Truck Demand Rising
Cramer spoke with Daniel Ustain, chairman, president and CEO of Navistar (NAV), a stock that disappointed Wall Street when it reported a seven-cent-a-share earnings miss on declining revenues, but also one that's up 19% since Cramer last recommended it on June 2, 2010.
Ustain said that Navistar has increased production 40% from the first quarter of this year, and the company's order rate appears to be trending even higher. He said demand is coming from aging truck fleets that were not replaced during the downturn, as well as a need for new trucks that meet higher safety and environmental standards around the globe.
Ustain said to be number one in the truck market, you need both great products and great distribution, something Navistar has plenty of. He blamed this quarter's earnings shortfall on a short gap in production that was caused by the last of the company's vehicles being converted to their newest engine technologies.When asked about rising commodity prices, Ustain said Navistar was able to pass on about 50% of the costs to customers, but has absorbed the other half through hedging. Finally, when asked about the unrest in the Middle East, Ustain said that Navistar offers vehicles for moving soldiers and protected vehicles for military applications, and both are increasingly in demand. Cramer continued his recommendation on Navistar, saying that only the future, and not the current earnings miss, is all that matters.