Cramer vs. Kass: Consumer Staples

Jim Cramer
Durable Nondurables
11/20/2008 8:47 AM EST

This blog post originally appeared on RealMoney on Nov. 20.

Year-over-year comparisons are what drive stocks. We like them when they are better than expected, and we love them when margins expand with moderate top-line growth.

That's why Procter & Gamble (PG Quote) and Unilever (UN Quote) will do well next year.

Now, let me just say to Doug Kass, who disagrees with the thesis, that Procter & Gamble thought for sure that this quarter, the first one after some monster price increases, the company would see a big top-line selloff. Instead, the company saw its regular increase, and the increases lasted throughout the quarter.

Because of currency problems and no rollback yet of raw costs, Procter & Gamble was adamant that this current quarter will be bad, which is why I say no hurry unless you are willing to own for 18 months. But when I look at the stocks that will keep the DJIA from going to 5,000, Procter & Gamble is one of them. Unilever is especially good because it is not hurt by a strong dollar, given that its translation is not denominated in dollars.

Frankly, my view is incredibly bearish. It stems from the fact that these stocks are the only ones that I believe will have positive year-over-year comparisons, so they will be magnets for money.

All others, I believe (some 6,000 of them), will have crummy compares, which is why, unless they have accidentally high dividends that have good coverage or are selling for cash, they won't be able to rally on next year's earnings.

Random musings: Big Buffett undercurrent in this market. People aren't as much worried about Berkshire Hathaway (BRK.A Quote) as they are worried about all of the bullishness his call to buy America gave them. The piece was absolutely Buffett being able to tell you "I specifically didn't tell you that we would go up any time soon or go up at all." That's the luxury you get if you are Buffett. No one else has it. As I made my call for a big fall, I was labeled the Anti-Buffett. Now we are all beginning to get Anti-Buffett.

At the time of publication, Cramer was long Procter & Gamble and Unilever.

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Know What You Own: This article discusses the personal products industry, another company operating within this space is Kimberly-Clark (KMB Quote). For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.