There's Pulp Fiction the movie and pulp fact, the smart stock play, Jim Cramer said on Thursday's "Mad Money" TV show. In a celebration of rain forest depletion and making some cold hard cash, Cramer said that there's a coming paper rally. Pulp inventories are low and as inventories tighten up, paper prices will have to come up. Where's the demand that will propel the cycle? "This sort of demand, it always comes from China," said Cramer, adding that the country is blowing through 41 million tons of paper a year. But he said International Paper ( IP), the big American name, is not the smart play. "Don't go American ... go Brazilian. In Brazil they have that whole darn rainforest to chop down," Cramer said. That's why Brazil's No. 2 paper company, Votorantim Celulose ( VCP), is his stock pick in the sector.
The biggest Brazilian paper company is up 8% this year, while Votorantim Celulose is down because it posted disappointing earnings. But Cramer said the past is the past, and that this is a broken stock, not a broken company. Moreover, Brazil's economy is growing at a rate that makes the macro environment good for business. It's impossible to ignore the fact that there's anti-U.S. sentiment brewing in South America, so Cramer recommends looking at companies in Brazil and Chile. He said to steer clear of Peru and Argentina.