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Investors who want to speculate on the economy’s recovery, Cramer said during Friday’s Mad Money, should consider buying Lear.
While many auto suppliers took on heavy debt loads to avoid going under, which has made their stocks untouchable, Lear used bankruptcy to its advantage. The company just emerged from Chapter 11 on Nov. 9, Cramer said, and it looks like the move was “perhaps the best thing that ever happened to Lear.”
This maker of seating systems and car electronics accomplished a lot during its four months in bankruptcy: It removed many fixed costs and created one of the strongest capital structures of any auto-parts company. The gross debt was reduced to $1 billion from $3.5 billion. And the three-year backlog jumped to $1.4 billion from $1 billion, a number that Cramer expects to grow now that the company’s in the clear
Also, Lear is expected to hold $1.5 billion in cash by year’s end, making it one of just three auto suppliers, along with Gentex and Magna International, to have net cash.
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