Jim Cramer is the host of CNBC's "Mad Money" and the chairman of TheStreet.com. In 1987, Cramer started his own hedge fund and returned an average of 24% per year between 1987 and 2001. Cramer also authored six money management books.
Cramer listed the worsening food shortage and Americans‘ increasing efforts to get healthy and eat better as two of five trends that will provide long-term growth prospects for the following 10 stocks. The global food shortage is a problem that will persist for years, if not decades, to come. However, Cramer feels this is a problem that has a stock solution. You can see the impact of the food shortage in the form of higher prices at the grocery store. When food prices are up dramatically, farmers have a surplus of cash which they then use to maximize acreage production. Here are Jim Cramer’s favorite food stocks.
Deere (DE): Cramer recommended this best of breed tractor maker on the idea that farmers will spend more money on equipment to try and get more crops out of the same acreage. Cramer said this stock should be bought into weakness and could provide multiple years of growth. Deere is trading at 11 times earnings and yields 2.25%. Ken Fisher of Fisher Asset Management increased his position in the equipment manufacturer by 147% (see more of Fisher’s stock picks).
Potash (POT): Playing the theme of a global food shortage, Cramer recommended the best of the fertilizer companies under the assumption that a rising middle class around the world will increase the demand for chickens, cows, etc. which all feed on grain. Cramer recommended buying on a pullback. Mohnish Pabrai has a large position in the stock (see more of Pabrai’s picks here).
With 2/3 of America being overweight (and half of them being obese), the strive to eat healthier is definitely a long term trend. Look for healthy eating plays that benefit from the fight against obesity. While most of the food that’s good for you doesn’t really taste well, these companies provide high-quality, healthy food that tastes great and that’s what will guarantee their success. Providing this consistently keeps sales strong, builds customer loyalty and guarantees customers will stick around if the companies need to raise prices.
Hain Celestial (HAIN): HAIN makes organic foods and other products that promote general well-being. Cramer said healthy eating is not going anywhere and HAIN is poised to benefit from it. The stock trades at 25 times earnings, but Cramer said it’s justified because of the price consumers are willing to pay to get these products. Billionaire investor Carl Icahn has a large position in the stock (check out Icahn’s stock picks).
Panera Bread (PNRA): Has become the place to get all-around healthy, high quality food. People feel they can come here and lose weight without losing taste. Ron Gutfleish’s Elm Ridge Capital owns 450,000 shares.
Chipotle Mexican Grill (CMG): Cramer likes this healthy, fast-food concept because of its customer’s loyalty, which would allow it to raise prices if it needed to. This loyalty, has been developed by consistently delivering the highest-quality food that is good for both consumers and the environment. Cramer gives it a buy recommendation, but not if it means paying-up for it.
Whole Foods (WFM): WFM is the ultimate high-end supermarket because of the good-for-you products offered. It can maintain higher price points without losing business. The stock has an EPS of 1.85 and yields less than 1%. Steve Cohen’s SAC Capital Advisors increased its position in the stock by 51%.
Pepsi (PEP): Pepsi unveiled a 3-year, 2.5 billion dollar program to invest in China. The company has been shifting to healthier, more sustainable products as of late and has yet to see real pay offs from the move. Boykin Curry of Eagle Capital Management increased his position by 13%.
General Mills (GIS): Cramer likes that the raw material costs for this company are decreasing and sees it as an opportunity to buy the stock. The stock has a $23.85 billion market cap and has a yield of 3.3%.
Kellogg (K): Cramer recommended this packaged-goods company because of both its dividend as well as the decrease in energy and raw material costs. Kellogg trades at 15.8 times earnings and yields 3.2%. Kellogg represents 2.63% of John Brennan’s (Sirios Capital Management) portfolio.
Just because these trends are long-term doesn’t mean they need to be bought at any price. Because they are long-term strategies, you can exercise some patience and wait for a pullback.