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NEW YORK (
) -- "Be afraid of the housing starts number due out tomorrow," Jim Cramer cautioned the viewers of his "Mad Money" TV show Monday.
He said the reaction to the housing starts number that are scheduled for release Tuesday and the existing home sales report on Wednesday will most certainly take the markets lower.
Cramer said he doesn't need a crystal ball to predict the headlines from tomorrow's and Wednesday's trading. He said the markets will fall as the economists are "shocked" by the poor performance in housing. Cramer wondered why these estimates are so high in the first place.
"All of these estimates are unrealistic," said Cramer, given the unemployment rate and the expiration of the federal tax credit on new homes. He said the economists, and their macro views on the economy, have been predicting housing wrong demand month after month, and tomorrow will be no different.
Cramer, on the other hand, said he takes his cues from the homebuilders themselves, who are far more cautious, and accurate, in their forecasts.
So while the world is "shocked" by the housing numbers Tuesday and again on Wednesday, Cramer said investors should be using the weakness as a buying opportunity and should be adjusting their portfolios ahead of time. He said there is growing pent-up demand for new homes, and that demand will be unleashed soon.
"Ignore the sirens of negativity," Cramer told viewers, "housing will get better." And in the meantime, use the market weakness and be ready for the wave higher.
Two IPO Plays
In the "Know Your IPO" segment, Cramer compared two coming IPOs, that of Green Dot, which will trade under the ticker "GDOT," and Ameresco, which will trade as "AMRC." Cramer said both IPOs can make you money, but only if you play them correctly.
Green Dot is the country's largest prepaid debit card provider, a huge business that didn't exist five years ago, but one that now has more than $119 billion loaded onto prepaid debit cards. Cramer said this business flourished during the recession as more and more consumers chose prepaid debit cards over expensive credit card alternatives.
Green Dot is expected to offer 3.8 million shares, priced between $32 and $35 a share. Cramer said he expects the deal to pop, but would be a buyer on the IPO only, and only up to $35 a share. Longer term, Cramer's worried that Green Dot will be held hostage by its largest customer,
, which is why he sees the stock longer term hovering near $31 a share.
Ameresco, on the other hand, is a great long-term investment, said Cramer. The company helps plan and build energy efficient projects for governments and large institutions. Cramer said it's estimated that the U.S. will need $500 billion in such projects through 2020 to help it save more than $1.2 trillion in energy costs.
Ameresco is expected to price between $14 and $16 a share, but Cramer said he'd pay up to $18 a share for the stock given its great long-term outlook. With 75% of the company's revenue coming from the government, Cramer said Ameresco may not be as sexy as Green Dot's debit cards, but it has solid customers.
"With the euro rebounding, we need to start thinking about stocks that can benefit from currency translation," Cramer told viewers. And that means companies like
Philip Morris International
are in a good position.
Cramer said the name of the game is overseas profits, and that's perfect for companies like Philip Morris, which derives 100% of its profits from overseas, and sports a solid 4.6% dividend yield. Philip Morris already cut their 2010 earnings guidance, but with the euro now rebounding, Cramer said those estimates are now too low.
Philip Morris has been raising prices, despite higher taxes being levied on its products. Additionally, the company has been $1.5 billion in cost savings since its split with
, which he also owns for his
Action Alerts PLUS portfolio, and its shares trade at just 10.5 times earnings despite a 10% to 12% long-term growth rate.
Colgate-Palmolive derives 76% of its sales from overseas, and 2.6% dividend yield. The company offers premium brands like Colgate, Irish Spring, and Ajax among dozens of others. Cramer said Colgate is an emerging markets play, with lots of room to grow in markets like Brazil, Russia, India and China. He said the company also has a clean balance sheet, and of course, its dividend. \\
Cramer told a viewer that he's still a fan of pipeline master limited partnerships like
Kinder Morgan Energy Partners
MarkWest Energy Partners
, and would buy them on weakness when their dividend yields rise.
Cramer told a second viewer that he's not a fan of
, or any solar stocks, all of which require oil prices to be higher or government subsidies to thrive.
Cramer was bullish on
He was bearish on
-- Written by Scott Rutt in Washington D.C.
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At the time of publication, Cramer was long Altria.
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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