Action Alerts PLUS

Return to Article

Playing Defense

Jim Cramer

I don't just want to add to my cyclical stocks on this extended market decline, though I do believe the names I'm buying -- or would be buying if my restrictions allowed -- will be among the first to recover in the next rally.

That said, I want to make sure that I have a sizable position in my defensive names, as they are the stocks that will likely continue to be the most consistent performers through the remainder of 2006.

With that in mind, I'm going to purchase 200 shares of Anheuser-Busch (BUD Quote) after you read this note. Beer sales have been strong all summer long, and the company is facing easy annual comparisons for the rest of the year. I also expect management to boost the 27-cent quarterly dividend (2.4% yield) later this month, lending further support to the stock. This purchase gives me a total of 2,400 Anheuser shares, or 3.1% of the overall portfolio.

I'm also going to take advantage of the 2% decline in Newell Rubbermaid (NWL Quote)this morning, to pick away at 300 shares here around $24.85. I believe the company will report another solid quarter on July 27, with resin costs on the decline and new CEO Mark Ketchum continuing to generate new revenue growth.

With that in mind, I believe the stock can trade up toward the high-$20s by the end of the year. This purchase rounds up my stake in Newell to 5,000 shares, or 3.5% of the overall portfolio.