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NEW YORK (
) -- "Everything that goes up is not a bubble," Jim Cramer told the viewers of his "Mad Money" TV show Tuesday, as he reminded viewers that the laws of supply and demand have not been replaced by the law of gravity.
Cramer said he's had enough with the skeptics keeping investors from making real money in stocks, and especially in commodities. He said it's OK to be skeptical sometimes, but being skeptical about everything will only hurt your portfolio.
Case in point, the commodities. Cramer said the last big rally in commodities like copper and oil was indeed driven by a hedge fund frenzy, but this time is different. This time, he said, commodities are being driven higher by real demand, by the fact that the world is growing, and there's an inability to find new raw materials fast enough.
Cramer said the case is simple, the rest of the world is going through the same rural to urban boom that the U.S. went through 100 years ago. As more and more people move into the modern world, they plug in more things, and that means the world needs more copper.
"Don't over think it," said Cramer, as he told investors to consider stocks like
, along with
, a stock which he owns for his charitable trust,
Commodities like copper are not being bought by hedge funds, Cramer concluded, they're being bought by countries who fear they might not be able to get enough of the stuff.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague John Roque over the charts of the basic materials stocks to see if Cramer's commodity bull market thesis holds water on a technical level.
Roque examined a chart of the S&P Basic Materials Index and its relationship to the overall
. He found that from 1977 through 1989, the basic materials stocks represented 8.6% of the overall
, but after a multi-year slide, the same stocks only accounted for 4.5% of the value from 1989 through the present. Currently, basic materials only account for 3.7% of the average.
Turning to the trading action of the group, Roque noted that the materials stocks were building a base from 1997 through 2005, then broke out on a strong rally that was only ended by the 2008 recession. Recently, however, these stocks have crossed over their 40-week moving average and once again appear to be powering higher as a group.
Cramer said he agrees with Roque's analysis, saying that it's clear the rest of the world just can't get enough of the commodities it needs, and stocks like Freeport-McMoRan, Vale and
will likely resume their march higher. He said the materials group is poised for a multi-year run, and he'd be a buyer of the best stocks in the sector.
Don't underestimate the potential of China, Cramer told viewers as he featured which U.S. companies have the most to gain from Chinese expansion.
Cramer said on the surface, China might not seem like a big deal to companies like
, since China accounts for only 10% of company earnings. But that would be a mistake, said Cramer, given how huge China actually is.
To put things in perspective, Cramer noted that China has 12 cities with populations over four million people. The U.S. only has New York and Los Angeles. China has three cities larger than New York, and all told, China has three times as many people in their top cites as does the U.S.
That's great news for U.S. companies, said Cramer, and especially for
, a stock that 's up 91% since Cramer got behind it in July 2009. Cramer said Starbucks only has 400 stores in China currently, but is ramping up to over 1,500 by 2015, adding an average 220 new locations a year. Given that Starbucks only has .7 stores per million people in China, and 36 stores per million in the U.S., Cramer said Starbucks is only just getting started.
Even better, Starbucks reports that stores in China are 22% more profitable than their U.S. counterparts, making China the company's new second home. Starbucks is not a new entry into the Chinese market, noted Cramer, which gives the brand staying power.
But Starbucks isn't the only beneficiary of China's size and potential. Cramer said he likes Yum! Brands and even
, which also has a lot of growth left in the country.
In the "Executive Decision" segment, Cramer spoke with Tim Main, president and CEO of
, a company that just delivered a 7 cent a share earnings beat on a 32% rise in revenue with better-than-expected guidance. Shares of Jabil are up 19.2% since Cramer recommended the stock as a momentum play just two weeks ago.
Main called Jabil "a very different animal" from the company it was just a few years ago, and a different company from the rest of its industry. He said since 2002, Jabil has been diversifying away from manufacturing printed circuit boards and into manufacturing completed products in 22 countries.
Main also noted that Jabil has diversified its offerings into higher margin sectors, like health care, where the company builds everything from CAT scans and blood analyzers to monitors and portable ultrasound units that are now being deployed to emerging markets. He said while 50% of Jabil profits came from consumer electronics in 2006, today the company has low levels of concentration in a host of industries.
Main said that Jabil has years of experience, which separates it from the competition. He said Jabil has expertise in not only manufacturing, but also engineering, testing and every facet needed to get products to market.
Cramer reiterated his buy recommendation for Jabil, saying the stock is not done and is heading much higher.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer gave a shout out to everything that was supposed to go belly up during the recession, but didn't. Cramer said whether it was the banks, the REITs, retail or the home builders, the bears were predicting the demise of countless companies. But in the end, far fewer failed than anyone thought.
Cramer said he's been preaching the "glass half full" argument for months, but with stocks like
doing so well, Chrysler getting a great bid for its financial arm and the home builders starting to run, he's taking a moment out to say the proof is in the pudding.
In his closing comments, Cramer said he'd take some profits in
, but he remains bullish on
, an Action Alerts PLUS stock.
In the Lightning Round, Cramer was bullish on
Penn Virginia Holdings
Cramer was bearish on
Las Vegas Sands
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long CAT, INTC.
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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