The market has entered “a positive and delicious void,” Cramer said Monday. There are no more earnings reports, no more Federal Reserve announcements, no hedge-fund liquidations or data points of any kind to trip up what he expects is a coming bull run in stocks.
Earnings season proved largely positive. Warren Buffett’s purchase of Burlington Northern Santa Fe certainly was positive. At the same time, the Fed refused to tighten rates, and the dollar’s down, thereby boosting profits for companies that earn much of their money overseas. Vulcan Materials recently spoke of the long-awaited infrastructure stimulus spending, while Federal Realty Investment Trust’s quarter showed the commercial real estate is doing just fine, despite reports to the contrary.
As Cramer said, if Friday’s announcement that US unemployment crossed 10% for the first time in over 26 years can’t derail the rally, little else can. That means investors should return to what he called the “stalled winners,” or high-quality bellwether stocks whose momentum petered out as their lower-quality peers played catch-up: Apple , Google , Goldman Sachs , Bank of America and Wells Fargo .
While some people discount Goldman Sachs’ valuation and its lack of catalysts, Cramer said that shareholders could pick up a quick 15 points, as big money managers circle back to the stock. Fears of equity offerings have weighed on BofA and Wells Fargo, but Cramer said management should push forward with them.
“You can pay back TARP,” he said, “and ramp right to 52-week highs.”
The estimates for Apple and Google, meanwhile, are just too low. Both companies enjoy secular and cyclical gains, whether through the former’s PC and iPhone sales or the latter’s ad revenues. Google is benefiting from a return in ad spending and the industry’s shift to online from print. Cramer reiterated his price targets of $300 and $700 for Apple and Google, respectively.
There are only 35 days of trading left in the year, and Cramer expects money managers to pile into these companies when they realize the 2010 numbers are too low. Retail investors should be sure they aren’t left behind.
“These five stocks have been stuck in neutral,” Cramer said. “I think they’re about to switch to overdrive.”
Cramer’s charitable trust owns Bank of America, Goldman Sachs and Wells Fargo.
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