Tech Distributor Play
In the "Executive Decision" segment, Cramer once again sat down with Rick Hamada, CEO of Avnet (AVT), a supermarket of tech components that distributes parts from 300 suppliers to over 100,000 customers around the globe. Shares of Avnet are up 18% since Cramer last spoke with Hamada in August during the depths of the tech slump.
Hamada responded to negative markets comments made today by Intel (INTC). He said that the company's comments were specific to Intel and to PCs in particular and not to the mtch market overall.
Hamama said that after two quarters of negative "book-to-bill" numbers, Avnet saw improvements in both October and November. Anvet has been drawing down inventory to match slowing order volumes but is looking with confidence towards its March and June quarters next year.Hamada also commented on Avnet's acquisition strategy by saying that the company remains committed to organic growth first but acquisitions will still play a major part of its strategy. "We're not out of big or small acquisition targets," he noted. When asked where the strength or weakness was coming from, Hamada said that servers and storage (think the cloud) remains a hot area. He said that the Americas, along with Asia, is also still strong. In Europe, Hamada said that Avnet saw minor effects during the credit tightening, but those effects are easing now. Overall, Hamada said that Avnet is well positioned for the next upturn, noting that the company has seen growth every year for the last 10 if you don't count the dot-com bust in 2001 and the financial meltdown of 2008. Cramer continued his recommendation of Avnet.
Beauty of CompositesOn the heels of an analyst upgrade and dividend boost for Boeing (BA), Cramer recommended Hexcel (HXL), an aerospace composites maker that's just getting started as another seven-year aerospace cycle begins to take off. Cramer said that while Hexcel also makes composites for helicopter rotors and windmill blades, investors should think of it as a commercial airline play, as 55% of company sales come from that segment. The company is benefiting handsomely from an industry shift to composites instead of heavier aluminum and even titanium. The result? Lighter, more fuel efficient aircraft and more sales for Hexcel. Clearly 90% of Hexcel's aerospace revenues come from Boeing and rival Airbus. So with Boeing's nearly 3,500 aircraft backlog, the stream of business for Hexcel will remain intact, even if things in Europe don't go well. While the company only reported an in-line outlook for 2012, Cramer said management was the most bullish of any company he's seen this quarter. Cramer also noted that while defense budgets may be strapped around the globe, the shift towards composites in military aircraft is still continuing, making that concern a non-issue for this stock that will soon be flying even higher than it currently does.
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