Global Economy Gaining Strength
In the "Executive Decision" segment, Cramer once again spoke with Sandy Cutler, chairman and CEO of Eaton (ETN), an Action Alerts PLUS holding that delivered inline earnings that caused shares to sink at the open, only to rebound 4.5% by day's end.
Cutler said that while China's economy has been a worry for most companies, he feels the country is engineering a soft landing for itself and will see a recovery in 2012. Back in the U.S., Cutler noted that exports and manufacturing are showing signs of strength, as is non-residential construction. He said that after a long slide, Eaton's truck segment is also rebounding, setting record revenue numbers even though truck production is still near its lows.
When asked about falling commodity prices, Cutler said that September saw a 25% decline in some of the company's commodities and prices are finally coming into line. The good news, however, is that commodity cost deflation is not currently part of the company's estimates.Turning toward Europe, Cutler said that most companies seem to have a plan A and a plan B when it comes to Europe, but it looks like the worst case may not happen, meaning that companies can focus on their plan A's in 2012. Finally, Cutler noted that Eaton has paid a dividend ever since 1923 and has a strong balance sheet and cash position to continue that legacy. The company also bought back 7 million shares of its own stock as it felt shares were undervalued. Cramer agreed that Eaton is still a very inexpensive stock, with growth and a great dividend yield.