Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday August 28.
Packaged Goods Are Dead Money: Procter and Gamble (NYSE:PG), Kimberly Clark (NYSE:KMB), Clorox (NYSE:CLX), Hershey (NYSE:HSY)
Why are packaged good plays, like Procter & Gamble (PG), Kimberly Clark (KMB), Clorox (CLX) and Hershey (HSY) selling off? Cramer thinks rising interest rates are to blame, since these stocks are bond equivalents. Some say the rise in oil will bring raw cost pressure, others emphasize the exposure these companies have to lagging emerging markets. Cramer still adheres to the thesis that it is all about interest rate fears, and these stocks are not going significantly higher. He would sell them into any lift.
The Least Perilous Stocks: TJX (NYSE:TJX), Urban Outfitters (NASDAQ:URBN), Viacom (NASDAQ:VIA), Celgene (NASDAQ:CELG), Gilead (NASDAQ:GILD), EOG Resources (NYSE:EOG), B&G Foods (NYSE:BGS), Starbucks (NASDAQ:SBUX), Hain Celestial (NASDAQ:HAIN), Whole Foods (NASDAQ:WFM), Boeing (NYSE:BA), Humana (NYSE:HUM). Other stocks mentioned: Agios Pharmaceuticals (NASDAQ:AGIO), Southwest Airlines (NYSE:LUV), US Airways (LCC).
With the Dow down 48 points on worries about Syria and domestic tapering, Cramer discussed some of the least perilous stocks in this market.
Celgene (CELG) and Gilead (GILD) are buys on any decline. Viacom (VIA) has doubled its buyback, and while it might be hard to find a dip in the stock, if it topples, it is a buy. Humana (HUM) is a winner with the Affordable Care Act. EOG Resources (EOG) is a buy on the basis that oil has risen, but oil stocks have not seen gains in tandem with the commodity. B&G Foods (BGS) is down 10% and has a 4% yield. Starbucks (SBUX) reported a stellar quarter and has solid growth ahead. It has only declined 5%, but at least it has dipped. Hain Celestial (HAIN) reported a knockout quarter, and while it may be too high to buy, it is a main supplier of Whole Foods (WFM) which has dipped. Boeing (BA) may be more in demand now that fuel prices are up and its Dreamliner is a cost saver.
Cramer took some calls:
Agios Pharmaceuticals (AGIO) is a good speculative play and Cramer would not sell it.
Southwest Airlines (LUV) is a victim of the entire airline industry which is facing higher fuel prices. Cramer felt the game changer in the industry was the proposed merger of US Airways (LCC) and American Airlines. Since the Justice Department has nixed the deal, Cramer doesn't see a reason to invest in this industry.
CEO Interview: Richard Smith, Realogy (NYSE:RLGY)
Housing stocks saw a run-up, until they were hammered on fears of rising interest rates. However, Realogy (RLGY), which works with the major real estate brokers in the U.S., reported a 22 cent earnings beat with revenues up 17% and transaction volumes rising 21% yoy. However, given persistent worries about interest rates and housing demand, the stock fell 23%, giving investors only a 13% gain since Cramer got behind it in November. In spite of the "enormous correction," CEO Richard Smith still thinks there is "enormous pent-up demand." Interest rates are still historically low, even with the uptick in rates. He discussed the fact that housing is local; some areas are stronger than others. He emphasized that housing is not as strongly related to interest rates as it is to demand, which is growing.
Jim Cramer's Action Alerts PLUS: Trade right alongside a Wall Street pro! Start your 14-day FREE trial today.
Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.