In Case of Recession: Go Overseas
Cramer’s pretty confident that Bernanke has made his decision that he isn’t go to cut interest rates anytime soon, which, in Cramer's view, could send this economy into, or close to a recession. If that’s the case, you need to get defensive. One of the best ways to play defense is to pick up stocks that are heavy on foreign exposure. And one of the best rest-of-world stocks out there is Vodafone , Cramer said.
Vodafone is the second-largest wireless carrier on the planet with over 230 million subscribers. The only company that eclipses that is China Mobile . VOD is the ultimate pan-European play, which is good because Europe, as Cramer has been saying, is doing much better than the U.S. right now. Most of the continent is chugging along nicely and VOD already leads by market share in both Germany and the U.K.
The business is great, and not just because of the market share, Cramer said. VOD is poised to benefit from wireless price increases across Europe as competition dwindles. Also, its selling more non-messaging data access, which raises the company’s revenue-per-user.
Vodafone is all over emerging markets, too, Cramer said, where it grows at 20% a year – driven heavily by India and Turkey. It’s basically colonizing the developing world with cell phone coverage but it isn’t even spending heavily to do it. Instead, VOD is paying fees to share existing wireless networks. And not only that, but the company is in talks with Apple to bring the iPhone – or a next-generation iPhone - to Europe.
In the recessionary environment Cramer is predicting, you want stocks with strong, reliable dividends, too. Vodafone yields a nice 4.25%, Cramer said, which is like owning a Treasury only with upside, and you’re only taxed at 15% on the dividend. In a rough market, a strong dividend provides a cushion for a stock and prevents it from going down too far. Vodafone has precisely the protection you need, Cramer said.
Bottom Line: To protect yourself in an economic downturn, you want that foreign exposure. Vodafone is Cramer’s foreigner of choice.
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