TheStreet.com's Jim Cramer says the exchange rate plus massive undervaluations make the great brands prime targets.There's always been a groupthink in Europe about currencies. The companies that want to buy American companies have, at times, seemed to care more about the currency, or at least not buying a company in a country whose currency is in decline, than they care about the actual target.
That's what it looks like now that a large German company and now a large Italian company have decided to start splurging. It is no coincidence that Deutsche Tel (NYSE: DT) (Cramer's Take) and Finmeccanica are exploring Sprint (NYSE: S) (Cramer's Take) and DRS (NYSE: DRS) (Cramer's Take). These companies are selling for something like 40% off for those bearing euros, and neither potential acquirer has debt problems or subprime issues, so the deals don't have big borrowing problems.
That's what I am thinking about when I see the better-than-expected figures today from Unilever (NYSE: UL) (Cramer's Take) and the other day from Nestle. These companies are part of that same groupthink. They are looking, no doubt, at a Heinz (NYSE: HNZ) (Cramer's Take) and thinking, "Wait, that's about a $10 billion company that's a global leader."
Or how about Allergan (NYSE: AGN) (Cramer's Take)? That was a $20 billion company that is down to $16 billion in dollars and about $12 billion as a translation to euros.
These are just too cheap for these companies to ignore, and much more of a healthy franchise than Sprint and a more important franchise than DRS.
We are all possessed right now with the "imminent" catastrophe of someone -- Citi (NYSE: C) (Cramer's Take), Cerberus, ResMed (NYSE: RMD) (Cramer's Take)? Somebody.
And those worries have continued to put a lid on many of our valuations. That, plus the subtle part of the slowdown -- botox use not accelerating that fast and breast augmentation slowing down in the U.S., as Allergan said to me last night on "Mad Money" -- makes people too nervous about some solid, non-financial situations.
Yesterday was really ugly. But this market doesn't have much of a memory. Go back over the franchises with great brands that have been crushed both here in stock and there in currency.
These are no longer going to be needles in a haystack.
Random musings: Like Quanta (NYSE: PWR) (Cramer's Take), a sleeper that I liked for utilities, Willbros (NYSE: WG) (Cramer's Take) -- a company that I was harping on as way too cheap and brought the CEO on "Mad Money" to bolster my case -- finally delivered the blowout I was looking for. I can understand anyone's desire to take profits on PWR or WG if you bought them at my direction, but these are really just "first good quarter" stocks, and I believe there is more ahead.
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.
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Reader Comments (Page 1 of 2)
5-08-2008 @ 12:28PM
sandy said...
What is your take on V ?
5-08-2008 @ 12:30PM
sandy said...
What is your take on V ?
Or aapl, or goog?
5-08-2008 @ 12:33PM
sandy said...
What is your take on V ?
5-09-2008 @ 7:10AM
Alex Vallas said...
Our less than brilliant president says that having a devalued dollar against the Euro makes products from Europe cheaper. He apparently is not bright enough to realize that it also makes American companies dirt cheap. The dollar may regain in value once this incompetent president is out of office, but the companies that moved overseas will never return. In my opinion, we are beginning to see the Declline and Fall of the US. I sure hope not, but there seem to be so many indicators.
5-09-2008 @ 8:20AM
Bobby said...
Alex, why would companies relocate that are being bought out here in the states?
If the same wisdom of operating cost applies, the company would stay intact in its' current profitable state. If that same wisdom directs movement in operations abroad it doesn't matter if the company is controlled here or abroad.
Heinz as an illustration, I would assume still sell the majority of product here in the states, it's not necessarily viable to relocate operations elsewhere even if a buyout occurs. Corporate decision making is going to happen irregardless of who owns the company or where its' located. Bottom line is profitability...
I don't necessarily like what I see either, I'm hoping there's a watchdog keeping an eye on american business losses due to bargain hunting. In retrospect, it is what it is....
5-09-2008 @ 8:25AM
tom said...
Bush is getting an education in economics. Cannot wait until he is gone along with the rest of his republican crooks.
5-09-2008 @ 8:35AM
Stanley said...
I really don't understand why we keep letting foreign companies purchase our companies. It not only creates the possibility of our jobs going elsewhere, but eventually the possibility of an economic take over of this country. If you can't beat our military strength, then lets have an economic take over of this country. I feel that to many foreign investments over here, will someday really hurt this country and it shouldn't be allowed.
5-09-2008 @ 8:35AM
Vicki said...
Alex, I agree with you. Hillary's idea of removing tax breaks for corporations out of the country is a good start to increase American business. Our cost of labor is high as American's believe that they need the ability to purchase excessively and live a lavish life style. Bobby - why would companies stay in America? Once the operations of a company is understood, it would make logic sense to relocate where expenses are less - labor, land, material. That would only drive the company profit higher. This has been going on as so many tech companies are gone. Tax breaks need to be taken from these companies - after all the jobs are gone how can we sustain paying for something that is no longer there.
5-09-2008 @ 9:18AM
Bobby said...
Vicki, my point quickly, there are no laws deterring companies from moving their operations abroad by simple determination of 'who owns the company'. Gov't can't force a company to compete in a losing environment. If you guys want to be unemotional about all this, turn your wrath to healthcare, local taxation, the overall cost of living & doing business in America, that's the real culprit. There are labor forces suited to be shipped abroad & there are quite a few that are prohibitive by nature. We either live in a global environment & re-invent ourselves or shut our borders down. It's as simple as that...
5-09-2008 @ 9:36AM
Tom said...
Honestly, I did'nt read the article, just the head line.
It occurs to me that the country is moving towards some kind of Global (Hostile) "Take-over". Little by little our economic base seems to be erroding in favor of "Foreign take-overs" and a Nationwide outsourcing of "The American Dream".
And our President sits idly by and hands out "Rebate checks" to the "Suckers".
Reminds me of the story of Nero, fiddling while ROME BURNS.
5-09-2008 @ 10:11AM
Topi said...
Why is it scary if European companies buy American companies, but it is no problem if it happens the other way round?
T
5-09-2008 @ 10:17AM
Steve said...
I'm still waiting for Reagan's trickle-down money from the rich. Let's face it: the only ones who profit are the rich, and their greed is what has created the situation that the rest are facing. If warren Buffet can make a dollar by selling us out HE WILL!! Have a dirt sandwich and be happy.
5-09-2008 @ 10:28AM
chuck said...
I feel that to many foreign investments over here, will someday really hurt this country and it shouldn't be allowed.
I agree with that comment^^^^^!
I might add the american people are "stupid"
they would sell out there own Mother if they thought it would get them ahead in this world....
Quit selling out to other country's people or someday it will come back to bite you in the @$$!!!
5-09-2008 @ 10:36AM
Monty Python 1975 said...
Cramer has already said that Hillary is the most qualified to become president "Hands Down" (quote), then why is everyone else so stupid?
5-09-2008 @ 10:36AM
Monty Python 1975 said...
Cramer has already said that Hillary is the most qualified to become president "Hands Down" (quote), then why is everyone else so stupid?
5-09-2008 @ 10:41AM
alina said...
Do you guys know Cramers e-mail I just have to ask him some things
5-09-2008 @ 10:48AM
RIchie said...
Americas dollar really needs to ketchup in the global economy. Sorry, I couldn't help myself.
5-09-2008 @ 11:08AM
David said...
This is exactly why America must pull out of the global economy.
Globalism is 100% pure evil. It is a consortium of rich people (Republican or Democrat, Conservative or Liberal, it doesn't matter). They more or less hire the Pentagon to defend their business interests overseas.
The fools currently running for Puppet (excuse me: "President") REFUSE to pull out of the global economy, and REFUSE to evict the United Nations from our country.
ANYBODY WHO SUPPORTS GLOBALISM IS GUILTY OF TREASON.
5-09-2008 @ 11:11AM
WE said...
american companies have been bying Europe out for many years
so stop screaming if it is NOW the other way around, selfcentered nation.
What goes around...................
we ask for it.
5-09-2008 @ 12:05PM
tomcat said...
The democrat liberals are running the show right now not Bush