The merging of L3 Technologies and Harris Corp. 'was a brilliant combination that's created the most high-tech operator in the industry,' Jim Cramer says.
"They think the company can beat Wall Street's consensus earnings estimates in short order, and they believe L3Harris is poised to take market share in the Pentagon budget thanks to their technology-rich product offerings," Cramer said. "They're in some of the strongest parts of the defense sector, both companies had strong numbers the last time they reported, and management has a tremendous track record.
Buying the stock here at about $180 is a bet on management's ability to mitigate costs, Cramer said. CEO Bill Brown, who led Harris Corp., says the combined company is "an efficient solutions provider, and 40% of our total savings are going back to the customer in the form of cost-plus contracts that drive more affordability." In two years, he will retire and be succeeded by COO Chris Kubasik, who was chief of L3 Technologies.
L3Harris is laboring to integrate the companies by optimizing the supply chains and reducing overhead expenses, Cramer said. The company is also offering shareholders a 10% dividend boost and initiating a $4 billion stock buyback. "Man, $4 billion — that is substantial. This is only a $44 billion company ... that means they're planning to retire roughly 9% of the share count, including more than 5% over the next year," he said.
L3Harris' stock has rose nearly $20 since it closed in early July and trades at 18-times next year's earnings estimates. That's more expensive than its peers like
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Cramer: The market is starting to look like the 1980s, and that's good for consumer goods stocks like Coca-Cola'If I'm right that this is like the 1980s all over again, it means the likes of Coca-Cola and Kimberly-Clark have a lot more room to run,' Jim Cramer says.
Read more »
Cramer Remix: The most important semiconductor bellwether has people talkingJim Cramer's breaking down Micron's latest upgrade.
Read more »
Cramer: FTC oversight is 'truly invasive' against FacebookJim Cramer says the government is 'reaching into the board room' at Facebook.
Read more »
Cramer Remix: Don't rely on another's viewpoint when managing your portfolioJim Cramer explains why investors should approach the advice of big-name money managers with skepticism and think for themselves.
Read more »
When's the best time to take a warm bath for better sleep?New research has looked through existing studies to find the best time to take a warm shower or bath before bedtime in order to improve sleep.
Read more »