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.