James Cramer told listeners on his

"RealMoney" radio show that Thursday's market action underlines the need to own "best of breed" companies.

Prell seller

Prestige Brands

(PBH) - Get Report

and Rayovac pusher

Spectrum Brands

( SPC) blew up after bad quarters. Cramer told listeners the stocks got killed because these companies "are not only not the best of breed, they might be the worst."

As always, Cramer recommends ignoring makers of second-rate products and focusing on the companies that sell stuff that can command a premium. In consumer goods, that means

Gillette

(G) - Get Report

and

P&G

(PG) - Get Report

, which spend huge advertising dollars to make sure their brands stay in the top spots.

"Gillete and P&G are two best-of-breed companies and they are merging," said Cramer. "And that's a tough combo to beat."

Cramer was particularly bemused by Prestige's 41% plunge because the company came public just five months ago. But he said you can't feel pity for the second-tier brands. "Wall Street is a cynical place," Cramer said. "They are not looking out for the small guys."

Cramer's Callers

Companies like

Comstock Homebuilding

(CHCI) - Get Report

have multiple good years ahead of them, Cramer said, unless the

Fed

derails the housing sector by raising long-term rates. Get the regional guys before they go national, Cramer said.

Celgene's

(CELG) - Get Report

quarter was fine, Cramer added. "They are not done going up," Cramer said. "It's well managed and has state of the art drugs."

A caller asked about

Annaly Mortgage

(NLY) - Get Report

, which Cramer thinks will soar when the Fed is done with its rate hikes. "It's one of the best performing stocks in the past 10 years, why abandon it now?" Cramer asked.

What stocks does Cramer think are hot now? Gun manufacturers like

Smith & Wesson

( SWB) and

Sturm Ruger

(RGR) - Get Report

can benefit from changes in gun control legislation, Cramer said.

Cramer said he would hold onto contract driller

Grey Wolf

( GW) as well as wireless supplier

Skyworks

(SWKS) - Get Report

, despite a middling quarter there.

Exxon Mobil's

(XOM) - Get Report

results were nothing special. The company is less interested in finding new oil reserves than in buying back stock. That's a sign of a geriatric company, Cramer said. "They are sinking like the Valdez -- their production is declining," he said.

Cramer advises buying

Southwestern Energy

(SWN) - Get Report

and

Chesapeake Energy

(CHK) - Get Report

instead.

Stump Cramer

Cramer was stumped by

Poore Brothers

(SNAK)

, a small but profitable snack foods maker, and IPO

Pike Electric

( PEC). He was also stumped by tortilla maker

Gruma

(GMK)

.

Image placeholder title

But he was to be neither stopped nor even contained in his knowledge of concrete churner

Rinker

( RIN), test kit maker

Meridian Bioscience

(VIVO) - Get Report

or box manufacturer

Graphic Packaging International

(GPK) - Get Report

.

At the time of publication, Cramer was long Gillette.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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