Great industrial...infrastructure play.

Cramer said he's still a fan of American Public Education (APEI), which caters to the more stable military sector, but he'd be a seller of Apollo, along with Career Education (CECO), Corinthian Colleges (COCO) and ITT (ITT).

Buy - Price 44.10 on Dec. 16
by Sterne Agee & Leach

We're maintaining our Buy rating and lowering our target to 48 from 72. Our target is based on our 2009 estimated earnings per share for ITT of $3.80 (from $4.30 previously) and assumes shares trade at a 15% relative price-earnings ratio premium to the overall market. Currently, Bloomberg estimates the Standard & Poor's 500 forward earnings of $80.86, implying a...P/E ratio of 10.9 times. [Our] investment case: This well-managed and attractively priced diversified multi-industry and infrastructure-industrial company is likely to positively surprise with better-than-expected success from recent EDO Defense Electronics....Potential negative: Slowdown in defense spending. Market cap: $8 billion.

Percentage increase: 22% Yield: 1.6%

Those who believe the stimulus will work can buy Black & Decker (BDK) or ITT (ITT) or Hewlett-Packard (HPQ). They can buy Ingersoll Rand (IR) and Freeport-McMoRan (FCX).

ITT (ITT) preannounces below "views" and rallies hard. Eaton (ETN) "blows up," catches a downgrade, and just gets back to where it was not that long ago. Boeing (BA) is doing terribly, but like ITT, raises its dividend, and people are jumping up and down about it. Honeywell (HON) puts out a bold forecast and ran up for a second day. Can United Tech (UTX) be far behind? All of these things have happened underneath the reaction to the Fed's "By Any Means Necessary" plan to reflate the U.S. economy. These are the undercurrents that will surface even as we decline for the moment.
These are all signs that people are banking on a recovery in the rest of the world next year, at least vs. this year. Is it right?
One thing I learned in 2003 is that you don't see it coming. Oh, and I feel like I am learning that hard lesson again in the Nasdaq/SOX, which just won't quit. You have to be impressed with how the big industrials don't want to give up the ghost. I found myself looking at Ingersoll Rand (IR) last night, and I almost wish I hadn't -- because the earnings are probably too high -- but it might not go down any more than, say, Johnson Controls (JCI) did Tuesday. They all seemed to get a second wind from the Fed's incredibly bold moves after yesterday's meeting.
I like to have a buy list ready at all times. I bought Eaton yesterday because it hit my yield objective, even if it was on a downgrade and a preannouncement. It has an accidentally high yield, a dividend established conservatively and is well budgeted for. I think yesterday's action tells me there's more here. I still like the Procters (PG) and the Johnson & Johnsons (JNJ) because they are really down despite what should be really good year-over-year earnings because of the margin expansion from cheaper input costs. They make sense even if you think we are going to have just a garden-variety recession.
Now, I keep trying to relate all of this to the Baltic Freight Index, which has bottomed, but I also think that all the stimulus from around the globe is going to make these companies do better than people think.
It's rough. It is clear there is overcapacity in so many places in commercial and residential and in retail and in energy. The opportunities are almost all in places where the government is going to have to build things, because we don't need any more capacity of anything! Only China has the raw demand of country folk coming to the cities, a la our Industrial Revolution.

From a recent Mad Money show:"ITT is a cheap stock."

Cramer: How to Trade Eaton:
This is a great company, but proceed with caution, says Jim Cramer.


Click here to watch the video.

Caller Matt in Massachusetts said that water is the new oil, and asked about which company Cramer would look at. "Most of the water plays have been a disaster," he said. "I have not liked the pump group." Cramer suggested ITT Corp. (ITT), which has yet to miss earnings.

Rating on ITT (ITT) was cut from Outperform to Neutral, Credit Suisse said. New management changes offset the recent positive pre-announcement. $62 price target.