Jim Cramer fills his blog on
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 less obvious China plays
- Tech's positive prospects
- Sen. Blanche Lincoln's antibank crusade
for information on
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Seek the Less-Obvious China Plays
Posted at 9:34 a.m. EDT, Monday, June 21
Who wins in China? First there are the obvious machinery and mineral plays, notably
, which are the most glaring. They have all made huge bets on China, and they are going to make hay now that China is very certain of its footing.
You can't mine without Joy Global and Bucyrus. You can't build without Caterpillar. You can't deal with all of the growing air traffic without Boeing, even though China is trying to crack into that market. You can't build trucks without Cummins. You can't farm without Deere.
The mineral plays are almost too obvious for words:
are all down because China is supposed to be weak and because the worries over the mining tax have hurt BHP mightily. I believe the tax will be whittled down, and the stock's decline is pretty humongous.
, the chemical company, and
, the diversified industrial giant, both have made heavy bets on China specifically and on Asia in general.
> > Bull or Bear? Vote in Our Poll
But I like the less visible players, the ones that thrive when the middle class thrives, because everything that has been coming out of China, whether it be the tacit endorsement of the factory strikes or the stronger currency, allows more buying of our
products and allowing more spending.
The ones that need to be highlighted are
as obvious, although many are well known. Yet, I think this area is the longer-term winner and can be bought even up here.
First, technology, chiefly Web and smartphone technology. There are the obvious ones:
. Baidu, which has 75% to 80% of the search market, is the dominant play. There are roughly 340 million Web users in China, and 155 mobile Internet users. Baidu trades at 38 times next year's earnings. However, I think the estimates are way too low. When you have money, you buy something Apple. The iPhone is just ramping there. You can only imagine how far the iPad can go there.
The derivative plays stand to benefit hugely, notably
, because it is fabless and can make a fortune on its sound chips. The CEO, Jason Rhode, told me on "Mad Money" that while the Apple business is so strong, the company makes a lot of chips that monitor electricity, another business with chips that could sell well in China.
still make sense even up here as Apple tagalongs.
, which has a very big Chinese asset that has yet to be unlocked. I think its Chinese assets could be worth as much as $6 billion, and I think it gets almost no value now with the company's current $21 billion market capitalization.
I like some of the tech plays that are heavily overweighted to China. Last week I had
on the show, a company that makes semis for hard drives, and the stock has been heavily shorted and sold. Sehat Sutardja, the chairman, president, CEO and co-founder, thought that investors are way too focused on the next six weeks and not at all focused on the next six months, when a whole host of new products kick in. Twenty-six percent of its business is with China.
have 32%, 24% and a high percentage of its 63% Asian business. Perhaps the biggest winner will be the 3-D chip maker
. Last week I spoke to Huang Jen-HSun, who didn't understand why his stock was so low, given the momentum the company has. Maybe after this revaluation of the yuan, people will look at it again, as 39% of its sales are in China.
In the end, though, the stocks that might go up more slowly than a Joy or a Bucyrus, but could be the best plays because they are not thought of yet as China derivatives or are undervalued as plays on China:
. Coach is profitable in China with 37 stores. It will only be a $250 million business in fiscal year 2012, but there's so much room for the company to grow, and it recently bought out its Asian partner.
Nike reports this week, and many are expecting a weak quarter. If there isn't one, look out, as Nike's going from 300 cities in China to 500 cities. As with Coach, China's not as important for Nike right now, with 9% of its business being done there, but it's the growth rate in the future that matters. Sotheby's is a play on a richer Chinese consumer. Recently the Asian Art Week in Hong Kong was up 189%. The Chinese covet collectibles. Obviously, gold will be a beneficiary, too. I have been a huge bull on gold and think it could go to $2,000 over the next few years, in part because of Chinese demand.
Travel and leisure will grow quickly.
has 50 hotels in China, but, like Coach and Nike, it's all future, as it is expected to build 80 new hotels.
Finally there are the two that people
circle back to. First, Yum! Brands, as 30% of its revenue comes from China and it's got 37% growth there. Yum!'s has three units per million people vs. 60 units per million in the U.S. It is opening new stores like mad. It's the largest U.S. retail developer in China, with 3,500 units now and 96 new units just this quarter.
. Long my favorite in the casino group, Wynn probably has the most leverage to Chinese consumer spending power. Wynn Macau has been generating $1.37 billion to $1.75 billion in monthly gaming revenue since August of 2009. Wynn generated 65% of its revenue and 75% of its earnings before income taxes and depreciation from Macau with lots of room to grow. Wynn's Encore is the
new hotel in Macau, and the gaming mecca needs as many rooms as it can get.
I suspect that in a couple of days, or even a day, the Chinese euphoria will wear off, but these trends won't, and they are going to be evident for multiple years to come, so stay engaged with these stocks. In a few years time they are going to be thought of as Chinese equities with an American tail. These Chinese moves matter beyond what anyone can calculate. They will be obvious, for example, and re-ignite when the
deal comes this fall. (
is only 3% China but growing at 61%). The Chinese actions will be obvious to the third and fourth quarters and talked about, most importantly, when the earnings conference calls begin, as they will be an excellent offset to whatever growth might be tempered in Europe. I think that buyers and short-sellers are going to hear about China endlessly when the quarters are reported, and it will color those calls in a most positive fashion.
To read about a Chinese yuan revaluation option play, see
At the time of publication, Cramer was long AAPL, BA and CMI.
Tech's Going to Be Just Fine
Posted at 9:57 a.m. EDT, Tuesday, June 21
Research In Motion
. The gantlet.
What will be the chatter, the focus? I think we are going to hear that things are just OK, that Europe is just OK, that Asia is just OK ... but as I said yesterday, the yuan revaluation gives all of these something to say. They give a positive coloration to things that would otherwise be negative.
You know that Adobe will be on the offensive, saying it doesn't need Apple and that it's doing terrifically. Jabil might be tentative, but they have the Apple biz, and that means they have something to say even if you aren't supposed to talk about Apple. Red Hat? Maybe a good tell for
, not that the latter needs it because we are going to see their new red hot Chatter product, the corporate social networking system that companies are apparently clamoring for.
Research In Motion remains problematic to me, and its report on the 24th will not change many minds, I believe, because, yes, Apple and the iPhone. The chatter of Apple going to
Scott Moritz has a good piece about the probabilities here -- will simply make it very tough for RIMM to say anything that anyone will want to hear. Perhaps the biggest surprise might be the Dell analyst meeting. They've got something to say -- notably components coming down in price so gross margins going up -- and Dell will say its new strategy is working.
Again, I worry about near-term softness. But so is everyone else. Maybe that's why we could have a positive run here, one that could be augmented by all of the ETFs that favor tech and might move everything in the sector along with them.
: Doug is out with
an interesting take on the technicals and high-frequency trading , and it makes a lot of sense. The distortions are awful. And real.
At the time of publication, Cramer was long Apple.
This Antibank Campaign Can Do Real Damage
Posted at 11:54 a.m. EDT, Thursday, June 24
Will the senator from Arkansas please yield the floor? You are destroying the large commercial banking system and sending business to
as surely as if we banned onshore investment banking. You are a one-woman wrecking crew.
I am talking about Blanche Lincoln and the simply incredible William Jennings Bryan imitation she is pulling off with impunity, the roll-back-the-clock power to community banks -- the most reckless of lenders -- and the hobbling of
Bank of America
-- in the name of, what? The European banks? How about
, her home-state retailer that will soon be able to compete nationally against the national commercial banks if she gets her way?
There is no doubt that if Rule 716 is included in the final financial regulation bill, a rule that strips the big U.S. banks of the ability to compete fairly with the German, British, French and Swiss banks, in trying to offer an investment-banking suite of products with derivatives attached, then earnings have to come down for the majors. They have to offer the accoutrements of investment banking -- currency swaps, interest rate swaps -- to the likes of
from a different entity within their own bank, a walled-off one that raises costs and makes these banks possible scofflaws if they try to match the Germans and Brits and French and Swiss.
I think she knows this. I think this is all punitive. I think she doesn't give a hoot who is hurt as long as the community banks are helped, and I think she is reacting out of perceived losses that derivatives gave our financial system and wants to punish those who offer them.
thing wrong with this analysis. With the exception of
, the banks didn't lose much in derivatives and they were a huge profit center and a solution to a lot of international companies' needs. They will now go elsewhere.
The losses were in
, not in derivatives.
She needs to yield the floor, or else the banks are
not done going down.
Throughout this period, I thought she would lose -- either because of her own home state election or because of Dodd or because of Frank or the
or the Treasury or even Volcker.
Right now, I look wrong.
Unbelievable. And I am not even talking about having the big banks pay for
wind-downs. I don't think that one is going to have any more luck than the
issue. It would wipe out all of the banks. That's obvious.
Mrs. Lincoln, please, please yield the floor. Point of order! Point of order! But she's not listening to anyone other than her populist constituency at home. Arkansas trumps America. Arkansas aligned with Germany, France, Britain and Switzerland. Who would have thought it would be such an international-state one-worlder?
: Start your
deep-in-the-money call position right here if you're
At the time of publication, Cramer was long AAPL, BAC and JPM.
Jim Cramer, co-founder and chairman of TheStreet.com, writes daily market commentary for TheStreet.com's RealMoney and runs the charitable trust portfolio,
. He also participates in video segments on TheStreet.com TV and serves as host of CNBC's "Mad Money" television program.
Mr. Cramer graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. He worked as a journalist at the Tallahassee Democrat and the Los Angeles Herald Examiner, covering everything from sports to homicide before moving to New York to help start American Lawyer magazine. After a three-year stint, Mr. Cramer entered Harvard Law School and received his J.D. in 1984. Instead of practicing law, however, he joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While he worked at his fund, Mr. Cramer helped start Smart Money for Dow Jones and then, in 1996, he co-founded TheStreet.com, of which he is chairman and where he has served as a columnist and contributor since. In 2000, Mr. Cramer retired from active money management to embrace media full time, including radio and television.
Mr. Cramer is the author of "
," "You Got Screwed," "Jim Cramer's Real Money," "Jim Cramer's Mad Money," "Jim Cramer's Stay Mad for Life" and, most recently, "Jim Cramer's Getting Back to Even." He has written for Time magazine and New York magazine and has been featured on CBS' 60 Minutes, NBC's Nightly News with Brian Williams, Meet the Press, Today, The Tonight Show, Late Night and MSNBC's Morning Joe.