NEW YORK ( TheStreet) -- "The averages are masking some big changes in the market," Jim Cramer told the viewers of his "Mad Money" TV show Thursday, as he said some of the market's former high fliers and once again ready to roll. Cramer said much of the market's recent rally was made on the backs of the industrial stocks and fertilizer plays like Caterpillar ( CAT), a stock which he owns for his charitable trust,
Rising Commodity CostsWhat can investors learn from Procter & Gamble's recent earnings? Plenty, said Cramer. He said while Procter technically delivered an earnings beat, the stock sold off hard as investors worried about the company's rising commodity costs. Cramer said for consumer products companies, it's all about the gross margin, the amount of money the company makes on each sale. And with commodities from grain to metals to oil on the rise, companies like Procter can't raise prices fast enough to offset these rising costs. According to Cramer, a diversified portfolio now needs to account for rising commodity prices. Cramer said while he likes companies like General Mills ( GIS), Procter and McDonald's ( MCD), these companies will all be held hostage to margin pressures. As an alternative, Cramer said investors need to consider companies that make commodities, and avoid companies that use them. Stocks like Alcoa ( AA), an Action Alerts PLUS name, and Potash, he said, are two great examples of the former.
Raw Materials BoomIn the "Executive Decision" segment, Cramer once again spoke with Dan DiMicco, CEO of Nucor ( NUE), an Action Alerts PLUS stock that's up 14% since Cramer last spoke with DiMicco on July 22. DiMicco said that Nucor is a long-term focused company, which is why it has invested over $6 billion into their assets since 2007. He said Nucor now has tremendous leverage, including a low cost structure and a great team of people. That's why the company is able to make money at just 70% capacity utilization. "Imagine what we'll be doing at 91% utilization," he said. DiMicco also said that he's seeing significant demand for raw materials worldwide, and that demand is being driven by real underlying growth. He said it's a slow, steady process that will take years to reach its former highs, but the markets are all moving in the right direction. DiMicco also took aim at what he called failed U.S. trade policies that overburden U.S. companies with regulations and lead to distorted trade practices. He said our country needs to fix these issues before they make things even worse. Cramer continued his support for Nucor, calling himself a "buy, buy, buyer."