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Jim Cramer told viewers of his "Mad Money" TV show Friday that he's on fire when it comes to the composite materials.
At the beginning of the year, he said that
stock of the year for 2006, and it's up 128% since he recommended it
, another composite stock that he likes, is up 180% since he said it was a buy
Bragging aside, Cramer said that he's got the next composite play, and it's German company
SGL is not just a carbon company, he said, noting that it also makes graphite-based products. The company is paying fines to the European Union for having a virtual monopoly in graphite electrodes, but Cramer said that it's still good to be a monopoly because the company is able to raise its prices.
Titanium and graphite are both light and tough, so SGL is selling to the aerospace sector, the defense industry, and it makes brakes for race cars, he said.
It's in all the good businesses, and it has been able to raise prices, he said. Plus, he said that it's the cheapest of the composite stocks because the others have moved up so much.
However, he warned that SGL has the worst balance sheet he's ever seen and that it's neck-deep in debt. Even so, "the stock is smoking." It was up against tough comparisons vs. the same quarter a year ago, but it still managed to blow away the numbers.
Sales were up 10.9%, and its earnings beat consensus estimates by 18%.
Banking on Brazilian Build
"Just like many people did in the late '40s, we're going from Germany, where I recommended SGL, to Latin America," Cramer said.
But he said to look at Brazil rather than Argentina, and he likes
( ITU). The bank just bought back
Bank of America's
Brazilian business, making it the No. 1 bank in the country.
He said it's time to think about buying the stock because we are in the midst of "the great Latin American bull market ... the most improbable bull market in the world."
When U.S. interest rates go up, we're supposed to get a cold and Latin America is supposed to get pneumonia, he said. And when governments are unstable anywhere on the continent, all the Latin American stocks should go down. But Brazil has boomed despite months of rate hikes in the U.S.
He pointed out that Brazil is lowering its rates and is energy self-sufficient, both good reasons for it to grow.
He likes Banco Itau because it is involved in wealth management and credit cards. "A few years ago, Brazil had neither wealth nor credit cards," he said. But now the country is on fire, and it has a lot of both.
"It's time to buy
," said Cramer, who owns the stock for his
ActionAlerts PLUS charitable trust portfolio.
He has been recommending it along with all the infrastructure companies because he believes an energy infrastructure build-out is coming.
Foster Wheeler builds power plants, boilers and refineries, things that we need more of and that haven't been built in decades, he said.
"If you think the president will push through new refineries, you will win with Foster Wheeler," said Cramer.
He said that there is also a market-structure reason to buy the stock. The company once had a huge asbestos problem, and it eventually had to settle several lawsuits and get its balance sheet right, he said.
Foster Wheeler didn't have the money to do so and had to issue high-yield debt to raise the cash. Taking out these loans cost it a fortune in interest, but it had no choice, Cramer said.
He said that at the same time, the company's order book dried up because oil prices were so cheap.
Now it's getting orders all over the world and is a favorite choice of the U.S. government. Moreover, it has recently paid off the last of its high-coupon debt by paying the bondholders with stock. This should have been good news for them, but the shares came under pressure.
This is because many of those bondholders were bond funds, he said; and by charter, these funds are not allowed to hold stocks. They had to dump it all in the open market, which took the stock down.
Cramer said that he believes the selling has stopped, and that this is a great stock that has been kept under pressure because of structural inefficiencies. Now you can get it cheaper than you should be able to, he said.
The company reports next week, and he said he believes the quarter will be good. But lots of great infrastructure companies have reported good numbers and then taken a huge beating, so Cramer issued a caveat. He said he would buy half of his position before Foster Wheeler reports, and then half after.
Avnet Tech Check
In the great bull market that was today, Cramer said that he is pleased by the fact that the big industrial companies have pulled away from the pack, but surprised at how technology stocks have lagged.
To find out whether something is wrong, he spoke with Roy Vallee, chairman and chief executive at
. The company has exposure to nearly all parts of the technology sector because it distributes electronic components and computer products. It also provides engineering design, materials management and logistics services and markets and sells semiconductors.
Vallee said that the tech sector is not in danger, contending that personal-computer unit growth wasn't that bad in the first quarter, even though
Vista was delayed.
Vallee also said that cell-phone growth "is off the charts," which makes sense given the fact that digital consumer spending has been driving the sector since the tech crash in 2000.
He finished by saying that over the last five to six quarters, businesses have increased spending, including expenditures on technology.
To view Cramer's interview with Vallee, click here.
Cramer was bullish on
Genesee & Wyoming
Whole Foods Market
Procter & Gamble
Cramer was bearish on
Martha Stewart Living Omnimedia
American Science and Engineering
Christopher & Banks
Research In Motion
For more of Cramer's insights during the most recent Lightning Round, click here
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At the time of publication, Cramer was long Foster Wheeler, Microsoft, Occidental Petroleum and Procter & Gamble.
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