When asked about the Chinese market, Sutherlin explained how his company uses China's electrical generation numbers as a gauge of overall economic activity. He said the Chinese demand for electricity is growing between 5% and 6% at the moment, which is down from the 10% to 11% levels they were seeing. But after a very light spring, demand has picked up over the summer and looks good for the winter months. Sutherlin also said that while coal-fired generators are becoming an endangered species here in the U.S., around the globe there are still hundreds of projects being built. The U.S. is also ramping up its export abilities to be able to meet that demand. Cramer said while it still may be early for Joy Global, past performance shows that investors who get in early are the most handsomely rewarded.
Two Companies in One
Sometimes it doesn't matter how good a company is, if it's packaged wrong for investors it will never receive the value it deserves. That's why Cramer is such a fan of breakup stories, companies with disparate businesses that could unlock tremendous value if only management would decide to split themselves up. Such is the case with Manitowoc ( MTW), a company that has two very different businesses under one roof. One half that is an old-school crane business. The company makes everything from giant tower cranes to boom trucks, all of which are levered to construction and, therefore, economic growth. But the other half of Manitowoc is restaurant equipment, where the company makes things like fryers, grills and ice makers for the food service industry. That business is not cyclical, which means it appeals to a completely different investor base. Cramer said using conservative estimates, Manitowoc's crane business could be valued at $2.5 billion, while its red-hot food service business could fetch an additional $2.5 billion. That means as a breakup possibility, the company is worth up to $5 billion. That's far more than the $3.9 billion the market is giving the combined company, noted Cramer, and represents a 28% premium over today's prices. If management were to pull the trigger on a breakup, shareholders could profit by $4 a share almost overnight.