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NEW YORK (
) -- "Nobody ever got rich being dogmatic," Jim Cramer told the viewers of his
TV show Thursday.
He said the negative pundits are continually making false assumptions and ignoring the notion that things are indeed getting a lot better.
Cramer said he's heard all of the negative arguments before. The recovery will take longer than expected. There aren't any jobs coming back. Entitlements are going to wreck the economy. The consumer is dead. Housing is a mess. And, when the stimulus ends, the economy is headed south.
Cramer said all of these arguments may have at one time been true, but aren't any longer. He said when the negative sentiments become conventional wisdom, it's time to start betting against them.
Cramer said the facts about the market are strikingly different from what the negative pundits portray. Employment claims are getting a little better. The worldwide economy is so strong, it's helping the U.S. recovery. The banks are reporting a peak in bad loans. And, the back-to-school retail season was stronger than expected.
These are just a few of the facts, said Cramer, and it would be ignorant to ignore them. He said the market's recent rally is all about the consensus being wrong and misinformed. When you reconcile the facts, he said, being optimistic about the markets makes sense.
Continuing his "Made Here" series of the best of breed American manufacturers, Cramer recommended both
, two diversified industrial companies with amazing track records.
Cramer said 3M is a lot more than just "Post-it" notes, the company is one of the most innovative companies in the world and makes products for everything from healthcare and safety to communications. 3M reinvests 6% of sales back into research and development, more than any of its peers, which is probably why 3M has some of the highest profit margins out there.
Emerson is another winner, said Cramer. The company is a truly diversified company, making parts and tools for other businesses. Think process automation, keeping plants and factories running smoothly. Cramer said Emerson benefits from the global increase in infrastructure spending, which is why the company last reported an 10-cent-a-share earnings beat on an 11% jump in sales.
Cramer said both companies also pay modest dividends, with 3M at 2.5% and Emerson at 2.6%. Both companies also have over a 50-year record of paying and raising their dividends, making them incredibly shareholder friendly.
With both companies getting over 50% of their revenues from overseas, Cramer said these two companies should definitely be on investors' radar.
Debating Deckers Outdoor
In the Thursday "Sell Block" segment, Cramer went head to head with colleague Ken Shreve over the chart of
, which is up 66% since Cramer recommended it in October, 2009, but one that's down 9% since Cramer added it to his C.A.N.D.I.E.S. high-growth portfolio.
According to Shreve, the weekly chart of Deckers shows the stock getting tired. The stock had five breakouts over the past 18 months, but none of them lasted. Instead, each breakout has been smaller than the last, with the stocks' 50-day moving average moving from support to resistance.
But Cramer disagreed with Shreve's analysis of Deckers. He said yes, there's been profit taking in the name, but the underlying fundamentals are still strong, and the company is still largely misunderstood.
Cramer said Decker's flagship products, Uggs footwear, is not a fad, and the company is transforming from a U.S. footwear phenomenon to a global behemoth. The company is also transitioning away from retailers in favor of running its own, more profitable, stores.
Cramer said Uggs sales, which make up 70% of Deckers' sales, are strongest during the fall and winter months, so now would not be the time to sell. The company trades at just 11.9 times 2011 earnings, despite a 24% long-term growth rate.
In his "Eureka Moment" segment, Cramer recommended specialty chemical maker
, which he called a textbook case of what to look for in great stock.
Cramer said this global purveyor of specialty chemicals is up 90% from its lows in 2009, and has been on a steady climb higher. Why? Because the earnings estimates are too low, said Cramer. The company delivered a 6-cent-a-share earnings beat when it last reported, and the analysts have simply not caught up in their forecasts.
Also in FMC's favor, the booming agriculture market. Cramer said FMC is second only to
in exposure to the strength in agriculture. FMC is forecasting a 20% bump in earnings thanks to increased volumes.
FMC also has pricing power, he said, another thing he looks for in a great stock. FMC pushed through a $10-per-ton price increase in soda ash, and Cramer said there will likely be more, all of which lead to better gross margins for the company.
Finally, Cramer said FMC has little competition. He said the company focuses on niche chemicals for regional crops, an area which most rival simply don't compete. He said when you add up all of these bullish factors, the move in FMC's stock price makes perfect sense, and he'd be a buyer.
Cramer was bullish on
Bank of America
Nordic American Tanker
He was bearish on
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was not long any stock mentioned.
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