"Evaluating Five Hiding Places"
By Jim Cramer
RealMoney.com Columnist
3/6/2008 11:12 AM EST
"Let's look at where people are hiding -- oil and gas, tech, ag, materials, defense and infrastructure.
Are these good hiding places? Depends on the domestic vs. the international exposure, and it depends on the end markets.
I can make a very strong case that agriculture is a legit place to hide because of the twin drives for renewable fuels -- something that makes a ton of political sense at $104, even as it doesn't economically -- and the food shortage that is worldwide.
Oil and gas? Sure. $104. That's all you need to know, unless you are drilling domestically a la Union Drilling (UDRL - commentary - Cramer's Take - Rating), a domestic driller where everything went wrong at once, particularly in Appalachian drilling, which should have been good at $104. I see people buying Nabors (NBR - commentary - Cramer's Take - Rating), maybe they got it right, but I would rather own Transocean (RIG - commentary - Cramer's Take - Rating) at $140 (Exxon's (XOM - commentary - Cramer's Take - Rating) new budget) than Nabors, even as Exxon says it is going back to some old wells to get more oil. That could spur Nabors but I think that Union would scare people off that name eventually. Getting that extra oil out is a Core Labs (CLB - commentary - Cramer's Take - Rating) play, and that rally's making sense.
Materials: that's a worldwide play. Mineral plays are going higher because of worldwide demand not U.S. declining demand. Makes sense although not as much sense as oil and gas.
Infra? Any of the international building companies are doing so well that it is hard not to buy them. They have been speaking in New York and business isn't showing any sign of cessation. If anything it is getting better. Great note about the strong business at Foster Wheeler (FWLT - commentary - Cramer's Take - Rating) out of Citigroup explains a lot of the gains.
Defense? McCain. He looks stronger as the two Democrats slug it out. Statesman who favors defense and made a bet on Iraq that short-term is liked by many people in the United States. I am buying into this theory big-time.
And then there is tech. I have said there is a rally going to go on here and it is happening. I don't trust this rally and would sell into it because the biggest clients for tech are financial firms. These companies are going up in part because they have some momentum. But I think that could go away and people might think numbers eventually could come down. Good opportunity to leave this hiding place into strength. Given the market is oversold you don't have to hurry but it is the weakest hiding spot.
What's so interesting is that there's no safety in health care and the foods aren't ramping. Those are either viewed as being too sensitive to ag and oil costs or that they have already made big moves and aren't great in an inflationary environment. The decline in the drug stocks and their lack of safety is new to this market and even in 1990, last real credit crunch, these held in better than they have, although the best stocks that worked were biotech and those have outperformed.
But the major thrust it is al hide. The oversold market, the negativity all add up to one thing: a decent place to be provided you have no diversification away from them. Sure, you can see some strength in a winning retailer -- Target (TGT - commentary - Cramer's Take - Rating) and Wal-Mart (WMT - commentary - Cramer's Take - Rating) -- but there's so much that is not working there that I can't call it a real hiding place.
At the time of publication, Cramer was long FWLT."
(in
www.realmoney.com)
Enviado: 7/3/2008 15:25
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