Cramer: Market Pullback Is Certainly Possible
Is a pullback in the markets imminent? It's possible, according to Mad Money host Jim Cramer who said on Monday's Stop Trading that tech is particularly vulnerable.
"Certain sectors are very vulnerable," Cramer said. "I have felt that tech is completely vulnerable. I continue to see tech drifting down — they don't go down sharply, they don't make you any money.
"I think that banks are in a regime where we're still not done bashing the banks — a lot of trouble there — and oil's at a very difficult level because if it goes up too much people say demand destruction, and if it goes down too much then people say numbers are too high. So those are major segments of the market that we are always on the verge of losing."
That said, there are still some bright spots, especially in upcoming IPOs, like McDonald's Latin America operator Arcos Dorados Holdings based in Buenos Aires. The company has filed for an initial public offering in the U.S. of as much as $1.08 billion.
"I think McDonald's has stabilized, but the part of McDonald's that really excites me is Brazil/Latin America," Cramer said. "This is the play on those."
"I also like the ZipCar," Cramer said. "It's a brand people are familiar with...I think this is one of those brands that...you're going to have a considerable cohort that just wants to be in the deal because they simply like the product."
On the M&A front, Cramer said he really likes the Flowers Foods/Tasty Baking deal announced Monday.
Thomasville, Ga.-based Flowers Foods, which makes breads, buns, rolls, snack cakes, pastries, and tortillas, is paying $4 a share for Tasty Baking's 8.6 million shares outstanding. The price is more than double Tasty Baking's closing price Friday of $1.61 a share.
In midday trading Monday, Tasty Baking shares jumped $2.36 to $3.97. Flowers Foods shares rose 2.6 percent, or 73 cents, to $28.39.
Including assumed debt, the companies say the deal is worth $165 million.
Tasty is "one of those brands that I think will travel, and Flowers is an opportunist," Cramer said. "It works out well for everybody."
Cramer was also keen on UBS raising the price target on Perrigo to $92 from $82 Monday.
"This has become, quietly, the growth stock name," Cramer said. "It's a stealth growth stock that is taking shelf space everywhere...and it's still not that expensive. It remains a favorite of mine."
Also on the M&A front, Cramer likes the deal announced Monday between Level 3Communications and Global Crossing.
Level 3 acquired the IP solutions and networking provider in a transaction valued approximately $3 billion or $23 per share. The all-stock deal also included the assumption of approximately $1.1 billion of net debt from Global Crossing.
"The fact that there's a pulse at LVLT, the fact that this combination would take out some supply makes it so everybody is a winner," Cramer said. "I know people are kind of aghast that LVLT could get that kind of money to do this deal, but they've always been a terrific manager of high-yield bonds."
Win-win for both, Cramer said.
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