Jim Cramer identified five themes investors should watch out for in the first quarter, which he shared with members of his Action Alerts PLUS charitable trust. Theme No. 4 is that soft goods are a good safe haven in the event of a market downturn.
The thinking behind this prediction is that soft goods producers like PepsiCo (PEP) , which reports earnings on Friday, Feb. 15, Procter & Gamble (PG) and Kimberly-Clark (KMB) , will benefit from their decision to raise prices due to an increase in raw material costs as those material prices normalize.
"Their price increases, brought on by rising raw costs and transportation and logistics and bottlenecks, are sticking but the inputs are plummeting at the same time. That's bountiful. Whether it be the collapse of oil and the pricing of everything from the bottles to the cans to the ingredients in them... we are going to see unprecedented margin expansion in the cohort," Cramer said.
The market hasn't priced this occurrence into these stocks yet, according to Cramer, so in the event of a wider downturn, there is value to be had in soft goods securities.
"No one is looking for this. We will be ready when the selloff occurs. We may have missed Este Lauder. But it could come around again. I like the new teams at Colgate, Pepsico, and Kimberly and, of course, it would be a gift if Procter would come back down again," Cramer said.