Cramer's Stop Trading! China Is Not for Contrarians (5/20/09)

Stocks discussed on Cramer's Stop Trading! TV Segment, Wednesday May 20.

Rio Tinto (RTP), Banco Bradesco (BBD), Sociedad QM Chile (SQM), Owens Corning (OC), McDonald's (MCD), Procter & Gamble (PG)

When it comes to emerging markets, China is no longer a secret or a contrarian play, so investors should keep in mind that a lot of the China story is priced in. While Russia may seem like a good country for speculation, Cramer says its government is still too unstable, and he doesn't trust Russian stocks. Brazil is an economy which is booming and he thinks the next Brazilian stocks that could be "on fire" are RTP, BBD.

Batteries are going to be a vital part of alternative energy technology; Cramer likes SQM as a lithium play and says copper will also be in demand. He is leery of wind stocks or Owens Corning and thinks natural gas may soon be a sector worth paying attention to.

Cramer observed Procter & Gamble and McDonalds are acting almost like small-cap stocks after their dramatic move following their upgrades. He thinks both companies will profit form the weak dollar.

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Comments

[Mad Hedge F...:]

It's better than the alternatives. 1) Investors which took my New Year advice to load up on emerging markets are now facing the vexing problem of what to do with all of their new found wealth. The emerging market ETF has soared by 57% to $33, and two of my favorites, the China ETF and India ETF’s, have doubled from their bottoms. The average emerging stock market is now up 50% on the year. The good news is that I believe this is just the down payment on a multiyear, tenfold move for many of these markets. The bad news is that all of these markets are way overbought on a short term and technical basis, and that we have to expect pullbacks this summer that could give up as much as half of the recent move. If you are a trader, take the money and run. If you are a long term investor, no pain no gain. But I don’t think any of these high growth plays are going to revisit the 2008 lows. Those were once in a century bottoms. This is the only long equity exposure you should have for the next decade.

May 21 08:02 AM