Cramer: This Firm Has No Competition
NEW YORK (Real Money) -- Why did Snap-on
Was it the 20% increase in second-quarter earnings? Maybe the 8.4% increase in sales? Or the 70-basis point improvement in operating margin? The 12-cent "beat" on a $1.68 basis? The recent 16% increase in the dividend, one that's been paid without interruption since 1939?
No. It was because of the competition. Or, more importantly, the lack of it.
We don't spend enough time talking about mundane stocks that just consistently deliver like Snap-on -- which is up 90% over the last two years and 30% over the last year – did yesterday.
In fact, looking at stocks that could buck the powerful negative trend of the market is often a great way to figure out what the market really wants, without any help from hostile bidders or big upgrades.
What Snap-on has is a unique set of diagnostic and operating tools that are upgraded constantly, whether they are for cars, trucks, aviation, agriculture or even military, mining and technical education. The complexity of everything requires sophisticated diagnostic tools to fix -- there are now thousands of parts in a car compared with hundreds just a couple of decades ago -- and only Snap-on, a 96-year-old company, seems to have been able to keep up with the times. I am sure you have seen one of its 3,500 mobile vans as it travels to one of the 300,000 vehicle repair shops in the U.S.
But when I talked with CEO and chairman Nick Pinchuk about the quarter yesterday, what stood out was a conversation he had had with customers -- all the good ones love talking with customers -- recently at a drag race. He likes to talk about what the other guys are up to, the companies that he competes against. What stood out was that the clients didn't even seem to know! They didn't think there was any competition; in many cases, for many individual products, there simply isn't any. There's no one to turn to. You have to use Snap-on.
Which got me to thinking. How many companies have to use one company's product? Can you imagine if there were only one supplier of tools to hospitals? How about if there were only one supplier of business equipment to financial companies? Or one supplier of oil gear?