Why Jim Cramer thinks GE Aerospace and GE Vernova are poised for success

GE Aerospace and GE Vernova can keep climbing, CNBC’s Jim Cramer said, because the two companies’ products are relevant globally and can be useful amid trade tensions.

“In the end, both GE Aerospace and GE Vernova are poised to be winners from the president’s trade war, because 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,” he said. “That means they need to buy aircraft and … they need to buy turbines.”

Along with GE Healthcare, the two companies are spin offs of General Electric. The conglomerate officially completed its break up into the three separate companies last year.

Both GE Aerospace and GE Vernova are important parts of the broader economy, Cramer said.

GE Aerospace makes jet engines and airplane parts, and it also has a repair and maintenance business. Cramer reviewed several positives in the outfit’s quarterly report, including growth in the commercial engines and services business, its largest segment. He also said he liked management’s commentary about improvements in its supply chain, which he said is especially important due to the current higher tariff environment.

Cramer also noted that over the past quarter, Korean Air agreed to buy 103 aircraft from Boeing, many of which will contain GE Aerospace Engines. The is the largest ever Boeing jet order in the air carrier’s history.

GE Aerospace is “one of the best ways to play the incredibly robust bull market in aerospace and travel,” Cramer claimed.

Energy name GE Vernova managed to beat the estimates, Cramer said, praising its power business and its decision to completely acquire Prolec, a company that makes equipment for the electric grid. The purchase helps grow GE Vernova’s electrification segment, Cramer noted, as data center buildout swells the need for electricity. Cramer was also impressed by GE Vernova’s strong backlog growth, saying that metric provides straightforward insight into the level of demand for the company’s products.

GE Vernova is also “one of the safest ways” to invest in nuclear power, Cramer suggested, because the company actually builds nuclear plants. He noted that there has been a lot of speculative interest in nuclear power, and many riskier stocks have declined recently. It may take a long time to reap the rewards from new plants, Cramer continued, simply because building them can take more than a decade.

Despite beating Wall Street’s expectations, both companies sold off right after they reported earnings earlier this week — but they have since largely recovered. GE Aerospace is currently up 83.70% year-to-date, while GE Vernova is up 80.94% year-to-date.

“When two of the children of General Electric reported this week, the market got them both wrong, but today they came roaring back,” Cramer said. “I’m betting that GE Aerospace and GE Vernova are ready to run and that today’s rallies were the ones that mattered.”

GE Aerospace and GE Vernova did not immediately respond to request for comment.

Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market.

Disclaimer The CNBc Investing Club owns shares of GE Vernova.