Cramer's Lightning Round - China's Rebounding, Buy Peabody (12/16/08)

Stocks discussed in the lightning round session of Jim Cramer’s Mad Money TV program, Tuesday December 16.

Bullish Calls:

Gilead Sciences (GILD): “I do not believe that is a takeover target. I like it because it’s got terrific AIDS portfolio .. even though the stock is up nicely today,…I still think it is very cheap under $50.”
Nike (NKE): “Let’s see how Nike does and I might consider buying them instead (of Skechers).”
Nordic American Tanker (NAT): “I’m only recommending Nordic American and Frontline.”
Frontline (FRO)
Johnson & Johnson (JNJ): “It’s been under a huge amount of pressure. I think under 60 this is terrific… the dollar is in bear market mode...that is good for JNJ. I think this is one of the great buys.”
Peabody Energy (BTU): “I believe China is coming back which means you should buy Peabody Energy.”
Bucyrus International (BUCY), Joy Global (JOYG).

Bearish Calls:

Skechers USA (SKX): “I’m not a big fan of Skechers.”
Principal Financial Group (PFG): "This stock is moving up. But if all the negatives are still true, then we don't want to own it. I want to hear from the Goldman Sachs analyst who scared us all to death first. "
Netflix (NFLX): “I have never been right about Netflix…it is one of those things I am not a good call on.”
Genco Shipping (GNK): “I like the management…but I am recommending oil tankers.” NAT and Baltic Index has bottomed. I want Frontline too
United Parcel Service (UPS): “...problematic because of what Fed ex reported…let’s stay away for now.”
James River Coal (JRC): “President Elect Obama is not a fan of coal and I know that because I have an eye for the obvious. You should buy Peabody Energy, but if you don’t want to play coal, I’d look at BUCY and JOYG.”

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Comments

[OldLimey:]

"“I believe China is coming back which means you should buy Peabody Energy.”

The guy's a moron. Check out the latest Chinese electricity production figures.

2008 Dec 17 02:08 PM

[g7enn:]

China collapsing:

Power generation in developing economies where manufacturing is a high % of GDP should correlate well with GDP growth. China's power generation declined more than 8% in November. In his FT.com Long Room posting, Joules Watt concludes that would correspond to a GDP growth of only 1.5% y-o-y based on his regression analysis of power generation vs. GDP growth. I think things will get even worse for China in 2009 and secular growth will never return to the levels we have gotten accustomed to during the last 30 years. The impact of these cyclical and secular slowdowns on a variety of products, such as oils and metals, will be huge.

Whether the official GDP data will confirm it or not, Chinese yoy real GDP growth will turn negative in the first half of 2009. Perhaps for all of 2009. This is the first time that China has been hit by both an external shock and an internal one. They are still blaming the US for their problems, but they were a co-participant in this bubble: their T-bill purchases fueled the credit bubble in the US which, in turn, fueled their export bubble. Everybody's credit bubbles fueled everybody's export bubbles, and vice versa, worldwide. So the Chinese export bubble has to collapse, as well. The same is true for their real-estate bubble (although this one was much smaller than US and UK bubbles).

Rare is an analyst willing to even contemplate low-digit growth rates for China in 2009, let alone NO GROWTH (Jim Walker from Asianomics (ex CLSA) predicts 0-4% growth). But, while history doesn't repeat itself, it rhymes. During its first 30 years of recovery and industrialization after WW2, Japan experienced several "growth recessions" when its growth halved from the boom times. But in the mid 1970s recession, it got much worse. Industrial production growth went from +16% y-o-y throughout the first half of 1973 to -19% in February 1975! Real y-o-y GDP growth went from more than 10% to solidly negative for a few quarters in late 1974 and early 1975.

While it's always dangerous to draw direct analogies from one country to another or from one time period to another, a country that is 25+ years into its industrialization, that is heavily dependant on both net exports to the world at the time of a global GDP and trade collapse, and that is also dependant on its real estate construction, has to get into deep trouble.

www.nakedcapitalism.co...

2008 Dec 23 03:20 PM

[Glen Bradford:]

China looks good to me: seekingalpha.com/artic...

2008 Dec 23 04:14 PM