He pinned his target on the relative valuation of GM ahead of that IPO, he said, “which isn’t nearly as attractive as Ford versus where Ford can go” in price.
“Ford’s virtually a growth cyclical right here,” Cramer said, “and that matters.”
Cramer also said he would take Ford over international autos plays like Toyota because the latter is losing share in China, a place where Ford plenty of has room left to grow. He sees Ford as “the highest quality out there,” with great leadership and a dramatically improved—and improving—balance sheet.
In retail, Cramer noted that high-end stores like Polo Ralph Lauren and Williams-Sonoma are able to push through higher prices without sacrificing sales. Why? Because their customers tend to be wealthier.
“The rich are spending,” Cramer said. “And that’s not a negative because the rich tend to lead.”
He pointed out that spending cycles in the past have worked out as they are now, with the middle and lower income consumers spending only after the wealthy have done so.
Cramer also tried to put all the talk of higher cotton prices into perspective, saying the key now was that the increased costs are known and the market will take that into account. That fact will be baked into stock prices.
“When you know something is hurting someone,” Cramer said, “it’s not as dangerous as when you don’t know.”
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