NEW YORK (
) -- "It's too late to sell the smokestack stocks," Jim Cramer told the viewers of his
TV show Wednesday.
He said the rotation out of the consumer staple stocks has begun, and the big money is moving back into the industrials.
Cramer said we've probably reached the high-water mark for stocks like
Procter & Gamble
and the bottom for stocks like
, a stock which Cramer owns for his charitable trust,
Action Alerts PLUS. Why the move now? In a word, valuation.
Cramer said a stock's valuation matters, and when a company's shares reach a price earnings multiple twice that of their growth rate, that's when the big institutional investors begin dumping.
That doesn't mean that investors should dump their
, but that does mean those who can't take the pain should use tomorrow's strength to lighten their positions.
Cramer likened the stock market to a game of "Chutes and Ladders," saying the markets never move in a straight line. There will always be rotations in and out of different sectors, he said.
But, Cramer noted, he invests based on long-term trends, like the need for more food, more roads and the need to mine more coal to fuel the world's energy needs. Cramer said he's not going to be held hostage by every 50 cent move in the price of oil or the euro.
"Rotations happen," said Cramer, but that doesn't mean we need to play every move like it's 2008. The long-term trends are still good, which is why investing in the now cheap industrials makes perfect sense.
In the "Executive Decision" segment, Cramer spoke with Kelly King, chairman and CEO of
, a regional bank whose shares are up 35% since Cramer first recommended it in May of 2009. Shares are down slightly, 7%, since Cramer last spoke with King on Feb. 14.
King said BB&T did see a slowdown in activity mid-way through the first quarter, but that weakness has passed and companies are once again making investments in equipment and employees.
King also responded to reports that the government is preparing to impose more stress tests on banks and limit dividend payments. He said anytime there is a crisis, the regulators tend to overreact.
He said it's time to realize that the recession is over and the banking sector needs to support the recovering economy. "You can't lump the good banks in with the bad," he noted, the regulators need to treat each bank individually.
Finally, when asked about homeowners living in homes for up to a year or more without making payments, King said that no banker wants to kick families out of homes. That said, King continued to say that it's simply not OK to borrow money and not pay it back, and there needs to be a better system for evicting foreclosed homeowners and recovering those properties.
Cramer continued his support of BB&T, saying that BB&T was one of the few banks that remained profitable through the financial crisis.
Big Soda Play
In a second "Executive Decision" segment, Cramer spoke with Daniel Birnbaum, CEO of
, a stock that soared up 23% today on a 12-cent-a-share earnings beat and a 50% rise in revenues. Shares of Sodastream are now up 170% since Cramer got behind the stock in Nov 2010.
Birnbaum said that Sodastream offers consumers four things: convenience, value, wellness and environmental benefits. He said individually those things might not be compelling but as a whole package it makes a lot of sense for consumers. On average, consumer save 70% if they're making their own carbonated water and 20% to 30% if they're making their own cola products.
Birnbaum also said that its no simple task to compete with Sodastream. He said the company has entrenched competition in Sweden, and still commands 80% market share with its 100 flavors and 35 different soda making machines.
Back in the U.S., Birnbaum said that Sodastream is focused on the in-home market currently, but plans to expand into the corporate market eventually.
Birnbaum said the soda market is estimated at $250 billion globally, and if Sodastream can capture even single-digit market share, it would have a huge business. He agreed that Sodastream's growth path has a lot of parallels to that of
Green Mountain Coffee Roasters
in the coffee category.
Cramer said he wouldn't be a buyer of the stock up $10 a share, but if it comes in a bit, he'd jump in.
Cramer sat down with Austan Goolsbee, chairman of the Council of Economic Advisors, which advises the president and Congress on economic matters.
Goolsbee explained that the economic advisors don't have a day-to-day working relationship with the president, but they do work closely on all economic matters. He said the tone towards business in Washington has definitely changed since 2009, when the focus was "rescue mode." Now, he said, it's in a transition mode where the most important thing is to support the private sector.
Asked why Obama doesn't talk about successful programs like TARP or the auto bailouts, Goolsbee said those programs are definitely wins for the president, he wishes those actions weren't needed in the first place, and therefore doesn't advertise them.
Turning towards natural gas, Goolsbee said the president endorses the safe expansion of domestic oil and natural gas production. He said the administration is also pushing research into alternative fuels and improving efficiency to decrease demand as well. When it comes for the oil markets, Goolsbee also said the president is for higher margin requirements for oil futures traders.
Cramer was bullish on
Nordic American Tanker
He was bearish on
Dell Off the Hook
In his "No Huddle Offense" segment, Cramer made a change to his "Wall of Shame" list of the worst CEOs, removing Michael Dell, chairman of
from the wall.
Cramer said he was wrong to doubt Dell's ability to bring his company back from the dead. He said Dell's 11-cent-a-share earnings beat and raised guidance was the exact opposite of rival
. He said Dell understands that growth will not come from consumer PCs, but rather from corporate customers and data centers.
"Dell showed strong execution," he said, and Michael Dell is now leading the company in the right direction.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long Caterpillar.
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