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This economy's getting stronger, and you have to position yourself for some growth here.
Traditionally, when you wanted to buy stocks because the economy was going to turn around, you bought cyclicals. I think that will still be the case, but you have to be careful with cyclicals. Those that are levered to housing, like the big homebuilders, have already boomed. Those that are levered to autos have, too, such as
and some of the larger automobile parts companies.
But that doesn't mean it is too late to buy some of the bigger plastics and wood products companies that make the raw products that go into those good markets. I was struck by Byron Wien's call in
The New York Times
. That's the type of stock I am eying here.
I'm eyeing that along with
. I think these traditional industrials could have incredibly surprising years, with raw costs under control courtesy of a weakened OPEC and some top-line growth courtesy of a stronger-than-expected economy.
My advice: Look at who has been raising prices. I saw some price increases in industrial gases last week, an excellent sign for these big chemical companies.
The big surprise, I believe, will be how much better this economy really will turn out to be. It will be led by exceptional retail sales, excellent housing numbers and good auto sales, all of which will be terrific for the quintessential building products that go into those businesses. That's where the action will be.
James J. Cramer is a director and co-founder 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.
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