Jim Cramer's Stock Market Predictions for 2013
Speaking at the Deal Economy 2013 "Beyond the Election" conference at the New York Stock Exchange on Thursday, Nov. 30, the "Mad Money" host and founder of TheStreet Inc. lamented on a host of global macroeconomic conditions that have weighed down on economies in the U.S. and Europe and stalled dealmaking.
"Most deals in 2012 were done out of fear," said Cramer. "I expect 2013 to be a better year. We'll get a resolution one way or another. The world will be a much better and more hospitable place for deals."
Cramer said he believed that dealmaking hit a trough in 2012 amid conditions including weakening economic activity in some of the BRIC nations like Brazil and China, and debt woes plaguing the Eurozone, as well as the looming showdown among power brokers in Washington over the fiscal cliff.
And while Cramer believes it won't be until January at the earliest that U.S. lawmakers reach an agreement on a national budget, he's certain that M&A will accelerate once an accord is struck. Cramer discussed ten deals he expects to happen in 2013 that should give healthy boosts to the respective stocks involved.
Generally speaking, according to Cramer, most deals will be geared toward unlocking shareholder value and boosting stock performance. But one "major force" for deals in the new year will be a push by executives for stocks to outperform sector-wide exchange traded funds, he said. ETFs act as a benchmark to measure stocks to determine certain aspects of executive compensation, particularly bonuses.
In a list of ten deals he expects in 2013, Cramer predicted three breakups, one "merger of equals," a likely take-private, and a possible auction. He also highlighted four attractive targets.
Prediction Number 10:
For beginners, Cramer predicts a break-up of Manitowoc Co. into separate construction and foodservice equipment companies. He said Manitowoc's construction company will operate more efficiently as a stand-alone business in the wake of infrastructure improvements in China and rebuilding efforts in the Northeast from Hurricane Sandy. The foodservice operations will benefit from middle class growth abroad. The two units together do not make logistical sense, he said.
Prediction Number 9:
Cramer also targeted New Brunswick, N.J. healthcare giant Johnson & Johnson Inc. as a breakup candidate. He believes J&J has become too unwieldy for its own good and should split into consumer products, medical devices and a pharmaceutical businesses. Cramer cited Covdien plc, which split itself in half in December 2011, as an example of an efficient breakup.