TLDR
- Jim Cramer says GE Aerospace and GE Vernova are positioned to benefit from trade tensions as countries buy big-ticket items like aircraft and turbines to narrow trade deficits with the US
- GE Aerospace reported growth in its commercial engines and services business and supply chain improvements, with Korean Air ordering 103 Boeing aircraft containing GE engines
- GE Vernova beat earnings estimates with strong performance in its power business and completed acquisition of Prolec to expand its electrification segment
- Both companies sold off after earnings reports earlier this week but have since recovered, with GE Aerospace up 83.70% year-to-date and GE Vernova up 80.94%
- Cramer views GE Aerospace as a way to invest in aerospace and travel, while GE Vernova offers exposure to nuclear power and data center electricity demand
GE Aerospace and GE Vernova both reported earnings this week that beat Wall Street expectations. However, both stocks initially sold off before recovering their losses. Jim Cramer reviewed the quarterly results on CNBC and explained why he thinks both companies are set up for continued success.
GE Aerospace reported growth in its commercial engines and services business. This is the company’s largest segment. Management also discussed improvements in the supply chain, which Cramer said matters more in the current tariff environment.
The company makes jet engines and airplane parts. It also runs a repair and maintenance business. Cramer called GE Aerospace “one of the best ways to play the incredibly robust bull market in aerospace and travel.”
Korean Air agreed to buy 103 aircraft from Boeing during the past quarter. Many of these planes will contain GE Aerospace engines. This represents the largest Boeing jet order in Korean Air’s history.
Trade Relations Impact
Cramer believes both companies will benefit from international trade dynamics. He said countries looking to narrow trade deficits with the US need to buy big-ticket items. Aircraft and turbines are among the products that can help close these gaps.
“When other countries decide to make nice with Trump by narrowing their trade deficits with us, they need to buy lots of big ticket items to really move the needle,” Cramer explained. Both companies offer products that fit this description.
GE Vernova beat earnings estimates with strong performance in its power business. The company completed its acquisition of Prolec during the quarter. Prolec makes equipment for the electric grid.
The Prolec purchase helps expand GE Vernova’s electrification segment. Data center construction is driving demand for more electricity infrastructure. This trend is supporting growth in the company’s core business.
Power and Nuclear Business
GE Vernova showed strong backlog growth in its latest report. Cramer said this metric gives clear insight into demand for the company’s products. The backlog indicates future revenue potential.
Cramer described GE Vernova as “one of the safest ways” to invest in nuclear power. The company actually builds nuclear plants. Many other nuclear-focused stocks are more speculative and have declined recently.
Building new nuclear plants takes more than a decade. This means investors need to be patient for returns. GE Vernova’s established business provides exposure to this sector with less risk.
Both GE Aerospace and GE Vernova are spinoffs of General Electric. GE Healthcare is the third company created from the breakup. General Electric officially completed the split into three separate companies last year.
GE Aerospace is currently up 83.70% year-to-date. GE Vernova has gained 80.94% over the same period. Both stocks dropped right after their earnings reports earlier this week but have since recovered most of those losses.
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