Cramer’s 5 Investing Sweet Spots
Jim Cramer often advocates themes in the market. These are big picture ideas that he believes will lift the fortunes of companies and by proxy their stocks.
"The concept is that big themes work for any occasion," Cramer explained. That is, when the market goes higher these stocks should be among the best performers. And when the market turns lower, these are the kinds of stocks that are most likely to attract new money first and then bounce.
"These are big theses that I've talked about on Mad Money through-out the year," said Cramer, and they continue to work. Five of Cramer's favorites follow:
Cramer is a big believer in the renaissance underway in the housing market and has profiled a slew of housing plays since January. However, Cramer is a shrewd investor and always scours the market looking for new ways to profit from the theme.
On Tuesday, Cramer found something.
"It's called William Lyon, it's a homebuilder IPO and it comes Wednesday night," he said. "The last few homebuilder IPOs have been tremendous wins. I think this one will be too, particularly because it's a California and Arizona play, the two hottest markets in the country."
Cramer said the IPO should price around $25, but would pay up to $27.
Cramer is also an advocate of the new energy discoveries made in the United States and the potential for these discoveries to make North America energy independent by 2020.
For most of 2013, Cramer has recommended playing the theme with EOG, as a bet that the company not only has fantastic energy yielding fields but that other real estate holdings may also contain gigantic reserves.
"And I 've got a new one too," Cramer added. "I'd look at Ensco as a bet the Gulf of Mexico is again heating up." Also he said, "just today Petrobras, the gigantic Brazilian national oil company raised a staggering $11 billion to increase its drilling budget. Fabulous news for Ensco."
For the first time in over a decade, Cramer thinks the airlines have become investable, largely due to consolidation underway in the industry. And his favorite way to play right now is US Airways.
"Last Friday the bankruptcy judge handling the reorganization of AMR, parent of American airlines, approved the merger with US Airways. That increases the chance that this deal closes by the end of the summer," he said.
"Meanwhile the story gets better and better. EADS, parent of Airbus reported last night, and it looks like there's very little availability for new planes any time soon for any upstart to compete with the US Airways-AMR behemoth," he added.
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Cramer believes today's biotech may be similar to big pharma in the 1990's – when stocks shot higher on the promise of new drugs. And four companies that he thinks are poised to profit from existing and new treatments are Biogen, Celgene, Gilead and Regeneron. "Now all of these have had a huge run, but I think they can work their way higher," Cramer said.
In addition, earlier in the week, Cramer presented a new stock that he also thinks presents significant opportunity in health care. "I'm also a buyer of Quintiles, the arms dealer to biotech," he said.
Cloud & Mobile
Although it's gained over 150% this year, Cramer's favorite play on new technology remains Netflix.
Largely he believes the company is facing huge growth potential overseas and he believes in the US the company will add more subscribers with its growing slate of proprietary programs.
"In less than two weeks' time Netflix will release season four of the incredibly beloved show, Arrested Development. I know, one product shouldn't matter. But House of Cards mattered. Catching up with Walking Dead mattered. I think Arrested Development will lead to a new round of sign-ups for a service that uses about 30% of the nighttime bandwidth in this country."
Disclosure: On May 14, 2013 Jim Cramer owned Ensco on behalf of his charitable trust.
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