"Street Critique" - Hilary Kramer, Chief Market Strategist at Greentech Research
Wednesday, August 20, 2008PAUL KANGAS: Tonight's "Street Critique" guest weighs in on commodity stocks. As we know, they've been beat up pretty badly lately, but is their bull run over? Joining me tonight with some answers is Hilary Kramer, chief market strategist at Greentech Research and author of "Ahead of the Curve." And Hilary, good to see you again.
HILARY KRAMER, CHIEF MARKET STRATEGIST, GREENTECH RESEARCH: Thank you Paul for having me here tonight.
KANGAS: Oil has led a major pullback in raw materials oaf the last month and commodity-based stocks from oil to metals, all the way to food, have been hurt. So are we seeing a start of a commodities bear market or is this just a breather?
KRAMER: This is just a quick break in a very long decade to two- decade-long bull market run for commodities. There's a lot of demand out there worldwide. It's good news. It just means we're going to have to adjust.
KANGAS: What about individual stocks? Are you buying, selling or just sitting on the sidelines here?
KRAMER: Paul, I'm buying stocks and I'm buying the commodity-related stocks, especially in the precious metals and in the steel, iron ore, copper, aluminum.
KANGAS: Let's get specific. What's your first stock you want to talk about?
KRAMER: I have been buying a stock called Metallico. I talked about it before on the show. Metallico's symbol is MEA. The stock is $11.20. It's down from $18 at the very end of June. It just came down because the price of oil came down, but scrap metal pricing stays firm. And we're going to see Metallico go back up to where it should be. Fair value as an analyst I see it well above $20.
KANGAS: There's another metal play that you like also. In early May you gave it to us in the 30s. It was Sims Group. Are you still a buyer here?
KRAMER: I like Sims even better in the 20s. It's a shame it's in the 20s. It should be in the high 40s. I have also seen a lot of whispering about Sims, SMS, being a takeover, an acquisition target by some of the big steel companies. It's an Australian-based company but you can buy it here under the symbol SMS.
KANGAS: What about oil stocks? You liked PBR - Petrobras in mid-May. It was around $75 and how about now?
KRAMER: I still like Petrobras. And I own Petrobras, just like I own Metallico and Sims. Petrobras I own for the very, very long run. PBRA is the stock of my choice. It's just Petrobras "A" shares comes in a little bit cheaper when it comes to buying.
KANGAS: We have less than a minute Hilary. Your final commodity related stock is one that you're not bullish on even though it seems to be at a bargain price, the name and ticker?
KRAMER: Whole Foods and the ticker symbol is WFMI. Paul, as you know, inherently, I'm a bull. I believe in the equity markets. I love stocks. It's what I've done my entire career. When it comes to a stock like Whole Foods, I'm surprised to see that people are still buying, jumping in there. And they think that just because it's cheap, it's a buy. Sometimes cheaper stocks get even cheaper. Now they depend on commodity prices in terms of food. They have these -- margins are very thin, less than 1 percent. I think we're going to see Whole Foods continue to struggle.
KANGAS: Hilary do you own any of the stocks mentioned or have other disclosures to make?
KRAMER: I own Metallico, Sims and PBRA, the Petrobras "A" shares.
KANGAS: Excellent. Well, I want to thank you for being with us again.
KRAMER: Thank you so much, Paul. Thanks for having me on.
KANGAS: My guest, Hilary Kramer of Greentech Research.
