand for new powerboats than we would’ve had without Sandy,” Cramer said on CNBC. “And if more people are going to be buying boats, if only to replace their broken or destroyed old ones, then the stock to own is Brunswick.”

Even though boats are luxury items, and tax rates “will likely jump on the wealthy in a couple weeks, why is Brunswick a buy?” asked a CNBC article recapping Cramer’s broadcast.

“Because as bad as the fiscal cliff might be it won’t be nearly as bad as the Great Recession and Brunswick handled the Great Recession with flying colors,” Cramer said. He later added that the company’s stock is “still pretty darn cheap” despite 50 percent year-to-date gains.

“In the marine industry about 30 percent of the dealers in the United States went under during the recession, but Brunswick’s dealer count remained flat. They held in much better than the competition and used the economic weakness to take share. Plus the company also took out $450 million in fixed costs during the downturn to come out even stronger than ever.”

CNBC also reported the oft-cited National Marine Manufacturers Association numbers that show the age of powerboats in the water has gone from 15 years, on average, to 21.

“That means there’s a ton of pent-up replacement demand,” Cramer said. “We saw the same thing happen in the automobile market, where the average car on the road got so old that it led to a surge in demand for new autos. I bet what’s true for cars is also true for boats, and that’s terrific news for Brunswick.”

“Back in late October, right before Sandy hit, Brunswick reported a big 14-cent earnings beat off a 29-cent basis, and the company also gave upside guidance for the full 2012 fiscal year,” Cramer said.

He also cited the recent shuttering of the company’s Knoxville-area plant and restructuring plan that moved Bayliner sterndrive and marketing to Brazil and halted it domestically as reasons to buy.

“Also the company has been cleaning up its balance sheet to the point where it has the lowest level of debt in more than seven years.”

“All told, Cramer smells a buy — and that’s despite the gains of nearly 50 percent year-to-date,” the recap article said.

“Even after this move, the stock is still pretty darned cheap, selling for just 12 times earnings with a 12.5 percent long-term growth rate,” Cramer said.

Click here to watch the video and read the report.

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Comments

8 comments on “‘Mad Money’ host bullish on Brunswick

  1. Mike A

    Hey Great Idea! Let’s encourage everybody to buy Brunswick stock. It will give them more money to invest in Brazil.

    I have a good friend that was a Brunswick dealer and got hung out to dry by them; Brunswick kept pushing more inventory on him early in the recession, so after 25 years in business he lost it all.

    They have no heart!

    If you are in the marine industry solely to make money, maybe they are the company you should invest in.

  2. ibleedstyrene

    Right on, Mike! I had the misfortune of working at a company that Brunswick bought in ’07 and closed in ’08. They don’t seem to have a problem putting their workers out of a job- haven’t seen anything about cuts at the top end of the pay scale though. I now work for a privately owned boatbuilder that blows Brunswick out of the water in our class. No more dividend-focused management for me- we take care of our people and the quality and value of our product takes care of the rest.

  3. Marty

    Surely Jim Cramer has taken total leave of his senesces. A bigger pack of thieves has never exisited, than Brunswick. The man knows nothing about the boating industry.k6xk

  4. Mike A

    Hey ibleedstyrene,

    I am glad that you have a job and even happier that it is with a small builder. I don’t even have to know the brand to know it is a better boat.

    I am sure your employer is in the industry because he loves boats, cares about the quality of his product and well being of his employees, not just the $.

    Let me tell you from first hand experience the whole system is against smaller, privately owned business’s; banks, govt. regulation and bureaucracy. Even most consumers think just because a big company built there boat it is better. Unfortunately, they are only sheep.

    Also, I am the son of a working man who had the good fortune of having had a great Boss (mentor) early in life. A billionaire who mowed his own lawn, painted his own house and flew bravely in WWII. Now, I don’t know much about Wall Street but remember his advice to me never to buy shares in a company with a price of more than 7 x earnings. When did 12 x become a bargain?

  5. ibleedstyrene

    Curly- Not bashing, just stating facts. I was there- not relaying secondhand information here. It honestly appeared that they bought our company expressly for the purpose of shutting it down- bringing in clueless “managers” that knew nothing about the business, miring us in paperwork- hell, we spent so much time updating timelines and spreadsheets we didn’t have time to be on the floor building boats! We went from a good, well-run boat company to a model of inefficiency in less than a year, then they said “well, this isn’t working out- sorry”

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