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.”