RealMoney Radio: Fueling Alternatives

The first caller on Jim Cramer's "RealMoney" radio show Wednesday asked him about whether to hold CB Richard Ellis Group(CBG Quote), the world's largest commercial real estate broker.

Cramer recommended avoiding any stocks connected with the real estate market or the building blocks for the real estate market.

"Even commercial real estate has to be slowed," he said, adding that the Federal Reserve wants to keep a lid on any potentially inflationary economic activity.

The next caller asked about United States Steel(X Quote).

"The most difficult stock to own now is a steel stock," Cramer said. "When you own a steel stock, you want the economy to go full steam ahead."

But Cramer also believes that if the economy were to cool down, U.S. Steel's stock price would rise.

"That's because in the end we have learned our lesson that the Federal Reserve is in charge," he said, and he urged listeners to lighten up on their U.S. Steel positions until the economy cools.

The next caller asked about defense company General Dynamics(GD Quote). Cramer is a fan despite the fact that the stock has been falling.

"Is the stock falling because of the fundamentals?" he asked. "No, it's because it's a stock," and all stocks are getting killed in this market, Cramer said.

The underlying fundamentals look good, and the company is in line to collect some "gigantic tank orders."

"If General Dynamics goes down, I'd buy more," he said.

The next caller asked about alternative fuel companies. Cramer said that such stocks were usually speculative, and that as a result, they may be disproportionately hurt by a general weakness in the market.

As a defensive move, he recommended that listeners lighten up on holdings of alternative fuel company Pacific Ethanol(PEIX Quote).

Paychex(PAYX Quote) and ADP(ADP Quote) were two companies another caller asked about.

"These are precisely the companies that do well right now in the economic cycle," Cramer said.

"Why?" Because they specialize in running outsourced payrolls for other organizations. As a result, in the days just before paychecks are processed, these companies receive vast quantities of cash.

That cash can be lent out to the overnight money market, Cramer said.

When interest rates are low, that doesn't do a whole lot for earnings; but in a high-interest rate environment, like the current one, ADP and Paychex stand to have strong earnings.

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