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NEW YORK (
) -- "Big picture themes never go out of style," Jim Cramer told the viewers of his
TV show Thursday in an episode dedicated to Wall Street mega trends that never go out of style.
Cramer said the right theme can be a gold mine for your portfolio, especially if you choose the best of breed stocks in which to play them. These businesses make money in good times, and in bad, he said, and the two most important themes have been vice and vanity.
While vice and vanity may not be our best character traits, its hard to go wrong with smooth, wrinkle free skin or expensive baubles, said Cramer. Of course, he noted that owning a vice or vanity stock doesn't not mean investors can simply buy them and forget them. Companies fall down on the job, he said, and sectors go in and out of favor as the economy cycles, so homework and discipline are always part of the equation.
That said, Cramer turned to vanity as his first mega theme. He said companies that profit from helping us look better are always in vogue, and his favorites are
Cramer said Allergan is the larger of the pair with a wide breadth of products. The company's eye care business, which ranges from treatments for glaucoma to contact lens solutions, represents 47% of company revenues. Allergan is also the purveyor of Botox and Juvederm, two leading skin care products.
Cramer said Allergan is best of breed.
Medicis comes in a close second. Cramer said the company's anti-acne drug, Solodyn, now accounts for 75% of company revenues and sales have taken off as dermatologists have gotten aggressive on treating acne. Cramer said investors can't go wrong betting with either of these two great companies.
Turning to vice, Cramer said there are a lot of things that are bad for us, but good for our portfolios. Perhaps the most lucrative is smoking. Cramer said regardless of how investors feel about the act of smoking, owning tobacco stocks is going to make someone money, so it might as well be you.
When it comes to tobacco stocks, investors need to stick with companies with the best track record, proven managements and strong fundamentals, and that means
Phillip Morris International
, he said.
Few companies have pricing power, explained Cramer, but these two, with their dominant market share, do, and they're virtually unchallengable in the space. Altria's brands have more than 50% of the U.S. cigarette market, said Cramer, and the company also owns 28% of SABMiller, the world's second largest brewer.
Phillip Morris International, which was spun off from Altria in 2008, is a close second in its appealing nature, said Cramer. It controls 52% of the market in China and 15.6% of the $5.5 trillion market worldwide.
"Smoking is not going away any time soon," said Cramer, that's why these two stocks should be on every investor's shopping list.
Betting on Macau
Cramer said his next lucrative vice is gambling and investing in casinos. Gambling, he said, still attracts hordes of people who love the thrill, and that means big profits for the casinos.
While Las Vegas is synonymous with gambling here in the U.S., Cramer said the real money is now being made in the Las Vegas of China, a province known as Macau. Macau is one of only two cities in China where it's legal to gamble, a fact that has attractive huge international investment.
Cramer said the two best of breed players at the Macau table are
Las Vegas Sands
Cramer said both companies derive less than 30% of their revenues from Las Vegas, while betting big on Macau. Wynn has two resorts in Macau, with a third one in development, while Las Vegas Sands has three operating properties there.
Cramer prefers Wynn for its healthier balance sheet. Las Vegas Sands had a "going concern" scare in 2008, he said, but is now a major comeback story. Both companies have fabulous CEOs, said Cramer, but "there's nobody who does it better than Steve Wynn."
Iconic Luxury Brands
Returning to the vanity theme, Cramer asked viewers to think of all the unnecessary jewelry, purses, watches and accessories we buy. He said these things sell like crazy, and are the ultimate vanity plays. That's why he likes both
in the luxury goods space.
Cramer said Coach makes accessories like handbags, and distributes them through 463 stores here in the U.S. and 202 locations abroad, along with a presence in another 950 department stores.
He said the company also has a burgeoning business in China. He said Coach's CEO Lew Frankfort has been making all the right moves, and Coach now throws off a ton of cash, and is expected to deliver $728 million in free cash flow in 2011.
Tiffany, said Cramer, is another iconic brand, and is the second largest jewelry store after Cartier. Tiffany is a global one and, like Coach, is an aspirational brand that attracts truly rich big spenders, he said.
Both companies did a great job navigating the recession, said Cramer, and both still have considerable growth ahead of them. He said you don't need to understand why people buy expensive, unnecessary things, just understand the massive theme behind these two names.
King of Beers
Cramer ended the show returning to the vie theme, mainly the vice of alcohol. He said when times get tough, people don't cut back on alcohol, and that's great news for the oligopoly of
Cramer said Anheuser-Busch is a lot more than the king of beers, Budweiser, it's about the end of the beer wars after a huge round of consolidation. Companies that were once fierce competitors, he said, are now peacefully coexisting, making it easier for Anheuser-Busch to make money.
Cramer said on size alone, Bud can outspend, outsell and out market any other beer outfit in the world. And Bud's not just top dog here in the U.S, where it commands 49% market share, it's also dominant in the western hemisphere, with 69% share in Brazil, 74% in Argentina and 42% in Canada.
"Size does matter," said Cramer, but Bud is also in it for the long term, divesting itself of cheaper value products and focusing on its premium brands. "For the record, I'm a Bud Light Lime drinker," said Cramer, but that's just one more reason to keep an eye on the stock of the "king of beers".
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was not long any of the stocks mentioned.
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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