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"Even with their economy cooling, Chile still has a hotter economy than we do," Jim Cramer told viewers of his "Mad Money" TV show Thursday.
Cramer returned south of the border to once again tout Chile as his favorite South American country.
Cramer said than even with the economy slowing, Chile still posted GDP growth of 3.5% for 2007. The country's economy is driven largely by the copper market, where it accounts for nearly one-third of global copper production.
"This is a stealth play in China," said Cramer, who explained that as China grows, so will Chile. That's why he continued to recommend that 20% of investors' portfolios remain overseas.
Cramer again recommended
as one of his favorite Chilean stocks. Santander has the highest credit rating of any South American company and is also the largest, most efficient and most profitable of all the Chilean banks, he said.
Santander had asset growth in 2007 of 23% and posted a 25% return on equity. The stock is up 20%, including dividend payments, since Cramer last recommended the company back on Oct. 11, 2007.
"You won't find this growth in any U.S. bank," Cramer told viewers. He noted
was down 70% in the same period,
, down 49%, and
, down 44%.
Cramer also liked Banco Santander because of the highly regulated nature of the Chilean banking system. He explained that with such high barriers to entry, existing banks are protected from new entries into the market. This explains why the top five largest banks in Chile control up to 80% of the banking market in that country.
Cramer: Two Hot Rig Stocks
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Finally, Cramer said he was fond of Santander's 4.5% dividend yield and the fact that it trades at just eleven times its earnings. With 13% income growth year over year, Cramer said Banco Santander is a steal.
A Red Hot Utility
Cramer also recommended Chilean utility company
as a safer, more conservative Chilean play.
Much like his recommendation of
in Brazil, Cramer said Enersis is a high-growth foreign utility.
Enersis' revenues are split equally between its power generation and distribution businesses. Cramer noted that with two-thirds of the company's power derived from hydro-electric sources, Enersis is also an environmental play as Chile works toward energy independence.
Cramer said Enersis is a growth story. As Chile continues its stable economic expansion, the country's need for power will fuel automatic growth for Enersis. The company plans to invest up to $5 billion into its infrastructure by 2021, which signaled to Cramer a strong, multi-year move for the stock.
Cramer said with its 2.1% dividend yield and the stock trading at just 19 times its earnings, Enersis is trading at a discount to the global utility average. He said this $17 stock should be trading in the mid $20s.
Bad Speculative Plays
In the "Sell Block" segment, Cramer put out a warning on
( IMB) and
He advised investors not to be enticed by low-dollar speculations, saying such speculative moves can wipe out entire investments overnight.
Cramer said investors often get lured in by single-digit valuations and don't give much thought on how much they can lose. It could be "everything," he said, citing the recent example of
( TMA), as just another in a long line of companies that decline sharply, with little chance of ever recovering.
"Stocks don't get down to these prices because they're doing well," Cramer reminded investors.
In the case of IndyMac, Cramer noted the bank has a bad loan ratio of 6.5%, yet wrote off only $132 million of losses this quarter. The company continues to raise additional capital, diluting existing shares by the day. He also noted that 40% of the banks loans are in California, one of the worst markets in the country.
Cramer said Standard Pacific is also on the verge of imploding and is only kept alive by continued waivers allowing it to cease repaying its growing debts. "These stocks are too risky. Don't think they're cheap," said Cramer.
Cramer reiterated his buy on
as one of his favorite gold stocks.
In a final note, Cramer reiterated his buys on
National Oilwell Varco
on the news that
is calling for additional offshore oil rigs.
Cramer was bullish on
Cramer was bearish on
Central Garden & Pet
Jim Cramer writes about all the stock trades in his charitable trust for TheStreet.com in Action Alerts Plus. Recent stocks he's traded in this account include Schering-Plough (SPG) - Get Report, Yamana Gold (AUY) - Get Report and Inverness Medical( IMA).
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At the time of publication, Cramer was long Schering-Plough.
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