Cramer's Mad Money - The Best Way To Play China (2/16/12)

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Includes: AAPL, BG, BIDU, CLR, DE, DVN, EOG, GG, GIS, GLD, GM, K, MAS, MHRCQ, SD, YUM
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday February 16.

CEO Interview: David Novak, Yum Brands (NYSE:YUM). Other stock mentioned: Baidu (NASDAQ:BIDU)

China is one of the biggest growth stories around, but Cramer does not recommend Chinese stocks, except for Baidu (BIDU). The best way to play China is with U.S. companies that do major business in China, like Yum Brands (YUM), which gets 42% of its revenues from China and reported a 20% increase in same store sales in the Middle Kingdom. CEO David Novak discussed the success of YUM in localizing brands and creating new menu items. He discussed some mistakes the company made with Taco Bell, including past unsuccessful ventures into the breakfast space, but is going to improve the strategy with better products and the introduction of high-quality coffee. He is confident the company can weather food inflation.

General Motors (NYSE:GM), Masco (NYSE:MAS), Apple (NASDAQ:AAPL), General Mills (NYSE:GIS), Kellogg (NYSE:K), Bunge (NYSE:BG), Deere (NYSE:DE)

The Dow surged 123 points, powered by strong themes in the market:

1. There was good news about Employment. Job numbers determine the movement of stocks, sometimes even more than good earnings.

2. Auto sales looked brighter, with news from General Motors (GM) that they are selling a large number of cars. The stock has risen 34% since the beginning of the year.

3. Despite bearish earnings from Masco (MAS), housing is looking up, with a 15% rise in housing starts.

4. The European problem is still looming, but appears to be under control.

5. While Apple (AAPL) moved down, and there are questions about patent issues and China, Cramer thinks these are not reasons to get out of the stock.

Cramer took some calls:

Kellogg (K) has a new CEO and looks promising, but General Mills (GIS) is still Cramer's pick, especially with a recent upgrade. If Kellogg goes to $51, it might be a buy.

Deere (DE) management were not so bullish and seemed to be calling a top in agriculture. Cramer would not buy Bunge (BG), since Deere didn't seem confident.

CEO Interview: Charles Jeannes, Goldcorp (NYSE:GG). Other stock mentioned: SPDR Gold Trust ETF (NYSEARCA:GLD)

Cramer has been bullish on gold, especially with GLD up 25%, but he has been skeptical about the mixed fortunes of miners. Goldcorp (GG) is one of the best miners, but is only up 7%. Miners are having difficulty getting gold out of the ground, but GG might be one of the first to come back; it has surged 525% over the past few years. The company delivered a 5 cent earnings beat on in-line revenues, and is expecting a 70% increase in production over the next few years. CEO Charles Jeannes discussed the $1 billion increase in earnings over the past year and growth in mines. GG is increasing its reserves and has new finds in Canada and Venezuela. "Goldcorp has regained its title of best in show among miners," Cramer said.

Sandridge Energy (NYSE:SD), Devon (NYSE:DVN), Magnum Hunter Resources (MHR), EOG Resources (NYSE:EOG), Continental Resources (NYSE:CLR)

With oil at high prices, stocks in the oil patch are performing well. Devon (DVN) rose an additional $3.32 from its $4 uptick earlier in the week on new finds. Magnum Hunter (MHR) is increasing its output dramatically. Sandridge (SD) is buying up oil properties. EOG Resources (EOG) and Continental Resources (CLR) dominate the Eagle Ford shales and the Bakken respectively. EOG's assets in the Eagle Ford are worth the price of the whole company, and the stock has more room to run.

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