- a good level to buy soft goods,
- Google's China standoff, and
- opportunities in odd places.
A Great Opportunity in Soft Goods
Posted at 11:13 a.m. EST, Jan. 11, 2009 The disparity between the performance of the cyclical -- as delineated by the Freeports ( FCX) and Honeywells ( HON) of the world -- and the Procters ( PG) and the Pepsis ( PEP) and the Cokes ( KO) is pretty historic, as anyone who maps out the CYC vs. the CMR (Morgan Stanley Cyclicals Index vs. MS Consumer Index) knows. I find this disparity a little too steep right now in that the values are rapidly appearing in the soft goods, but it doesn't matter -- this is the beginning of the year and the cyclical beat does go on. However, I think it is important to note that the big-cap soft-good stories simply aren't that expensive, especially vs. their cyclical brethren. It is almost as if there is a huge source of funds going on, which must be totally mystifying to those who focus on the employment reports. In the past, when we got this incredible inability to create jobs, we would have been lapping up the stocks that are down and selling exactly what's going up. The counterintuitive nature of this move must be driving the bears batty. To me that's just an opportunity. Does anyone think that Procter -- with its huge restructuring and dollar tailwinds -- will do badly? Does anyone think that Pepsi is about to miss its quarter when it has already shaded its earnings and has the big deal closing soon? Does anyone really think that Coke's doing badly? I am calling for a mixed market approach here. I really like the steel and the autos and the aerospace plays. But I would much rather buy P&G right now. That's where the bargains are, not in the cyclical. One other thought: The White House is deaf, but not totally deaf. I suspect that jobs will be a major focus even though the president seems incapable of doing anything but health care for now. Maybe that, too, is a reason why P&G has no mojo whatsoever. At the time of publication, Cramer was long Honeywell, Procter & Gamble and Pepsi. > > Bull or Bear? Vote in Our Poll
Google's China Standoff Won't Hurt Too Much
Posted at 11:40 a.m. EST, Jan. 13, 2009 Is Google's ( GOOG) China imbroglio much ado about nothing? Well, the first rule of trading is that when you have a premium multiple, the only news you want to hear is that business is getting better. You need an accelerating growth rate to keep a 30 multiple, and this news doesn't help. Plus there are mitigating factors. China is just not that big for Google, and the wild high estimates of a loss of $600 million in revenue can't be used to figure out what the real impact will be. And you can't compute the impact by measuring the 42-point gain in Baidu ( BIDU), in part because there was a huge short in Baidu, as the word in the hedge fund community was that BIDU was about to miss the quarter and guide down. A transition issue, I kept hearing. So, I am not sure of the EPS impact. But here is something I would be worried about if I owned Google -- and I have been recommending Google: What's the impact on the Android? The Chinese cell-phone market is the most vigorous on earth. The smartphone adoption is in its infancy. There is a lot of share to be taken. I think this Google move could cause the government to shut down Android. That would be a huge deal and a reason to sell Google down the road, as I have a good feel that GOOG earnings will be amazing. If anything, you don't buy Baidu up 44 -- you buy Apple ( AAPL) down a couple. Or you buy China Unicom ( CHU), which is the best distributor of Apple's iPhone in china by virtue of it being the best technology. (I own them both for Action Alerts PLUS.) So, no freakout on Google, but a multiple crimper for certain. At the time of publication, Cramer was long AAPL and CHU.
Watch for Opportunity
Posted at 9:40 a.m. EST, Jan. 14, 2009 The opportunities keep knocking, they just knock in strange places. The other day Associated Banc-Corp ( ASBC) (a second loser out of Green Bay) priced an offering in the hole, and you made a quick buck if you blinked simply by getting in on a deal meant to appease the regulators. Today First Midwest Bancorp ( FMBI) -- another ne'er-do-well bank, this one from Illinois -- looks to be another quick gainer. In Getting Back to Even, I stress that this strategy of buying merchandise in the hole, even if you don't like the merchandise, is a dynamite idea, just dynamite. It is counterintuitive to buy anything you don't care for. ASBC and FMBI, like Zions ( ZION), are banks that I am not crazy about. But when they raise equity, they go from being a bad story to being a good story. Check the REITs -- names like Federal Realty ( FRT), Brandywine ( BDN), Boston Properties ( BXP), and many of the hotel REITs -- if you don't believe me. Or the huge gains in U.S. Steel ( X) after its deal. Other than Federal Realty, I didn't care for any of these deals before the refinancing. After, though, they are terrific. The Wells ( WFC)/ Bank of America ( BAC) bank deals and all of the other secondaries all worked too, including ones like Capital One ( COF) that seemed like they shouldn't, given Obama's attack on credit cards. In fact, only Synovus ( SNV) was a disaster. So keep an eye on these. They keep happening. Stocks that that are bad before they sell stock and good after. A great pattern. Would I hold ASBC or FMBU after these deals? I like to own the well-managed ones, not the "bad" ones, so I am indifferent after the deals are done. Money is money. I like the quick profits. At the time of publication, Cramer was long Apple and Bank of America.