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 states the exchange rate plus big 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 huge Italian company have decided to begin 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 massive borrowing problems.
That’s what I’m thinking about when I see the better-than-expected figures this day 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’s 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’re 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 stated to me last night on “Mad Money” — makes people too nervous about some solid, non-financial situations.
Yesterday was really hideous. 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 have the ability to comprehend anyone’s desire to take profits on PWR or WG if you purchased them at my direction, but these are really just “first good quarter” stocks, and I believe there’s 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.
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