After Google (GOOG - commentary - Cramer's Take), Broadcom (BRCM - commentary - Cramer's Take) and Marvell (MRVL - commentary - Cramer's Take), the hottest stocks for 2006 have to be these asset managers, which are simply en fuego. As Michael "Diablo" Comeau has noted in these pages, if you really believe there's going to be a rally in the averages, there is no better play than the people who will get money in because the tide has turned. When you layer in that real estate doesn't get the marginal dollars anymore, you have a recipe for earnings estimate bumps and the requisite multiple expansion.
So, how expensive is the cohort? Legg Mason (LM - commentary - Cramer's Take), the umbrella, the Google of the group, now comes in at 24 times earnings, which is beginning to get pricey. I believe T. Rowe (TROW - commentary - Cramer's Take) at 21 times earnings and Franklin Resources (BEN - commentary - Cramer's Take) at 19 times earnings make more sense, but the hoopla around the changes with Citigroup (C - commentary - Cramer's Take) and Bill Miller's numbers gives Legg the edge. It is the best of breed, so it is difficult to argue with it.
Janus (JNS - commentary - Cramer's Take) sells at 29 times earnings but that's all take-out. Now that the performance has turned up, it isn't dangerous to speculate in it, but think about how much more money you could have made just being long Legg Mason.
One wild card in the asset management game is UBS (UBS - commentary - Cramer's Take), which is also a broker and is the cheapest of all -- and, therefore, a buy!
To me, this group is great for calls. I would buy deep-in-the-money calls on Legg Mason and treat it the way I described for Google, Broadcom and Marvell in my column on tech laggards. Best way to go, and sell common against when the averages get hit.
P.S. Will you be there when Cramer makes his next move?
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James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for ActionAlertsPLUS. Listen to Cramer's RealMoney Radio show on your computer; just click here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.
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