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"I'm here to tell you what happened to these emerging-market stocks, what I think is going happen and how you can make some money," Jim Cramer told "Mad Money" viewers Wednesday.
"It's because I think opportunity could be knocking."
He reminded viewers that emerging-market stocks have been "a house of pain" for the past three weeks while investors sold off holdings in emerging-market economies.
It used to be that when America catches a cold, the developing world got pneumonia, Cramer explained. That means when the
increased interest rates in the U.S., the developing world would get crushed economically.
But Cramer doesn't believe that is as true anymore.
"The big fear is that the Fed will destroy all your Third World stocks," he said.
Some investors think the Fed rate increases are a prelude to a repeat of the emerging-market "massacres" seen in 1994, 1997 and 1998.
"Traders think that because the Fed raised rates then, and the Fed is raising rates now, that must be the cause of the softness in emerging-market stocks," Cramer said.
Cramer acknowledges that there is a correlation, but it's not the cause of the current softness. "The market is drawing the wrong conclusion," he said. "The conditions that existed then don't exist now."
He explained to viewers that the economic fundamentals in BRIC (Brazil, Russia, India and China) are good.
"The bottom line is that emerging markets aren't just safe, they're cheap," he said. "They will bounce back because they have some of the best stories out there."
Cramer then outlined the following top five stock picks for emerging-market investors:
( TNE) because of its 5% dividend and the $1.3 billion special dividend the company is planning.
, which posted growth of 71% in the latest quarter.
Mexican wireless telecom
because you can't build land lines for telephones in Latin America, says Cramer, but he believes that the demand for cell phones will grow as increasingly rich citizens demand convenience and symbols of status, such as cell phones.
And finally, Indian auto company
. Cramer added that Tata won't be hurt by U.S. interest rates because the company's growth isn't dependent on U.S. demand. "More and more people are going to buy more cars in the quest for increased status," he said.
: Cramer recommended the stock last year at $18. "If you bought it, then you'd still be up," he said.
"You're getting an incredible sale on these stocks," he said. "These stocks have fallen a lot, and that's taken a lot of risk out of the situation."
Am I Diversified?
A caller from Idaho was first to play "Am I diversified?" His holdings were
Cramer liked Halliburton and Rite Aid. But he likes
more than Disney. He also liked Rite Aid and Bancolombia.
He added, however, that with Grey Wolf and Halliburton, the caller had some sector overlap. "You have two of a kind," he said. "Sell Grey Wolf and buy a defense contractor."
The next caller from Oregon asked about
Cramer likes Aegon. "That's a company we don't speak enough about."
He also liked Comcast and Citigroup, saying that "Comcast is kicking butt," and that he "loved" Citigroup.
Revlon? "That's a dog that ought to merge with
." Cramer didn't have kind words for software giant Microsoft, which he owns for his charitable trust
Action Alerts PLUS.
"The whole thing has melted, but I think it's cheap."
But in terms of diversification he said, "Yes, I like your hand. Stick with it."
Cramer was bullish on
J.P Morgan Chase
Bank of America
Cramer was bearish on
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At the time of publication, Cramer was long Schering-Plough, Microsoft and Halliburton.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on Mad Money are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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