'RealMoney' Radio Recap: Best of Breed

James Cramer told listeners on his "RealMoney" radio show that Thursday's market action underlines the need to own "best of breed" companies.

Prell seller Prestige Brands(PBH Quote) and Rayovac pusher Spectrum Brands (SPC Quote) blew up after bad quarters. Cramer told listeners the stocks got killed because these companies "are not only not the best of breed, they might be the worst."

As always, Cramer recommends ignoring makers of second-rate products and focusing on the companies that sell stuff that can command a premium. In consumer goods, that means Gillette(G Quote) and P&G (PG Quote), which spend huge advertising dollars to make sure their brands stay in the top spots.

"Gillete and P&G are two best-of-breed companies and they are merging," said Cramer. "And that's a tough combo to beat."

Cramer was particularly bemused by Prestige's 41% plunge because the company came public just five months ago. But he said you can't feel pity for the second-tier brands. "Wall Street is a cynical place," Cramer said. "They are not looking out for the small guys."

Cramer's Callers

Companies like Comstock Homebuilding (CHCI Quote) have multiple good years ahead of them, Cramer said, unless the Fed derails the housing sector by raising long-term rates. Get the regional guys before they go national, Cramer said.

Celgene's (CELG Quote) quarter was fine, Cramer added. "They are not done going up," Cramer said. "It's well managed and has state of the art drugs."

A caller asked about Annaly Mortgage(NLY Quote), which Cramer thinks will soar when the Fed is done with its rate hikes. "It's one of the best performing stocks in the past 10 years, why abandon it now?" Cramer asked.