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NEW YORK (
) -- "The hedge funds are too eager to abandon their conviction," Jim Cramer told the viewers of his
TV show Monday, but individual investors shouldn't be.
Cramer said investors can use a prism to determine which stocks are worth holding onto and which ones aren't.
In a world with rising fuel and commodity prices, Cramer said the simple metric to look for is whether a company has pricing power, and can pass these rising costs onto its customers. Companies with this power win, while those that don't, lose. Cramer said investors need to use this metric in their buying and selling decisions, and not follow the lead of hedge funds whose decisions change on the latest headline.
Among the companies that work are names
, a stock which Cramer owns for his charitable trust,
Action Alerts PLUS
. Cramer said these companies make products that can't be replicated, which gives them pricing power.
The same logic extends to companies like
, another Action Alerts PLUS name, said Cramer, along with those in the energy group like
Among the losers, restaurants and brand name consumer goods. Cramer said unless a restaurant has a unique concept, like
Chipotle Mexican Grill
, its growth will be squeezed.
And names like
that offer cheaper alternatives to brand name consumer goods will survive in the consumer space.
There is not substitute for
and their all natural products, said Cramer, nor a substitute for
for those set on eating healthy.
Using the prism of pricing power, Cramer said investors will be able to easily see the winners in this market.