Stocks may have rebounded Monday on renewed hope for a trade deal between the U.S. and China, but CNBC’s Jim Cramer still found value in some names that tend to do well during downturns.
Specifically, he highlighted the stocks of McDonald’s, Johnson & Johnson, Coca-Cola, Clorox, CBS and Kimberly-Clark. All six companies have secular tailwinds behind them that will make their stocks worth owning, even in a time of economic prosperity, he said.
“I think these slowdown stocks may continue to fall here, but the higher-quality ones are absolutely worth buying into weakness, so long as you buy them gradually on the way down,” the “Mad Money” host said.
McDonald’s, for one, is in the middle of a restructuring aimed at raising productivity and cutting costs. Now that the rotation out of “safe” stocks has begun, Cramer recommended buying shares in the fast-food operator as its stock falls.
Johnson & Johnson boasts “a fabulous pipeline of new drugs,” many of them focused on hard-to-treat afflictions like depression, Cramer said. When those treatments are approved, he figured the stock would get a boost.
Under CEO James Quincey, Coca-Cola is on its way to becoming “a faster-growing business with more ability to take market share,” the “Mad Money” host said, adding that he preferred its stock to PepsiCo’s at these levels.
The high-performing Clorox rarely sees its stock sell off because of how good the company is, Cramer said. He recommended buying some shares now, then waiting for a three-point decline before buying more, then repeating until the stock stops its decline.
CBS, which could soon merge with Viacom, could soon create a “powerful” combination in the media space, he continued. Declining oil prices are translating into lower raw costs for Kimberly-Clark because the company uses oil in its plastic packaging, making its stock and others like it worth buying, Cramer said.
“These stocks had been some of the strongest performers, … but thanks to a widespread perception that the Federal Reserve will ease up on its rate hikes after the next one and the Chinese are willing to play ball with President [Donald] Trump, they were thrown away en masse today,” he said. “That’s what happens in a rotation, but I think we need to give them a look because many of these companies are doing incredibly well.”
Now that China and the United States have tentatively agreed on a trade truce, Cramer wanted to give investors the best strategies for profiting from the developments.
The 90-day cease-fire, struck by Presidents Donald Trump and Xi Jinping at the G-20 summit over the weekend, sent stocks higher in Monday’s trading session on renewed hope that a deal would be made in the three-month window. The market got an additional boost on news that China may make significant concessions as a gesture of good will.
“If you want to understand what’s working in this market, you need to think like a Chinese bureaucrat — not like a portfolio manager — a Chinese bureaucrat who’s trying to make President Trump happy,” Cramer said Monday. “If China wants to show President Trump some good faith, what can they do?”
First, China will likely spend more money on U.S. agriculture products, raising grain prices, giving farmers more money to spend on supplies and thus sending the stocks of agriculture machinery makers like Deere & Co. higher, he said.
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Fewer emails and a wider array of offerings are the recipe for success at Groupon as the e-commerce platform tries to transform itself into more of a “utility” for consumers, CEO Rich Williams told CNBC on Monday.
“We have great brand awareness,” Williams told Cramer in an exclusive interview on “Mad Money.” “We’re north of 80 percent. People know who we are. I think our opportunity there is to move just from people knowing who we are and what we’ve been to where we are moving and what we are now, which is a utility they can use every single day.”
For Groupon, which has gained popularity since its 2008 launch for offering deep discounts on travel and lifestyle offerings, that means cutting back on its emails to consumers and daily deals, and instead offering a consistent spread of great deals at the best possible prices.
Williams envisions a place consumers can “trust when they’re hungry, when they’re bored, [or] when they just want something to do on the weekend with their kids,” he told Cramer.
Click here to watch and read more about Williams’ interview.
“[Collins] thinks you need to be cautious when buying stocks here, because the trade truce failed to clean the murky waters,” Cramer said Monday after consulting with the chartist. “That said, if you want to understand what’s going on with the Chinese and with the U.S. economy, there’s one stock that he says you can tell a great deal from: Caterpillar.”
Collins, Cramer’s colleague at RealMoney.com, chose to focus on Caterpillar because the company is not only cyclical — meaning it thrives in a strong economy and hurts in a weak one — but because China accounts for a large portion of its growth.
As a result, the industrial’s stock “has been a pretty good proxy for the progress — or lack thereof — in the trade war,” Cramer explained.
Click here to read the full analysis.
Now that “Deal or No Deal” has found a new home at CNBC, Cramer also sat down with the game show’s longtime host and executive producer, Howie Mandel.
Mandel — a former comedian from whom Cramer admittedly draws inspiration for his own hosting style — told the longtime investor that some of his show’s contestants could use a little “Mad Money” in their lives.
“On Deal or No Deal, … the truth of the matter is that I think you’re needed, because most people don’t know what to do with money,” Mandel said on Monday.
He recalled his first-ever contestant, a woman with three children who had never had health insurance or owned a home in her life. After trying to go for the $1 million jackpot instead of taking other deals for tens of thousands of dollars, she walked away with $5,000, Mandel said. Two years later, when she returned for a reunion, he was shocked.
“She came back two years later. You know what she had done? Her breasts. Talk about an investment. It’s in her vest,” Mandel said.
Click here to watch his full interview, and catch the premiere of “Deal or No Deal” this Wednesday, Dec. 5 at 8 p.m. ET on CNBC.
In Cramer’s lightning round, he raced through his answers to callers’ stock questions:
Nucor Corp.: “I think that it’s the best American steel company, best steel company in the world. I think it’s got a nice yield, I think that they’re generating a huge amount of cash flow and I want you to hold onto Nucor.”
Exelon Corp.: “Exelon is good. I’ve got to tell you: I think that utility stocks, short term, are way too high, but I do think it’s such a fine company [that] you have to be willing to buy more if it comes down.”
Disclosure: Cramer’s charitable trust owns shares of Johnson & Johnson.
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