BHP Billiton: Out of Obama’s Reach

Cramer has been a bit nervous since President Obama announced his budget plans this week. Changes to Medicare immediately took down the health-care sector, and now the Mad Money host is wondering who might be next. That’s why he’s looking for stocks that don’t answer to Washington. It’s one of the few ways investors can find profits right now.

Australia is definitely out of Obama’s reach, which is one reason Cramer likes BHP Billiton . Plus, the world’s largest diversified resources company is probably the best play on China’s $600 billion infrastructure stimulus plan. And China, Cramer said, will be engine of any global economic recovery, with BHP as its supplier.

BHP is the world’s second-largest producer of iron ore, third largest of copper and nickel and number one for seaborne traded coking coal, which is used in steel production. These are all key to China’s build-out. Twenty percent of BHP’s fiscal 2008 sales came from that country, so the new stimulus should means the number will rise this year. BHP also owns some oil properties, which is another commodity China can’t get enough of.

A projected slump in iron ore sales to China is now lesser than expected thanks to that stimulus. Chinese iron ore inventories in the week ending Feb. 23 were down 6% year-over-year, 2% from the previous week and 23% from the September high. Cramer thinks they’ll reverse direction and head higher now. Already Chinese imported iron ore prices are up 25% since October. Hot-rolled steel is up 25% since mid-November, and new-home sales in China have doubled year-over-year, another sign that copper and other raw materials are in demand.

BHP did miss earnings estimates last quarter, but cash flows increased 74% year-over-year, the dividend was up 41% from last year, and the company reduced its net debt by 51%. Those cash flows lend security to BHP’s 4.5% dividend yield, and the stronger balance sheet allows for spending even during the downturn. And that’s just what BHP is doing. The company’s putting money to work to better position itself for the market’s eventual turn up.

The stock’s down to $36 from $95, but that dividend is safe – BHP is even in position to raise it – the balance sheet’s solid, the company’s capable of taking market share and this is most likely the largest beneficiary of China’s stimulus plan. Best of all: Obama can’t touch it. That’s why Cramer thinks BHP is a buy.

Watch Mad Money all next week for more Obama-proof stocks.

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