Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Thursday August 24. Click on a stock ticker for more analysis:
Bad Business Cycle? Take a Trip to the Mad Money Supermarket: Kellog (NYSE:K), Anheuser-Busch (NYSE:BUD), PepsiCo (NYSE:PEP), Proctor & Gamble (NYSE:PG), Merck (NYSE:MRK), Danone (DA), Tootsie Roll (NYSE:TR), Wrigley's (WWY), Hain Celestial (NASDAQ:HAIN)
Cramer asserted that the way to effectively wring profits from the market is to "obey the business cycle". He notes that the current one is "very bad". He suggests to viewers that the best way to deal with this situation is to invest in consumer staple and pharaceutical stocks like K, BUD, PEP, PG, MRK, DA and TR. On Thursday, Pepsi and Procter & Gamble closed at $64.14 and $61.05, respectively; and Merck closed at $40.06. He believes that PEP and PG should hit $70, while MRK should go up to $50.
As part of his trip down the aisles of the "Mad Money Supermarket", Cramer focused heavily on Danone and Tootsie Roll, noting that they are the only unexploited consumer stocks that he likes. "For a long time, Tootsie Roll was stagnant, but we are in the cusp of their turnaround right now," Cramer said. "It has been a torpid do-nothing company for the last few years, but it's about to become a true secular growth story."
Of Wrigley's, Cramer said that "their bubble has popped" and he considers HAIN to be too speculative. Cramer added that "at this point in the cycle, you don't want to be speculating."
Cramer suggested three drugstore "fresh, unexploited" plays that are a bit off the beaten path: CHTT, MTXX and PRGO. Chattem makes well-known products like Gold Bond powder and Icy Hot.
In this segment, Cramer tells his audience that it's time to sell a few of the stocks that he thought were investments because, as he writes in his book, "Never turn a trade into an investment, or you'll get the house of pain."
In light of this statement, he said referred to GYMB and PLCE, which a few weeks ago he said were great investments:
Both of them caught some really solid - hey, some might even say terrific - monthly same-store numbers and both of the stocks just took off. Both of them had fabulous conference calls. Let me tell you. It feels real good to be right. If you sold them, you would have made some mad money.
It was a great trade, but remember, I thought it was an investment. So I didn't realize when it was time to sell. And now, both stocks are down because PLCE is discounting their hoodies, and GYMB extended their back-to-school season for much longer than I'd expected - nine days. I caught a great trade, and then I thought it was an investment, which meant we had to give back all those gains.
To avoid making the same mistakes, Cramer said to sell Coldwater Creek and Bristol-Myers: "I don't want you to make the mistake of PLCE and GYMB; that trade's happened. CWTR? Time to go. BMY? I'm hanging in there for my charitable trust, but I'm very troubled. You should be worried - not panicked - but worried, if you own the stock.
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