There are three tiers of stocks in the current economic climate, according to Action Alerts PLUS charitable trust portfolio manager Jim Cramer.
Tier one is stocks of the companies that everyone knows are winners and are still winning in the current coronavirus-impacted economy. Tier two includes stocks that will be well-positioned for big gains once the economy normalizes. Finally, there are stocks that are just wrong right now and probably will be wrong for a while even when conditions improve.
The AAP team has been putting cash to work, albeit at a slower pace in the past few weeks, and since they have plenty on the sidelines, Cramer and senior analyst Jeff Marks have been looking for spots to deploy those reserves.
Costco (COST) - Get Report and Clorox (CLX) - Get Report are two of the most attractive names right now, and the portfolio has been buying Costco aggressively. Meanwhile, Clorox is looking at an 80% increase in disinfectant-wipes sales.
"Clorox was losing a lot of share," Cramer says. "And what happened is ... people don't mind when you're not fighting a scourge that lives on surfaces for a long time. People are happy with any old wipe. But when you're reading about something that can have a life of five days on the surface, boy, is this thing diabolical. Well, you want Clorox because bleach kills everything."
The biggest issue with Clorox for Cramer is that it is already valued pretty high in the mid-180s and cheaper plays can be made with so many good stocks discounted in the current market environment.