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What do you do if Johnnie Walker's slowing and Merillat cabinets aren't moving? I think you sell Fortune Brands (NYSE: FO) (Cramer's Take).
Both Diageo (NYSE: DEO) (Cramer's Take), the liquor king, and Masco (NYSE: MAS) (Cramer's Take), the cabinet and plumbing king, reported earnings. While Diageo didn't deliver terrible numbers and boosted its already bountiful dividend, its outlook was horrible.
Masco all around was just plain horrible. Huge quarterly dividend cut to 7.5 cents from 23.5 cents, miserable outlook and a sense that things are spiraling as housing starts get slashed to ribbons.
Hmm. Kitchen, bath and cabinet. What's like that? Fortune Brands. Now, the company already has delivered a miserable quarter and an ugly outlook, but in this market there's no such thing as ugly discounted.
I like Fortune Brands' product line of kitchen and bath vs. Masco's -- a little more loved, a little more visible. Its liquor business cannot measure Diageo's worldwide reach, though. Fortune Brands does have some other minor businesses, like golf apparel, but that can't move the needle.
To me, you get a chance as the market has been pretty stupid of late, opening things higher than they should.
I would exit Fortune Brands today at a minimum or at least run a pairs trade, long Diageo, short Fortune Brands, so you don't get hit with too much of a dividend disparity, as they have roughly the same yield.
Random musings: Getting a lot of feedback about Wednesday's forceful assumptions about MGM Mirage (NYSE: MGM) (Cramer's Take). The company's bonds are acting horribly, just to note what might be the obvious. One must ask, given the selling of Ford (NYSE: F) (Cramer's Take) all the way down, is Kirk Kerkorian out of money? ... Good piece on MainStreet Wednesday about cleaning out your computer cookies to save cash. Nothing like saving in this environment.
Jim Cramer is co-founder and chairman 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 1)
2-12-2009 @ 12:25PM
BHarrison said...
Quote from article: "Nothing like saving in this environment."
Why would any reasonable and prudent person invest in a manipulated and corrupt declining market that is projected to lose another 20% to 30% or more in value, especially when there is so little INTEGRITY, inf ANY, in the financial reports and representations by the FIs and the corporations.
"Getting to the bottom" is going to be a very painful process for most Americans . . . we can either expeditiously do that, or it can be a much longer drawn out, economically painful process. Personally, I support the "quicker adjustment" by letting the REGULATED Free Market Economy handle these matters in a "natural manner" econommically.
The longer the "bail out" takes, the more "gaming" of the bail out" will occur. We need to minimize the gaming of the bailout system; only the wealthy are benefitting from this long drawn out process.
2-12-2009 @ 2:28PM
paul s said...
Integrity? There never has been and never will be that on Wall St. The place is about making money, for yourself, hopefully for others too. So get a new rap. Gaming is what the place is about. Getting wealthy IS the point.