RealMoney Silver - Coke and Smokes Leading

Coke and Smokes Leading
By Jim Cramer
RealMoney.com Columnist
1/11/2008 2:39 PM EST

Raw costs will be bad for Pepsi (PEP) and Procter (PG) and Colgate (CL) . We see the worries about it in Unilever (UL) and Diageo (DEO) today.

They will be bad for Kellogg (K) and for General Mills (GIS) . They will be bad for ConAgra (CAG) .

But will they take the stocks down big?

Maybe. These stocks are all valuation-stretched. They are rich and they are priced for perfection.

They can shed three, four points in a heartbeat. But they are not all created equally. As I have been saying, Coke (KO) told me in the fall that it has costs under control. Pepsi and Procter fretted about their costs last quarter, and the stocks went up anyway.

These are now faith stocks, as in if you have no faith in the Fed -- and a lot of people don't -- you want to buy these ahead of the quarters if they keep getting slammed.

But the only two I have conviction in of all of these are KO and Altria (MO) . MO is splitting and brimming with cash. KO is accelerating growth and won't surprise on costs.

The rest right here? Dicey.

Random musings: AT&T (T) doesn't look bad here if you believe in Stephenson. I kind of do. ... They really want to kill it today. ... Fed wants to wait to see CPI/PPI before it moves. That's one of the reasons why people are losing hope. ... I would sell CIT Group (CIT) and Capital One Financial (COF) right here.

At the time of publication, Cramer was long Altria.

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