We have a ton of stocks that are like General Mills right now. They have come back down to levels where they aren't cheap or expensive after they'd spent some elevated time as bond-market equivalents. It is going to be hard to get them off the dime if the U.S. stays at this 2% range of economic growth.
But here is what's important about that: These stocks have reached some level at which, because of their consistency and their dividend policies, it isn't worth selling them either. I think the action in General Mills explains why the market has stabilized. With this level of growth, you simply no longer want to sell stocks that look and act like General Mills.
Certainly you are more attracted to cyclical stocks that could do better if you think the second half is going to give you 3% economic growth. That's why, when you get an upgrade today of a company like Western Digital (WDC - Get Report) or Seagate (STX - Get Report), two uber-low-multiple stocks, you know you have winners. You are going to be drawn to companies like Boeing (BA - Get Report), too. Last night, on "Mad Money," Boeing CEO Jim McNerney traced out a 20-year-secular growth path for the company. That stock can go much higher.
But the main takeaway I can see here is stasis for the part of the market that had been falling apart. The General Mills-like companies out there -- with this Federal Reserve right now and this economic growth right now -- are just plain, well, hunky dory. They are clearly opportunities to be bought down a couple from where they are now, but they are opportunities to be sold if they climb back to where they had been before the Fed's May 22 signal that the economy's risk is now toward acceleration and not de-acceleration.The Big G doesn't have the cyclicality the market craves, but it doesn't have the pitfalls the market fears. So there's nothing to do and, sometimes, when there is nothing to do, it's a terrific statement for the market as a whole. Because this huge cohort just isn't going to hurt us anymore -- at least from these levels.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV