The rally in stock markets during the spikes in Covid, which could jeopardize the recovery of the U.S. economy, could be justified by strong gains from struggling American industrial companies, CNBC’s Jim Cramer said Tuesday.
“Those are amazing numbers,” said Cramer in “Squawk on the Street,” referring to the quarterly results of General Electric and Raytheon. “One has the feeling, wait a minute, the market has risen sharply; maybe it should be like that.”
“When I look at GE I think ‘Houdini’, wonderful, incredible,” Cramer said after GE delivered better-than-expected industrial free cash flow and a rosy outlook for the fourth quarter ahead of the bell for the fourth year. The shares rose 6%. Fourth-quarter sales of nearly $ 22 billion beat estimates, but earnings per share of 8 cents were a dime off forecast.
“If you look at Raytheon and General Electric, you’ve noticed that no one flies and they still crush it when it comes to aviation,” said the Mad Money host, while realizing that GE and Raytheon did massive Going through cost-cutting measures, including tens of thousands of job cuts.
While orders in GE’s beleaguered aviation division were down 41% year over year, Cramer said he was encouraged that they had not declined any further. “If you adjust the baseline, it’s surprising that they didn’t see a dramatic decline from last year, which was an amazing quarter,” he said.
Raytheon’s shares rose roughly 6% after the company beat its 2020 cash flow forecast, beating estimates with adjusted fourth-quarter earnings of 74 cents per share and sales of $ 16.42 billion.
Raytheon’s Pratt & Whitney unit, which manufactures and services aircraft engines, exceeded sales expectations. However, the aerospace maker forecast a full-year revenue outlook that was below estimates.
“The free cash flow from these two companies, Raytheon and GE, is surprising,” said Cramer, adding that GE’s healthcare, wind and hydrogen turbine businesses are also growing.
While GE stock was stronger on Tuesday, it has remained flat for the past 12 months. Raytheon stocks are down more than 50% over the same period.
Both stocks were once among the 30 components that make up the Dow Jones Industrial Average. GE, which has been a permanent member since 1907, was replaced in the Dow in 2018 by the drugstore chain Walgreens Boots Alliance. Raytheon was replaced by the Honeywell International conglomerate last year.