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Cramer on BloggingStocks: Europe is starting to eye U.S. gems

Posted May 8th 2008 9:00AM by Jim Cramer
Filed under: Deals, Market matters, Allergan (AGN), Citigroup Inc. (C), Sprint Nextel Corp (S), Unilever ADR (UL), Stocks to Buy, Cramer on BloggingStocks

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.

Tags: agn, allergan, c, citigroup, deutsche telekom, DeutscheTelekom, drs, dt, featured, heinz, hnz, jim cramer, JimCramer, resmed, rmd, s, spint nextel, SpintNextel, ul, unilever, wg, willbros

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