Chinese Consumer Culture

Cramer figures he’s sticking his neck out anyway just by recommending Chinese stocks tonight, so why not offer some speculative picks to go along with more dependable names he gave viewers in the A block.

No matter what you choose to do, just remember Cramer’s caveat: He expects a pullback, and he doesn’t think you should touch any of these stocks until that happens.

The fact that the Chinese haven’t yet been exposed to too much Western-style advertising means they’re more susceptible to it, Cramer says. It’s more effective. And China needs advertising as it grows a middle class. So his two plays on the sector are Focus Media and Baidu.

Focus Media is an out-of-home advertiser, specializing in LCD displays, built-in displays and digital billboards. It’s the largest display-advertising firm in the country, and the stock has major momentum, Cramer says. The company is consistently raising numbers.

Baidu just so happens to be the only company in the world that’s beating Google at its own game. The problem is that BIDU is priced for perfection because of its huge run and raised guidance, but its potential for growth means that it could still be incredibly undervalued. If the company drops the ball, you lose money. But if it delivers…

Bottom Line: Cramer’s been dragged, kicking and screaming, into China, so don’t make him look bad. If you like BIDO of FMCN, wait for a serious pullback before you buy.

Questions? Comments? [e-mail]