Jim Cramer Calls ABM Industries (ABM) a “Trump-Proof” Hidden Gem

In a market rattled by geopolitical volatility and shifting trade policies, Jim Cramer has flagged ABM Industries (ABM) as a rare “Trump-Proof” stock—a company insulated from the whims of the administration’s erratic trade agenda. The facilities services giant has quietly outperformed volatile sectors like AI and semiconductors, defying market headwinds with steady growth and a resilient business model. Let’s unpack why this under-the-radar stock could be a defensive standout in 2025.

Why ABM is “Trump-Proof”
Cramer’s thesis hinges on ABM’s insulation from trade-related risks. The company’s core business—janitorial, maintenance, and energy management services—is inherently domestic and non-discretionary. Unlike sectors reliant on global supply chains (e.g., tech, retail), ABM’s revenue streams are tied to U.S. commercial real estate, aviation, and education. Even as tariffs and trade wars roiled markets, these essential services remained stable.

The “Trump-Proof” moniker also reflects ABM’s performance during periods of policy uncertainty. While AI stocks like NVIDIA (NVDA) and Broadcom (AVGO) lost ~25% in recent quarters, ABM’s adjusted EPS rose, and its dividend grew 17.8%. This resilience aligns with Cramer’s broader argument: investors should prioritize companies with low tariff exposure and steady demand.

The Financial Case for ABM
ABM’s Q1 2025 results underscore its defensive strengths:
- Revenue rose 2.2% to $2.1 billion, driven by 1.6% organic growth and acquisitions.
- Adjusted net income increased 1.3% to $55.3 million, while adjusted EBITDA grew 3.4% to $120.6 million, maintaining a 5.9% margin.
- Technical Solutions (ATS), a high-growth segment, surged 22% to $202.3 million, fueled by microgrid services—a sector benefiting from energy efficiency trends.
- Aviation revenue jumped 8% to $270.1 million, aided by new contracts and robust travel demand.

The ERP Transition: A Speedbump, Not a Detour
Not all metrics were rosy. ABM’s rollout of a cloud-based ERP system in its Business & Industry (B&I) and Manufacturing & Distribution (M&D) divisions caused temporary cash flow pain. Free cash flow plunged to -$122.9 million, and B&I/M&D revenue dipped slightly. However, management views this as a short-term disruption. The system is expected to normalize by mid-2025, unlocking long-term benefits:
- Cost efficiencies through real-time analytics.
- Enhanced M&A synergy capture to boost profitability.
- Improved client satisfaction via faster invoicing and quality controls.

The ERP rollout’s impact is already priced in, and the company’s strong liquidity ($296.9 million available) and amended $2.2 billion credit facility provide a safety net.

Looking Ahead: A 24% Office Leasing Surge
Management highlighted a 24% sequential rise in U.S. commercial office leasing activity in late 2024—a positive sign for ABM’s core B&I segment. With 50% of its workforce under union contracts (fixed rates through 2025), labor costs are manageable. The backlog in Technical Solutions—though down to $490 million from $590 million—remains substantial, suggesting future growth.

The Bottom Line
ABM’s Q1 results and revised guidance signal confidence:
- Adjusted EPS raised to $3.65–$3.80 for fiscal 2025, up from prior expectations.
- Adjusted EBITDA margin targets remain 6.3%–6.5%, achievable with ERP normalization.
- Dividend hikes and share buybacks (with $133 million remaining) reinforce shareholder value.

While risks like ERP delays and macroeconomic uncertainty linger, ABM’s focus on essential services and cost discipline position it as a rare winner in turbulent markets. For investors seeking stability amid political and trade chaos, this is the “hidden gem” Cramer is talking about.

Final Take
ABM Industries isn’t a flashy tech stock, but its steady-as-she-goes approach is paying off. With a 2.9X leverage ratio, a 236th consecutive dividend payout, and growth catalysts in microgrids and aviation, this is a stock built to weather storms. As Cramer says, “Stay the course”—and ABM just might deliver.

In a world where volatility is the norm, ABM’s resilience is no accident. The numbers don’t lie: this is a company—and an investment—designed to thrive in chaos.