Jim Cramer's Best Blogs
Jim Cramer fills his blog on
RealMoney
every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- the Kraft-Cadbury venture,
- a growing weariness with the rally, and
- an end to the buying.
for information on
RealMoney
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Kraft-Cadbury Could Jolt the Candy Aisle
Posted at 11:39 a.m. EDT, Sept. 14, 2009
Could
Kraft
(KFT)
-
Cadbury
(CBY)
lead to stable margins in the candy industry? Here's a cutthroat seasonal business that often has had problems with its margins.
When you read through the excellent trade press on the potential of the deal, all you can do is recognize how much this deal would be for candy the way
Anheuser-Busch Inbev
(BUD) - Get Report
was for beer. In case you haven't followed the pricing in beer and the gross margins of the players, you may not recognize that we are in a major beer renaissance, not because of the top line, which is anemic, but in bottom line. You can't tell from looking at Inbev, but a gander at
Molson Coors
(TAP) - Get Report
shows you exactly what I mean: "Relief post quarter," said a Bank of America/Merrill Lynch report from right before the takeoff at the beginning of August, and it really does tell the story.
Deutsche Bank, which has a buy on Molson Coors, also pointed out in an excellent report after the last quarter that "equity income was significantly better than expected," Why? "Margins significantly better than we expected as cost synergies" expected to ramp.
Left out of all of these reports, though, is the obvious: If you take out a big player in a competitive industry, you get pricing relief even as sales weaken.
Which brings me to this Kraft-Cadbury deal. The candy industry has been fractured among Mars,
Hershey
(HSY) - Get Report
and Cadbury. While there are no true synergies with Cadbury and Kraft on the candy aisle, obviously the synergies from advertising and the lack of a
need
to price cut with the Kraft umbrella could have a huge impact on Kraft and other players.
On Kraft: Margins go higher, because the delivery system of Kraft to stores is already in place. Kraft does have Planters as a play on the snacks oil, but that won't move the needle much. Kraft would be able to cut costs though and get some growth.
More important, with Mars private and burdened by debt, and Hershey spending to try to take share, we could be in a rare moment where we get the same kind of oligopolistic pricing that beer has just undergone. In other words, no one has to do better top line -- this is an industry with little growth -- but everyone can benefit bottom line.
That's why I like this deal so much. It is the way of the future.
I would be buying Hershey off this. I would be buying Kraft
after
it gets Cadbury, and I think that should be rather soon, because it feels a lot like Inbev's pincer move on Anheuser-Busch.
A very good deal that can really make a difference to an industry with the same low growth as beer.
At the time of publication, Cramer had no positions in stocks mentioned.
Weary of the Rally?
Posted at 7:36 a.m. EDT, Sept. 16, 2009
Can you weary of a market going higher? Can you be as exhausted of the rally as you are of a selloff? Sometimes that's how I feel when I look at my bases for stocks I own and where they are now and realize the impossibility of reaching for even the best names. It feels like what happens when you bought low, and then it turned out that things could go much lower. You feel like you should sell, but then the stocks go much higher and you get left behind.
This is a time when discipline has failed people. It is when the market is most electric and exciting and people just figure, "What the heck? I will hold on to that
Caterpillar
(CAT) - Get Report
or
Deere
(DE) - Get Report
or
Chesapeake
(CHK) - Get Report
or
Devon
(DVN) - Get Report
... and why not? It hasn't hurt me."
The cyclical stocks have all had 20% moves in a heartbeat, and yet they are not expensive if we have a growth economy.
Apple
(AAPL) - Get Report
? Maybe it is the cheapest when the new accounting rules come in for smartphones that make them like regular phones. Right now it seems expensive, but I
made the case last night that it could be anything but.
But good things keep happening. The new tax law changes for commercial real estate are going to take a bite out of that forbidden fruit, and I know that all the bearish wags I talk to about CRE (as it is known) didn't see this coming. No wonder all of these REITs people are short can keep going up.
Along with
GE
(GE) - Get Report
.
So much good.
But so high.
That's really the issue, isn't it?
At the time of publication, Cramer was long Devon.
I'm Done Buying
Posted at 2:35 p.m. EDT, Sept. 17, 2009
I usually don't like to say this, but I had chats today with Bryan Ashenberg from
and Stephanie Link from
, and all of us said the same thing: We aren't doing any more buying until this market comes down.
So, we don't want to sweat the program. Let it rain.
Last night I got a call about discipline -- what do I do when I like a story but the stock has run above my basis?
I typically think, well, it depends. If the story's solid, let's say a
Honeywell
(HON) - Get Report
or
Johnson Controls
(JCI) - Get Report
, where I think next year's numbers are too low, then I might break price and pay up.
But in this market, you aren't just paying up, you are breaking every bone of discipline in your body. You are simply begging for a bruising. You could look back 10 days from now and say, "How did I ruin my basis here? What was I thinking?"
So, this post is simply dedicated to the proposition that if we were to come down a bit, then there is the possibility of getting back in and doing some buying.
Right now, unless it is something like a
Nucor
(NUE) - Get Report
that I mentioned
earlier that is barely up for the year, I have to wait.
We are too overbought. We are too high. I bet a huge percentage of the sales here will look good in five days.
I bet few of the buys will, though.
At the time of publication, Cramer was long Johnson Controls.
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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