Dow Chemical and DuPont’s long-awaited merger may have closed almost two weeks ago, but Cramer pointed out that there’s more to the story.
“You have to remember, the current DowDuPont setup is only an intermediate stage before the combined company breaks itself up into three separate businesses,” he said.
The company, currently the world’s largest chemical player producing $73 billion in combined sales, plans to execute a split that would make it three companies: an agriculture play, a specialty chemicals play and a materials science play.
But according to Cramer, not only is the stock of DowDuPont still fairly cheap at just over 15 times next year’s earnings, but investors haven’t missed their shot to get in on the deal.
“You’re not too late,” he said. “In fact, since the deal was announced in late 2015, DuPont’s stock has slightly underperformed the S&P 500 while Dow has only outperformed it by a hair, meaning the stock could have a lot more room to run as we await Dow-DuPont’s big three-way split. I say trust [DowDuPont CEO] Ed Breen. He’s the king of value creation via breakup. Long live the king!”