Stocks are showing some key patterns right now, and investors are wondering whether the U.S. will enter a deflationary environment, according to TheStreet's Jim Cramer.
"First, investors see deflation coming, not inflation, despite whatever discordant hawks from the Fed say or what the consumer price index indicates," Cramer wrote this week on Real Money.
The investment guru sees other themes emerging, including the "fear that central bank tactics to relieve deflation will lead to inflation." He also said that "some are willing to stretch for yield in a low-yielding world" and that "some see a nascent industrial turnaround or believe certain managements can navigate the moment better than others."
Cramer said that of the turnarounds and "secular growth stories out there," few "inspire aggressive buying." That said, some stocks are "twice blessed and are probably the best place to begin."
To that end, investors are seeking safety in the consumer packaged goods industry. "Which stocks seem to have it all right now? It's the consumer packaged goods segment where people are buying into a deflationary environment where there's yield and even conceivably a weaker dollar, although I am not yet willing to call that a trend," Cramer wrote.
Cramer has identified 17 consumer packaged goods stocks that have strong supporting charts. Read on to find out what Cramer thinks of these stocks and whether they are worth considering for your portfolio.
Campbell Soup (CPB - Get Report) is a global food company headquartered in Camden, N.J. The company makes packaged or canned products under several brands, including Campbell's, Pepperidge Farm, Arnott's, Royal Dansk, V8 beverages, Bolthouse Farms, Swanson and Prego.
Campbell reported adjusted earnings of 87 cents per share for its fiscal second quarter, surpassing analysts' estimates for earnings of 80 cents per share. Revenue, down 1% to $2.2 billion from last year's quarter, was slightly below Wall Street estimates.
"Campbell's, after years of having little to no growth, has a moderately positive earnings trend, some natural and organics to its lineup, with the Bolthouse Farms brand being the best, and a decent dividend," Cramer wrote. "Many of its raw costs, whether it be transportation or packaging or ingredients are all coming down in costs, but it doesn't seem to have that much pricing pressure at the store level. This stock has been perhaps the strongest in the market, save a couple of others on the list and, to me, has gotten ahead of itself. Nobody seems to care though, as it just won't be stopped."
Campbell's shares are up approximately 18% this year, compared WITH the S&P 500, which has fallen 4.7%.
Earlier this month, the Ewing, N.J.-based company reported in-line profit for the fourth quarter. Revenue of $873.6 million for the period came in above expectations, according to the Associated Press.
"Church & Dwight shows you the great lengths investors will go to get into any consumer packaged goods story, even one with disappointing earnings, provided it had some organic growth, which was the case with this quarter as it gave you 2.6% organic growth," Cramer wrote.
Church & Dwight's shares are up approximately 8% this year, compared with the S&P 500, which has fallen 4.7%.
Clorox (CLX - Get Report) manufactures and sells household, cleaning and lifestyle products under the Clorox, Formula 409, Glad, KingsFord, Fresh Step, Hidden Valley and Brita brands, among others. Clorox is based in Oakland, Calif.
Last week, Clorox reported its highest quarterly gross profit margin in more than five years for the fiscal second quarter, fueled by low commodity costs.
"Clorox is clicking on all cylinders through innovation and social media, which now accounts for more than 30% of its spend," Cramer wrote. "Look out for its underperforming Brita Filter division, which I think is about to get hot through celebrity endorser and American family favorite Steph Curry. Benno [Dorer] was the only CEO in this whole group who said, out loud, that energy is a real tailwind. I think he's thought it through and has decided that energy costs will be lower longer. He also has among the least strong dollar exposure. You need more than one reason when your stock has been this strong."
Clorox's shares have risen less than 1% this year, compared with the S&P 500, which has fallen 4.7%.
General Mills (GIS - Get Report) manufactures and markets branded consumer foods including cereals, pastries, ice cream, yogurt, prepared meals, organic and natural foods, soup and snacks that are sold in retail stores. Some of the Minneapolis-based company's popular brands include Pillsbury, Cheerios, Haagen-Daas, Annie's Organics, Chex and Nature Valley, among many others.
Cramer considers General Mills an underperforming food company that is "blessed with good yields, which keeps investors in them while they turn around."
General Mills is "a perennial favorite as it has been slow and steady wins the stock race even as it has repeatedly disappointed on the earnings front. It is getting much more natural and organic though and investors love that," Cramer wrote.
General Mills shares are up 2.3% this year, compared with the S&P 500, which has fallen 4.7%.
ConAgra Foods (CAG - Get Report) is an Omaha-based packaged foods company manufacturing and marketing foods under a variety of brands including Marie Calendars, Healthy Choice, Wesson, Banquet, Libby's, Swiss Miss and Alexia.
Cramer considers ConAgra another underperforming food company that is "blessed with good yields, which keeps investors in them while they turn around."
"ConAgra's a restructuring story having just offloaded the disastrous Ralcorp private label division. The company fleeced itself in that acquisition, one of the worst of the new millennium," he said.
ConAgra shares are slightly down this year, by -0.2%, compared with the S&P 500, which has fallen 4.7%.
Kellogg (K - Get Report) is food manufacturing company based in Battle Creek, Mich. The company's brand portfolio includes Kellogg's Special K, Pringles, Keebler, MorningStar, Rice Krispies, Pop-Tarts, Eggo and Frosted Flakes.
The company posted a loss for its most recently reported quarter, ending Jan. 2, of $41 million, or 12 cents a share, however its adjusted earnings of 79 cents a share beat Wall Street estimates. Revenue was hurt by foreign currency conversions, dropping 11% to $3.14 billion, but was also better than analysts forecasted, according to the Associated Press.
Kellogg is another underperforming food company that Cramer named among those "blessed with good yields, which keeps investors in them while they turn around."
"Kellogg just reported and it had a nice beat and raise, but still doesn't have its old growth back, although it did say that cereal sales are rising," he wrote. "Boy did that get people salivating. It yields 2.65% and it is one to go to on the next oil- or China- or Fed-related selloff. Yes, that's how strongly it is now perceived."
Kellogg shares are up barely 2% this year, compared with the S&P 500, which has fallen 4.7%.
Earlier in February, the beverage maker posted better-than-expected profit and revenue for its fourth quarter. Coca-Cola's cost cutting measures helped it navigate a challenging macro environment, according to Forbes.
"Coca-Cola has improved its marketing and changed its cost structure while perennially boosting its dividend. I think it's going to do quite well in a deflationary environment," Cramer wrote.
Coca-Cola shares have risen approximately 0.5% this year, compared with the S&P 500, which has fallen 4.7%.
PepsiCo (PEP - Get Report) is a global beverage and snack company that sells products under the Pepsi, Frito-Lay, Tropicana, Gatorade and Quaker brands. The $143-billion market cap company is based in Purchase, N.Y.
The beverage giant's fourth-quarter earnings of $1.06 a share was in line with Wall Street forecasts. Though revenue dropped 7% year over year to $18.6 billion, it still surpassed estimates.
The North American division of Frito Lay, Pepsi's chip and snack segment, was the stand out winner for the quarter, with organic revenue rising 3% and operating profit rising 6% for the period.
"PepsiCo has amazing large-cap growth, but that comes more from snacks, notably Frito Lay and a resurgent Quaker. It had an amazing quarter and it has a generous dividend policy. It's best in show," Cramer wrote.
Pepsi shares are down 1.5% this year, compared with the S&P 500, which has fallen 4.7%.
P&G is in the process of selling off its non-core brands, nearly 100 in total, so that it can focus growing its best-selling products. The company has nearly two dozen brands that have sales at least $1 billion.
"P&G is in the midst of a multi-year turnaround and everything it makes and everything it transports is a huge beneficiary of lower energy costs," Cramer wrote. "The turn is very real, the yield will support you if there are bumps and the country club atmosphere at this giant apparently is a thing of the past."
P&G shares are up 2% this year, compared with the S&P 500, which has fallen 4.7%.
Kimberly-Clark (KMB - Get Report) manufactures personal and family care products including Huggies diapers, Kleenex tissues, Kotex feminine care products and Scott toilet paper. The company is headquartered in Irving, Texas.
Kimberly Clark reported a profit of $333 million, or 91 cents a share, for the fourth quarter compared to a loss in the year-earlier quarter. Revenue slid 6% to $4.54 billion in the quarter, hurt by currency volatility, according to Morningstar.
"Kimberly has become the deliver-and-beat company with the most pro-shareholder characteristics in the group when it comes to returning capital," Cramer wrote. "Its raw costs are plummeting and it ditched its underperforming Halyard Health Group not that long ago. Smart."
Kimberly-Clark shares are up roughly 3.2% this year, compared with the S&P 500, which has fallen 4.7%.
Estee Lauder's adjusted quarterly profit for the December quarter topped Wall Street forecasts. Sales for the company's fiscal second quarter results rose 3% to $3.12 billion over the prior year's quarter and also surpassed estimates, aided by demand for the company's Smashbox and Tom Ford brands and online sales.
Estee Lauder is one of four fast-growing consumer packaged goods companies that the market adores. "Estee Lauder just keeps making the numbers and is the No. 1 cosmetics growth engine in the world. Fantastic management here," Cramer wrote.
Estee Lauder's shares are up 4.2% this year, compared with the S&P 500, which has fallen 4.7%.
Last month, the chocolate company posted a 5% decline in quarterly revenue for the December period and said that sales growth was slowing as American consumers shopping habits change and that China remains volatile, according to The Wall Street Journal
Hershey is a second fast-growing consumer packaged goods company that the market adores. "Hershey's spent the time in the doghouse it has needed to courtesy of high cocoa costs and an even higher valuation. It's done going down," Cramer wrote.
Hershey's shares are up barely 2% this year, compared with the S&P 500, which has fallen 4.7%.
Hormel (HRL - Get Report) is the parent company of food products such as Applegate organic meats, Jennie-O turkey burgers, Skippy peanut butter and Wholly Guacamole. Traditionally known for its Spam meat products, the company has expanding into natural and organic foods, most notably with its acquisition of Applegate. Hormel is based in Austin, Minn.
"Hormel's reinvented itself even faster than Campbell's and it has shed the Spam-only moniker that has dogged it, sealing that terrible processed meat tag with its purchase of the natural and organic Applegate Farms," Cramer wrote. "This stock's one for the ages and like many of these companies, when the CEO comes on he dazzles. What a terrific quarter. Someone recently threw this stock under the bus in TheStreet.com's Worst Stock in the World contest and all I can say is that perhaps it has been too hot of late. Otherwise, this is a very forward-looking company that was the exact opposite not that long ago."
Hormel shares are up nearly 8.7% this year, compared with the S&P 500, which has fallen 4.7%.
The jelly maker's revenue fell short of estimates for its most recent fiscal quarter, despite the fact that the company has been acquisitive. That said, Smucker's raised its adjusted earnings guidance for 2016 to between $6.99 and $7.09 a share, compared with its previous outlook of $6.85 to $6.95 a share.
"Smucker, like Hormel, has bought growth, including coffee, peanut butter and most recently Big Heart Pet Brands and they have all come out splendidly. Oh my, is this company loved, even as the growth is more purchased than organic," Cramer wrote.
Smucker shares are up 3.5% this year, compared with the S&P 500, which has fallen 4.7%.
Cramer considers Dean Foods a "pure deflationary plays as milk, chicken and beef are all part of the declining commodity complex," he wrote. "If you believe that commodity costs are coming down further, something you have every right to believe, especially after the horrendous Deere quarter," then the stock should be among investor favorites.
Dean Food's shares are up 12% this year, compared with the S&P 500, which has fallen 4.7%.
Cramer considers Tyson a "pure deflationary plays as milk, chicken and beef are all part of the declining commodity complex," he wrote. "If you believe that commodity costs are coming down further, something you have every right to believe, especially after the horrendous Deere (DE - Get Report) quarter," then the stock should be among investor favorites.
Tyson shares are up 22% this year, compared with the S&P 500, which has fallen 4.7%.
Cramer is a big believer in Johnson & Johnson's stock. He wrote:
"Oh my, here's a consumer products company that has one of the fastest-growing drug divisions, a cost-cutting margin-improving medical device business, a fantastic buyback, a bountiful dividend and exposure to a potential weaker dollar. It has it all, which is why the stock never sells off any more. Watch this stock. On a down day it is always the first to turn. It's become the most go-to name among drugs, devices and packaged foods and its balance sheet, the strongest of any in the United States, one of the lone Triple As, gives everyone the lovely blanket that they so crave."
Johnson & Johnson shares are up 3% this year, compared with the S&P 500, which has fallen 4.7%.