No fear of small countries with small markets
What's the better bet? The paper of Spain or the paper of UPS, which just raised its dividend?
By Jim Cramer, TheStreet
The companies are stronger than the countries. Plain and simple. I will take the common stock of Kinder Morgan Energy Partners (KMP) or Enterprise Products Partners (EPD) over the paper of Greece or Portugal any day of the week. Which is really the problem. Who needs the headache of the stuff?
Not only that, but a lot of our dividends are going higher after the companies turned out to be doing better than expected. The dividend boosts are running hot and heavy. The paper of Spain or the paper of United Parcel Service (UPS), which boosted its dividend Thursday? Is there really an issue?
I am a big believer in contagion when the contagion can affect demand, but as Doug Kass spells out this morning using some pretty smart data from Mike O'Rourke, we are dealing with small countries and small markets. In the 1996-1997 fiascos, our issues involved Russia, which had just raised a gigantic amount of capital, and Asia, which was taking in a huge amount of tech.
I am not minimizing anything. I have said repeatedly that 2010 will not be like 2009. The past year pretty much represented a remarkable turn everywhere on borrowed money. I am simply saying that the common stocks of so many companies represented great buys after they got hammered, and I am curiously wondering with a Chevron (CVX) yielding 4% and an HCP (HCP) giving you 6% and change -- one of my faves -- whether we should use their pain as our gain.
The usual caveat: When I see the run in copper, for example, and I know it is driven by hedge funds, I want to short Freeport-McMoRan (FCX), a company without a dividend that just ran fivefold, and I don't want to be in a steel stock like U.S. Steel (X), which had a similar move.
But companies like Inergy (NRGY) are beginning to be bought.
You can stay away from the non-dividend plays, or you can go after the companies that just reported superior earnings with multiyear visibility, a la Boeing (BA), or the drillers, all of which signaled better times ahead and bet that Greece, Spain, Portugal and whoever is next -- Italy? -- won't hurt you.
What will hurt you is your fellow shareholder, the one who owns copper on margin, the one who has been playing oil in big tankers.
They are your enemy, not these tiny countries that are smaller than Exxon (XOM).
At the time of publication, Cramer was long Chevron.
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Why are stronger numbers considered bad news? Investors are worried about the impact on inflation and interest rates.
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