Cramer's Morning Take: Caterpillar 8/1/23

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Jim Cramer (0:33)

Hey, it's Cramer, and this is my morning take on the market from today's CNBC Investing Club morning meeting.

Jeff Marks (0:38)

Let's jump right to the cat quarter. Revenue is up 21%. Adjusted earnings up 74%.

Jim Cramer (0:45)

Never seen this before.

Jeff Marks (0:46)

$5.55, beating estimates by about $1. Margins are strong. Why? Well, their pricing was up big, up 10%, increasing much faster than their manufacturing costs. That's how you get big margin expansion. They beat really on every single line.

Jim Cramer (1:00)

Every line.

Jeff Marks (1:01)

Construction industries, seeing strong things in non-residential due to government-related infrastructure projects.

Residential, better than expected. Resource industries, it's construction and quarry and aggregates. Seeing good growth there from infrastructure, which, by the way, still in its very earliest of innings for a caterpillar.

Jim Cramer (1:22)

And I can't get the CEO to talk about it. He won't, because he's a certain, not a hype artist, who's unwilling to take my bait of talking about all the business he has for 2024

Jeff Marks (1:35)

So still very much a 2024 story for them. It did have the backlog increase by about 0.3 billion, 300 million. That was big to see because everyone was concerned the last couple of quarters. Are we at peak backlog? Well, they've disproved that theory with backlog growth sequentially.

By the way, energy and transportation, a lot of it is thought to be known, they make some of the turbines and the oil and gas, but they're also doing the data center is where they're seeing growth as well for reciprocating engine demand.

Jim Cramer (2:05)

I was worried the data center would be slowing down because we've seen that. A lot of, you know, Intel's data center is slowing down. It's not. What I think is really important is that a lot of people still feel it's China. China is less than 5%. China, some of that is just the irrelevance of China. They are not built. They're overbuilt.

We, on the other hand, have a lot of non-residential building that we're still doing. And that's Caterpillar. And you have to understand that when the infrastructure bill passed, the idea is that we buy American.

There's nothing more American than Caterpillar.

Jeff Marks (2:34)

Yeah.

I know dealer inventories increased 600 million. That's something the bears have been focused on, but the bears are getting blown out today. So Jim, what do you do with the stock? All right.

Jim Cramer (2:44)

Our discipline says...

Jeff Marks (2:45)

Up 7%.

Jim Cramer (2:46)

Let's say the stock...

I'm sorry about my voice. Let's say the stock were down 7%. I would say we have to buy 25

Why? Because in the end, discipline always trumps conviction. Always. So when you have a stock that is up 7%, you must sell 25

Jeff Marks (3:03)

Yeah, just a small, small amount.

Jim Cramer (3:05)

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