- As the prospect of interest rate cuts looms, but investors worry about a slowing economy, CNBC's Jim Cramer on Tuesday told investors it's important they have exposure to cyclical stocks.
- But he said to be selective about these stocks and named five industrials that are no longer "pure smokestack stocks" and have a lot to offer Wall Street as the economic landscape changes: Cummins, Dover, Eaton, Hubbell and Parker-Hannifin.
As the prospect of interest rate cuts looms, but investors worry about a slowing economy, CNBC's Jim Cramer on Tuesday said it's important they have exposure to cyclical stocks. But he said to be selective and named five industrials that are no longer "pure smokestack stocks." These picks incorporate secular themes and a lot to offer Wall Street as the economic landscape changes, he said.
"In this tricky market, people are giving up on the industrials at exactly the moment where they should be buying them, because the rate cuts are on the way," he said. "That's why I recommend the new industrials that have pivoted to powerful secular themes."
- Cummins: Even though Cummins is primarily known for manufacturing truck engines, Cramer said the company has more to offer than just that segment of the business. Cramer praised Cummins' green energy efforts and said it has a strong power systems business that makes products for buildings, including data centers. Even if truck sales have slowed, he said the data systems business is doing well, as data centers — which need generators — continue to proliferate. The company reported higher-than-expected earnings earlier in August, and management indicated power systems drove sales that quarter.
- Dover: Dover transformed into more than a "classic metal-bender," Cramer said, and incorporated secular growth themes into the business, like products to keep data systems cool and pumps and processors to be used by biopharma outfits. He noted that the company has reported two consecutive quarters that topped expectations, but said Wall Street seems to be underestimating the stock at the moment.
- Eaton: Eaton is also a major outfit in power management systems, and it also makes products for auto and aerospace companies, Cramer said. According to him, Eaton benefits from the government's substantial investments in the electric grid, and the company's equipment is necessary for data centers and domestic manufacturing. He said investors may be getting a good chance now to buy the stock before its next run.
- Hubbell: Hubbell makes equipment for utilities and large commercial entities that use electricity. Cramer called the company a "play on the modernization of the electrical grid," highlighting the need for more power to support new manufacturing, especially of data centers needed for artificial intelligence. He added that the company also helps deliver renewable energy, from solar panels or wind farms, to the grid.
- Parker-Hannifin: Parker-Hannifin manufactures motion and control technologies and systems for a variety of industries. Like its peers, Cramer said, the company diversified its customer portfolio to take advantage of secular growth trends including aerospace, infrastructure, clean energy, semiconductors and data centers. According to Cramer, Parker-Hannifin may have had one of the best quarters in the sector, and although the stock has jumped, it could have more room to run.
Dover declined to comment. Cummins, Eaton, Hubbell and Park-Hannifin did not immediately respond to request for comment.
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