3 best stock plays for the rest of 2011
Autos, energy and clothing offer the best ways to take advantage of a peak in commodities as we enter the second half of the year.
I think the answer is when we failed to create any jobs to speak of and became a suspect place in which to do business. It happened when our budget deficit became laughable, such that everyone knows that any other country with a balance sheet like ours would see its interest rates soar. I think we became this way once it was clear that China's tightening was more important than our loosening.
That's the bad news.
The good news is that with the sudden break in commodity inflation, we have a chance to create some wealth in the companies that export overseas and depend on emerging growth. That's because emerging-growth countries will stop being forced to slam on the brakes, as they have for most of this year.
Let's focus on three areas. The first is American companies with big businesses overseas. That's what brings me autos, specifically General Motors (GM). Here's a company that people got all excited about because of Chinese sales -- not American sales. But the company's IPO window coincided with the shutting of the cheap-money window in China. I expect that, by September, after this oil intervention, China will no longer be actively trying to slow down its economy. That means GM can start selling many more cars. It is a huge swing factor, and the base in the stock is showing you that's what's to come.
Other companies like Cummins (CMO), Caterpillar (CAT), Joy Global (JOYC) and Freeport (FCX) can be winners. Heaven knows they've been crushed. But it is GM that I think does the best in this environment.
The second cohort is companies that can supply energy to markets that repatriate dollars. I had thought that coal would begin to do better because of Japan's newfound and justifiable antipathy toward nuclear power. But the country is shel lshocked; it hasn't adjusted to the new world yet. That will happen in the second half, and a beaten-up company like Peabody (BTU) will be the best way to play it.
The third area? If commodity inflation has peaked, as I think it has, you want to do something with apparel. These companies need oil to come down so shoppers do better and cotton to come down so raw costs are much lower. You want ones that are international in basis and not just domestic, because our economy will still not be strong enough.
My two favorites are Phillips-Van Heusen (PVH), because of Tommy Hilfiger and Calvin Klein -- huge brands overseas that were able to put through monster price hikes -- and Jones Group (JNY), which just bought Kurt Geiger, a very important international brand that nobody seems to care about. If you are going to sell luxury brands, you have to sell them internationally, and this U.K. footwear outfit makes Jones more of an international player, like VF Corp. (VFC) and PVH.
Jones has been hobbled by rising raw costs, but now that those have peaked -- and the balance sheet is in terrific shape while shares are in the doghouse -- you have what may turn out to be the best of all the second-half plays in the industry.
At the time of publication, Cramer was long GM, CMO, CAT and FCX.
Follow Cramer's trades for his Charitable Trust.
Really? What about WFT that you touted so consistently? It has been a piss-poor performer, almost any other choice in the oilfield service space would have been better. You got paid by the CEO that was on the show, right? Will you disclose that?
For any author to write a column on this site, they must have balls of steel or someone that reads the articles for them and gives them feedback. I would not want to be an author in this tough crowd and have to read what people give as feedback.
The only reason Cramer gets any print and others to read his poo is that he is the most shameless and unabashed self promoter of these days, and even worse than Donald Trump, Michelle Bachman and Larry Kudlow. and everyone knows those three are as about as low as a snake's belly.
Cramer gets continually and brutally beat up every day by nearly everyone who sees his opinions, but his elephant-thick skin allows him to laugh it off all the way to the bank. Even though I cannot stand his PT Barnum level of self promotion, I almost wish I were more like him in his supreme ability to ignore insults that are more than often deserved.
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