Jim Cramer says investors can hide in these three recession-proof packaged food stocks
CNBC’s Jim Cramer on Thursday gave investors three options for packaged food stocks they can seek refuge in, as the stock market continues to seesaw.
“With commodity costs coming down big, the food stocks can become recession-proof safe-havens. But you have to be selective, which means sticking with the winners that we know are doing well,” he said.
All three major indices fell on Thursday, the last day of the second quarter. The Dow Jones Industrial Average and S&P 500 had their worst quarters since the first quarter of 2020, while the Nasdaq Composite had its worst declines since 2008.
The “Mad Money” host said that packaged food stocks are great plays during turbulent times and fit the current market for two main reasons.
“First, commodity prices have already begun to collapse, and those savings flow right to the bottom line. … Second, nearly everybody seems convinced that we’re headed into a recession, and while I’m not totally convinced, that creates a much better backdrop for the Steady Eddie packaged food stocks,” he said.
Here are his top three picks:
Third Place: Campbell Soup
“This is not my favorite food play, but I haven’t felt so good about Campbell Soup in a very, very long time,” Cramer said.
2nd Place: Kellogg
The business, which houses famous brands including Froot Loops, Pop-Tarts and Rice Krispies, is expected to finalize the spinoffs by the end of next year.
“Their snack division in particular is terrific, and I think it will be worth a lot more as an independent company that’s not hostage to the much slower growth [of the] North American cereal business. Plus, we don’t have many good pure plays on snack food,” Cramer said.
1st Place: General Mills
General Mills beat Wall Street estimates on revenue and earnings in its latest quarter, though its full-year profit outlook is lower than analysts’ estimates. The stock reached a new 52-week high on Thursday.
Cramer praised the company’s “blowout quarter” and called the company a best of breed operator that’s been at the top of its game for the past several years.
“I think it’s worth buying here, but you might want to leave some room to buy more the next time we get hit with a market-wide pullback,” Cramer said.
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