After a year of an often unpredictable administration, CNBC’s Jim Cramer was heartened to see President Donald Trump deliver a measured, predictable State of the Union address.
“It’s ironic, but this president does, indeed, know what the stock market wants from him: it wants cheerleading, more defense dollars, less regulation, especially when it comes to big business, and, of course, lower taxes,” the “Mad Money” host said.
Trump gave investors a bullish take on the market layout, touting the $8 trillion in stock market value added since the election, pledging more defense spending and talking up a $1.5 trillion infrastructure plan.
Given the optimism, Cramer broke down the speech into actionable parts so investors could get in on the “rhetoric per share.”
The biggest beneficiaries were defense stocks, Cramer said, taking into account Trump’s repeated vows to support U.S. allies and strengthen the military.
“Suggested buys? Lockheed Martin off the fighter jet franchise, Harris for the radio and communications business [and] Raytheon for Patriot missiles, which our allies can’t get enough of,” Cramer said.
Trump also touched on infrastructure (albeit vaguely), calling on Congress to push forward a “desperately” needed plan to “rebuild our crumbling infrastructure.”
Cramer noted that there are formidable barriers to building infrastructure in the United States. At the state level, environmental impact statements or courts can block most projects. At the federal level, Congress seems unwilling to spend on infrastructure for a variety of reasons.
“If Trump can get around this, well, that would be huge for Caterpillar [and] United Rentals,” Cramer said. “As it is, though, the strength in those stocks has more to do with commodity rallies and the strength in construction in [the] private sector than anything happening in Washington.”
But if lawmakers were to follow through on infrastructure, industrials like steel producer Nucor could benefit even more than they already have, the “Mad Money” host said.
After speaking with Nucor CEO John Ferriola on Tuesday, Cramer said the strength of its last quarter and the company’s new $250 million steel mill could take the currently cheap stock even higher if Trump were to kick-start nationwide rebuilding.
“Best of all, the State the of the Union had no surprises,” Cramer said. “If your only litmus test for the presidency is higher stock prices, boy, was this a great speech. As for all the other issues, I’m really glad to say it’s not my department.”
Disclosure: Cramer’s charitable trust owns shares of Nucor.
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