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NEW YORK (
) -- "It's an exquisite moment for General Motors to come public," Jim Cramer told the viewers of his
TV show as he praised all those responsible for helping the once hobbled automaker return as a publicly traded entity.
Cramer said the GM deal is happening at the perfect time, as the company is levered to global economic growth. With over two-thirds of the company's business coming from overseas, Cramer said GM has plenty of exposure to the hot emerging markets and is a leader in Brazil, Russia, India and China. In China alone, he noted, GM's market share has risen from 3% to now 13%.
GM also has a new business model, said Cramer, and is focusing only on four key brands: Chevy, Buick, Cadillac and GMC. Unlike the GM of old, the new GM has better capacity utilization, better inventory controls and actually makes money on every car it produces. No longer will GM lose money when the economy slows, said Cramer.
In a change of opinion, Cramer said he'd bless buying shares of GM in the open market up to $35 a share. He said the company is worth that price given its earnings estimates, and shares might fall to that level given the huge size of the IPO.
Using 2012 earnings estimates, Cramer said shares of GM could fetch in the mid to high $40's, but that likely won't be until mid next year. He also noted that GM will likely be re-added to the
, which will spur even higher prices for the stock.
Continuing on the General Motors story, Cramer spoke with
colleague Phil Lebeau, who has been covering the automaker and the entire auto industry for many years.
Lebeau shared in Cramer's sentiments that now is the perfect time for GM to come public. He said the deal is oversubscribed by 10 times. Lebeau also said the buyers, who include individuals, institutions, governments and sovereign funds, are not likely to flip those shares for a quick profit.
Lebeau also said that GM is poised to make money right away. He said in 2008, the company lost $1200 for every car it produced. But today, GM profits $3005 for every car produced, a stunning turnaround. Lebeau noted that this is the bottom of the economic cycle as well, and GM should have many years of solid profitability ahead of it.
Cramer agreed, telling viewers that they need to be in on any company that the government has a stake in. He recounted how the 1979 loan guarantee for Chrysler netted shareholders a 280% gain by 1982. Cramer said the government's deal involving Conrail in 1987 was also a winner, fetching a 192% gain over the next five years. And in recent memory, shares of
have also been rising since the government began selling its stake.
Other Auto Trades
For investors who want other ways to play the General Motors IPO, Cramer once again recommended
, a stock just off its 52-week high, and one that still has room to run.
Cramer said that with GM priced at a discount, Ford will be the natural beneficiary as GM shares head higher. Ford is the better company, said Cramer, and will be net cash positive in 2011, thanks to hard work and a brilliant management team.
Cramer said he's also bullish on some auto parts makers, mainly
, a speculative play with a terrific backlog, along with
, a seat maker that get 15% of its business from GM.
Finally, Cramer said he's bullish on
, a stock which he owns for his charitable trust,
Action Alerts PLUS. Johnson just today boosted its dividend by 23%. Cramer noted that the company not only has auto exposure, but also exposure to the bull market in climate control and energy efficiency.
Natural Gas Catching On
In the "Executive Decision" segment, Cramer sat down with Andrew Littlefair, president and CEO of
Clean Energy Fuels
, for an update on the state of natural gas in America.
Littlefair said that a vote on natural gas legislation, scheduled for today, was once again delayed, but he was assured that the bill will go to a vote before the end of the year. He said that bill, which would provide tax incentives for big trucks to convert and use natural gas, will accelerate adoption of natural gas, but is not necessary for the industry to keep growing.
Littlefair said companies like
are seeing a one-year payback on the trucks they've already converted to natural gas, and Republic in particular, already has 20% of their fleet running on gas.
When asked about consumer vehicles, Littlefair said that General Motors makes 14 natural gas vehicles around the world, but still offers none here in the U.S. "It will happen," he predicted.
Finally, when asked about the company's finances, Littlefair said the company raised $55 million recently to help them process their backlog of filling stations that has doubled over the last six months. He said that capital will last the company through the end of 2011.
Cramer was bullish on
He was bearish on
Canadian National Railway
Cramer said he's angry that the Obama administration, which lobbied hard for Wall Street reforms, decided to go with "business as usual" for the General Motors IPO. He said the American taxpayers deserve to be in on the GM deal, and the government could have easily made it happen.
Cramer said the government could have put up a Website and allowed anyone to auction up for shares. But instead, the government put the Wall Street bankers, the same ones it vilified for months, in charge of allocating the shares.
"Its the same deals for the same big boy bankers," said Cramer, "so much for reforms."
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long Johnson Controls.
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