Cramer's 'Mad Money' Recap: Brand Disloyalty

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We are in the midst of an economic slowdown in the U.S., and during a slowdown, the playbook is easy, Jim Cramer told viewers of his "Mad Money" TV show Tuesday. Buy best-of-breed supermarket, drug and medical stocks, he said.

Branded names are not the same thing as best of breed, Cramer emphasized. He offered two examples of companies that sell branded products that are actually second-tier products.

When playing in an economic slowdown, people should not buy low-quality brands, such as Spectrum Brands (SPC Quote) and Prestige Brands (PBH Quote), and skip best-of-breed names, said Cramer. They will lose money.

"These two brands are the equivalents of gourmet tater tots," he said.

People want to get into these stocks because they look cheap and make what Procter & Gamble (PG Quote) makes.

But if market players want to become defensive and make money during a slowdown, they must be able to differentiate between real brands and faux Wall Street brands, Cramer said.

Spectrum and Prestige are brands that are created by private equity guys that are out to make money at anyone's expense, he said. Only you really care about your money, said Cramer, adding that he wants to help people sort out the real gold from the fool's gold.

Cramer believes that Spectrum, his first example, is not a good company because "it is a virtual mosaic built around the husk of batteries."

Since March 2005, the stock has dropped 85.9%. In mixing lawn-care products, fish and aquatic supplies, grooming services and batteries together, the company thought it would create brand loyalty that would make it money.