
Jim Cramer's Top Takeaways: Polaris, Thor, Danaher
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Did you miss last night's "Mad Money" on CNBC? If so, here are Jim Cramer's top takeaways for today's trading.
Polaris Industries (PII) - Get Report versus Thor Industries (THO) - Get Report : How is it that shares of Polaris Industries are down 40% over the past 12 months, while rival Thor Industries, makers of recreational vehicles, has returned 13.7% during the same time period? Cramer took a deep dive to find out why these two similar companies are moving in opposite directions.
While both companies make leisure vehicles, Cramer noted they're actually quite different, with Polaris making mainly all-terrain vehicles, snowmobiles and motorcycles, while Thor owns the RV market for both towable and drivable vehicles. Polaris is only 78% domestic as it expands aggressively overseas, while Thor remains all American.
Cramer said it's the latter metric that allowed Polaris to rack up a stunning 2,000% gain from 2009 through 2014, as the U.S. and the rest of the world was booming. But starting in 2015, shares fell 43% after the stock became overheated and faced multiple headwinds and missteps from recalls and a strong dollar to warm winters and too much inventory.
Thor, on the other hand, is part of an oligopoly in the RV space, where the top two players account for a full 70% of the market. Being all American, the company can also flourish when the rest of the world is sluggish. Finally, the low price of gasoline, coupled with lots of retiring Baby Boomers, all works in Thor's favor.
With both companies trading at 12 times earnings, Cramer said Thor is a much better investment as Polaris has too many moving parts and too many questions surrounding its business.
Danaher (DHR) - Get Report : Shares of industrial giant Danaher are already up 30% since the company first announced it was breaking itself into two back in May 2014. Is there still more upside to be had? Cramer thinks there is.
As part of the deal, which will commence in July, Danaher will split itself into a slow-growing industrial to be called Fortive, while the remaining Danaher will become a higher-growth medical and industrial testing powerhouse. Shareholders will receive one share of Fortive for every two shares of Danaher they already own.
Cramer said he loves the new Danaher, which will focus on medical testing, dental products, water quality systems and product identification. Without its industrial sibling, the company will no longer be held hostage to the world economy and will be a faster growing and easier to value.
But how much is the new Danaher worth? Cramer said while the stock trades at 18.8 times earnings now, it could easily compare to Agilent (A) - Get Report , trading at 21 times earnings, or Illumina (ILMN) - Get Report at 34 times earnings. Ultimately, he said that 21 to 22 times earnings is not unreasonable for this terrific company.
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At the time of publication, Cramer's Action Alerts PLUS had no position in stocks mentioned.











