3 Recession Proof Stock Picks By Cramer

Includes: GIS, KO, PG
by: Efsinvestment

Secular stocks are the recession-proof stocks whose progress sustains no matter how bad the economy is. Therefore, Jim Cramer, one of the most popular stock pickers on the street, gave names of three stocks that are performing well.

I have investigated these stocks from a fundamental perspective, adding my O-Metrix Grading System where applicable. Here is a fundamental analysis of these stocks from Cramer's Mad Money.

Stock Name


Cramer's Suggestion

O-Metrix Score

My Take

General Mills





The Coca Cola Co.




Buy After Pullback

Procter& Gamble




Long-term Buy

Data from Finviz/Morningstar, and is current as of August 30.

General Mills

General Mills has spent approximately $170,000 this quarter on lobbying. The food company was trading at a P/E ratio of 13.9, and a forward P/E ratio of 13.3, as of Aug 30. Analysts expect the company to have an annual EPS growth of 8.4% in the next five years. Profit margin (12.1%) nearly doubles the industry average of 6.8%, while it offered a 3.24% dividend.

O-Metrix score of the stock is 4.27, and it is trading only 5.09% lower than its 52-week high. Earnings increased by 56.86% this quarter, and 20.77% this year. Target price is $41.06, which implies a 9.0% upside potential. Institutions own 71.21% of the stock, whereas it returned 4.2% in a year. Yields are impressive, and debt-to assets ratio is slowly going down for the last four quarters. ROE is 30.56%. Operating margin is 18.7%, way above the industry average of 10.8%.

General Mills had a remarkable recovery since its dip in Mar 2009. I guess it will keep on for a considerable time.

Coca Cola

Founded in 1886, Coca-Cola produces, distributes and sells nonalcoholic beverages over the globe. The Georgia-based beverage titan shows a trailing P/E ratio of 13.0, and a forward P/E ratio of 16.2, as of Aug 30. Estimated annualized EPS growth for the next five years is 8.0%. Profit margin (29.7%) crushes the industry average of 15.2%, and it paid a 2.69% dividend in 2010.

Earnings increased by 72.75% this year, and 17.81% this quarter. Sales rose by 46.84% this quarter, while the company has an O-Metrix score of 3.66. ROA, ROE, and ROI are 19.49%, 41.29% and 29.05%, respectively. Target price indicates an about 11.4% increase potential, and it is trading 0.01% higher than its 52-week high. Gross margin is 61.7%, whereas assets and debts are increasing sharply. Coca Cola returned 25.1% in the last twelve months. While SMA50 is 3.30%, SMA200 is 7.18%. Institutions own 63.69% of the stock. Debt-to equity ratio is 0.3, way better than the industry average of 1.1.

Coca-Cola is a dividend pick for the next five years. Insiders have been selling stocks and exercising options for a while. I would rather wait for a pullback.

Procter & Gamble

Robert Steele, the Vice Chairman of Procter & Gamble’s, has just joined Beam’s board of directors. Procter & Gamble, as of the Aug 30 close, has a P/E ratio of 16.2, and a forward P/E ratio of 13.7. Analysts estimate a 9.0% annualized EPS growth, which sounds reasonable given the 9.95% EPS growth of past five years. The company paid a 3.31% dividend last year, while the profit margin was 14.0%.

Target price is $70.10, which indicates a 10.3% increase potential. O-Metrix score is 4.11, whereas the company returned 6.7% in a year. Gross margin is 50.6%. Debt-to assets ratio is nearly stable for the last five quarters, and the stock is trading 5.46% lower than its 52-week high. SMA50 and SMA200 are 1.54% and 1.13%, respectively. Yields seem all right. Debt-to equity ratio is 0.3, way better than the industry average of 1.4. Institutions hold 58.73% of the stock, and earnings increased by 18.16% this quarter.

Procter& Gamble is a trustworthy profit maker in the long-term.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.