Cramer's 'Mad Money' Recap: Price Matters More Than Earnings (Final)
Kleinfeld was also bullish on shaped cans, which are replacing plastic bottles for many soft drinks. He noted that aluminum is infinitely recyclable and that 75% of all the aluminum ever mined is still in use today, an amazing statistic. Kleinfeld dispelled the rumor that increased recycling hurts Alcoa's bottom line. "Alcoa loves recycling," Kleinfeld said, as the company has a huge recycling plant and recycling takes only 5% of the energy that mining does. Thus the company can sell recycled aluminum at far higher margins than new.
Other highlights included computers, where Kleinfeld said products can be made lighter, stronger and run cooler -- thanks to aluminum -- and turbines, which allow jets to run more efficiently with better emissions when made with the metal.
Kleinfeld closed by also dispelling the notion that China is flooding the market with aluminum. He said in fact, China produces and uses 40% of the world's aluminum. The problem, he noted, is that China's aluminum is the dirty kind, which uses a ton of water, energy and other resources to produce.
Cramer reiterated his bullish recommendation of Alcoa.
In the second "Executive Decision" segment, Cramer once again spoke with Chuck Bunch, chairman and CEO of PPG Industries (PPG) , a stock that just hit a fresh 52-week high.
Bunch said that he's bullish on the U.S. economy, noting that end markets including autos, aerospace and even construction are showing signs of strength. The low price of natural gas here in the U.S. has been a windfall, he said, for not only PPG but also for the chemical industry and the overall U.S. industrial sector.
Expanding on that notion, Bunch said that the U.S. is now very competitive with China when it comes to energy intensive businesses, now that natural gas here sells for just $1.90 vs. $6, more than three times that amount, in China. The price of natural gas combined with inflating wages in China means that the cost advantage China once had is rapidly diminishing, he said.
Bunch said the PPG will continue to invest capital into both the U.S. and China over the coming years and he expects that both markets will continue to do well. However, if the U.S. revamps its tax policy, Bunch added, the U.S. could pull into the lead.
Finally, when asked why PPG decided to exit the glass business and instead focus on coatings, Bunch said that glass became a commodity business, whereas coatings requires proprietary technology to meet customers' specific needs while at the same time being far less capital intensive to produce.