Friday, March 24, 2023
Homemad moneyCould wealthy people goose your gains?

Could wealthy people goose your gains?

Don't resent those chic people sipping champagne as they cruise around in their motor yachts. They could help you make money.

Owning the stock of Brunswick, the number one maker of recreational boats and more, has generated gains of more than 1000% over the last 5 years.

You may think of Brunswick as a maker of billiards tables, fitness machines and bowling equipment but "three quarters of Brunswick's sales come from boats and boat engines," Cramer said. Their brands include SeaRay, Meridian, Bayliner and other names that are among the most favored in the boating world.

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Cramer thinks at least part of that stunning return has to do with the customers that buy Brunswick products; let's just say people who buy boats tend to be more comfortable than most.

"F. Scott Fitzgerald was right, the rich really are different," Cramer said. "And not just because they have more money, but because they keep spending it, even when everybody else is hunkered down."

Cramer believes recent earnings confirm his bullish outlook.

"The company earned 15 cents a share, a 2-cent beat, on higher than expected revenue that rose 8.6% year over year," Cramer explained. "That's pretty darned good."

Also, the company's 26.1 percent increase in gross margin — reflecting an increase of 70 basis points from 2012 — was the highest level since 2000.

"On the news the stock jumped more than $2 from $40 and change to $42," Cramer noted.

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However, since then Brunswick has given up most of that move. "And Brunswick has pulled back about six points from its highs," Cramer added.

Yet Brunswick customers may not be affected by economic woes in the same ways as the less affluent.

Therefore the sell-off may not have been warranted.

Think of the company this way. "Brunswick is a maker of playthings for the rich," Cramer said. And the rich are not like the rest of us.

Call Cramer: 1-800-743-CNBC

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