CNBC’s Jim Cramer on Friday identified three industrial stocks he thinks are worth owning next year, saying he expects them to outperform the sector’s top performers in 2022.
The best industrial stocks in the S&P 500 so far this year have been Northrop Grumman, Lockheed Martin and Deere — up 36.9%, 35.6% and 25.7% respectively. Looking ahead, Cramer said he prefers to own those larva, Illinois Tool Works and railway operator CSX.
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Shares in Caterpillar, which reported strong earnings two months ago, are up 12.6% year to date. Cramer said he favors Caterpillar over fellow machinery maker Deere.
“CAT has a lot more exposure to infrastructure, and I think they’ve gotten a boost from the oil and gas industry coming up,” Cramer said. “Definitely worth owning here at 17 times earnings,” he added.
Illinois Tool Works stock is down more than 12% in 2022 because fears of an economic downturn have trumped the company’s actual performance, Cramer argued. “I like myself here, of course more [so] on a withdrawal,” he said. “But I give you my blessing to buy ITW.”
Carriers like CSX — down nearly 16% year-to-date — are “absolutely hated” on Wall Street, Cramer acknowledged. However, he said he believes CSX is attractive to investors with longer time horizons.
“To me, it’s a long-term story. I see our East Coast ports getting more business as shipping companies adjust to the fact that our West Coast ports are dysfunctional. Meanwhile, CSX is just minting money with coal,” he said . “I think it’s worth buying into 2023.”