Are Banks, Homebuilders Cheap?
Are the banks and homebuilders cheap?
Cramer thinks they may be. The two groups, as represented by the Financial Select Sector SPDR exchange-trade fund and PHLX Housing Sector ETF, respectively, have continued to climb higher despite being loathed by many investors.
Too many people think it’s still too hard to estimate earnings for the banks and homebuilders, that neither sector has fully recovered from the crashes that rocked them between 2007 and 2009. But nonetheless, Cramer said that, though these stocks became “unanalyzable” after those crashes, if there finally were estimates and an accompanying multiple for them, “you’d realize that they’re cheap.”
“Is there anyone in America who thinks that the bank stocks are expensive?” Cramer asked. “I mean, who knows what Wells Fargo’s really worth? But it ain’t worth $30 if you think you’re going to catch some buyers in banks. If Toll Brothers could go to $23-$24, would anyone think it’s expensive? No.”
While no one yet is endorsing these sectors, Cramer said, “That’s going to happen.”
One bank that Cramer said he does like is Huntington Bancshares . HBAN is overcapitalized now, has paid back TARP and is run by a great management team.
“I really think that Huntington Banc is going to return to its old greatness,” Cramer said, “maybe even exceed it.”
The “Mad Money” host also talked up Nike , one of the few stocks with double-digit growth. NKE trades at just 18.4 times next year’s earnings estimates, with a 12-percent long-term growth rate, but Cramer said most money managers would be will to pay twice the growth rate for a name like this. He also praised the recently boosted dividend and called the Nike’s Chinese franchise “tremendous.”
Nike’s $43.85 billion market cap is too small, Cramer said, “for an opportunity this big.”
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