In the spirit of Maurice Sendak, Cramer is taking Home Gamers to where the wild bull markets are. These sectors are where investors want to be after a sell-off of any magnitude – say, after a bad unemployment number at the end of the week or a spike in oil prices – because they will be the first to recover, he says. There are six such markets right know, and Cramer thinks the strength they’ve enjoyed so far this year should continue for the rest of 2007.
Agriculture is in the middle of one of the greatest bull markets in history, Cramer says, and no editorial from the New York Times should stop that. A column in Sunday’s paper called for the phase out of four major farm subsidy programs, which count only large producers of traditional crops as its beneficiaries, and divert $55 billion dollars to specialty farmers, rural conversation and food stamps. Cramer doesn’t think it would ever get past the Senate, so investors shouldn’t have anything to worry about.
With that in mind, Cramer recommends three stocks: Deere for ag machinery, Monsanto as an interesting biotech play, and fertilizer company Socieded Quimica. Deere’s best of breed, Cramer says, and it’s cheap these days, trading at 16 times earnings with a 12% growth rate. Monsanto makes seeds rather than cancer cures and at first glance it’s expensive trading at 35 times earnings. But the 24% growth rate makes it cheap in Cramerica. Cramer would pay up to $70 for this stock before he thought it was overstretched. Sociedad Quimica , a Chilean company, is the world’s biggest supplier of lithium in addition to producing fertilizer, and Cramer says you can practically get that business for free with the stock presently trading at $159 a share.
Machinery is bull market number two, and there’s only one play in the sector Cramer’s excited about – Caterpillar . The stock is cheap and comparisons for the second half of the year should be easier than the first six months, so he thinks the future’s bright for CAT. If forced to pick other machinery companies worth owning, Cramer would look at Terex and Manitowoc , but they’re not as cheap as CAT, nor does he think they’re as good.
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