The rail market is one unbelievable bull market right now, Jim Cramer told viewers on his "Mad Money" TV show Tuesday. But when investors are playing a cycle, be it the aerospace cycle or the rail cycle, they shouldn't just buy direct plays -- they should also buy companies that touch the booming cycle, he said.
All Aboard Koppers
The four big rails are "flush with cash," Cramer said, and they are going to be buying a lot of equipment. There are only two plays on this, he said, the first of which is Koppers ( KOP). Koppers is a stock Cramer first recommended a little over a year ago, and it is up about 46% since then. It is "an oblique play" on railroads, he said. It makes rail ties and rail splitters. The "trick" with Koppers is that it's really a chemical company, Cramer said. Rails account for just 37% of the company. However, when you get a cycle, "impure" plays such as Koppers are great "because The Street doesn't notice them until they report great numbers," he said. The Railway Tie Association expects that 21 million railroad ties will be sold this year -- a lot more than usual, Cramer explained. For the first two months of this year, the demand for railroad ties was up 23%, but supply was only up by 11%, he said. Low supply and high demand means higher prices.