Cramer's Top Stocks in Emerging Markets
In one of his big themes and important trends for 2010, Cramer is suggesting investments in countries that are safer for doing business than in the US. Besides, as your personal investment adviser, it is Cramer's duty to help you identify the things in 2010 that you have to keep your eyes on. Investing internationally is certainly one of them. With a plenty of uncertainty in Washington, it makes sense to park some of your money in stocks outside the country... your portfolio needs some international diversification, says Cramer.
So where should you be putting your money? Which emerging market countries are the safest, and which companies are worth buying? Three attractive locations are Brazil, China and Peru, says Cramer.
First off: Brazil. Cramer points out that in the country banks are lending, companies are hiring and the middle class is growing, which should all lead to a 5% growth in the economy in 2010. Not to mention that the country's foreign currency reserves rose 15.2% in 2009. Looking back, it was able to pay off its IMF debt in 2006 and looking ahead to 2016 the country will be hosting the summer Olympics. But what are Cramer's companies to buy in Brazil? He likes VALE for its status as the planet's top producer of high-grade iron ore, along with its nickel and copper assets. Noting that VALE's earnings could grow by 40% this year with strong volume growth and higher commodity prices, Cramer has identified this stock as quite cheap.
In Brazil he also likes Banco Bradesco , but the company Cramer has identified as the safest way to approach the Brazilian financial industry is actually a Spanish company, Banco Santander , which - after an IPO of its Brazilian Unit BSBR - is the third largest non-government-owned bank in the country.
How about China? An economic superpower flush with cash, it's quickly becoming the center of the financial universe, says Cramer. His stock to buy in the country is China Unicom, which is one of the largest phone companies in China, which is set to profit from a growing wireless business and is also the exclusive carrier of the iPhone. With 21% of the wireless market, Cramer thinks it stands to gain more with its expansion into 3G technology.
Last up: Peru. Cramer points out that this country has been on a tear as its bonds are continually upgraded and growth can be expected to accelerate from 1% in 2009 to 5.5% in 2010 and 2011, a feat made possible by a good stimulus plan and a recovery in private sector spending. In a country with rich natural resources, his favorite stock is Southern Copper, which also has exposure in Mexico. The fifth largest copper mining company on earth, the commodity represents 70% of its net revenue, says Cramer, which will prove to be a valuable item as China's demand continues to rise.
What's the bottom line? Internationally diversify your portfolio and buy stocks in countries that are business friendly. To play Brazil, Cramer suggests VALE or Banco Santander, China Unicom in China, and PCU in Peru, all of which can help you get a taste of the emerging markets.
Cramer's charitable trust owns China Unicom and VALE.
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