When the economy slows down, high-end retailers such as Whole Foods Market ( WFMI), Nordstrom ( JWN - Get Report), Coach ( COH) and Tiffany ( TIF - Get Report) continue to do well because the rich keep spending, said Jim Cramer Friday on his "Mad Money" TV show. The "very low" end also works, he said, and the "absolute bottom of the barrel is SPAM," which is made by Hormel Foods ( HRL - Get Report). "I think it's a buy right here," he said. Cramer likes Hormel because people tend to buy cheaper food when the economy isn't doing well, and "Hormel is the best of breed when it comes to low-quality meat." Additionally, there is a turkey shortage, said Cramer, and Hormel should benefit from higher prices for its turkey products. Cramer said Hormel isn't a bad company just because it sells cheaper meats. It is a "good company that fills an important niche." Boding well for Hormel is the fact that ConAgra Foods ( CAG) recently reported good results, said Cramer, and if ConAgra can do well, Hormel should "put them to shame" because Hormel is a much better-run company, he said. Cramer also believes Dollar General ( DG), a budget retailer, should start doing well. Among restaurants, Cramer likes McDonald's ( MCD) as a low-end play and because of its plan to spin off its Chipotle restaurants. Cramer also likes Darden Restaurants ( DRI) and Brinker International ( EAT). And, he's not giving up on high-end restaurant play Ruth's Chris Steak House ( RUTH).
Playing Hurricanes' Chemical ReactionsCramer said he's bullish on NL Industries ( NL - Get Report), whose subsidiary, Kronos, makes titanium dioxide, an ingredient in paint and toothpaste. Titanium dioxide is in short supply after Hurricane Katrina hit DuPont's ( DD - Get Report) titanium dioxide plant, knocking out 5% of the world's supply until at least early 2006. Cramer expects NL Industries to benefit from price increases.
Riding a BuybackBuy Goldman Sachs ( GS - Get Report) and let its buyback lift the stock for you, said Cramer. Goldman Sachs "knows how to buy back stock," said Cramer. The company bought back stock last quarter, and the stock is now trading 12% higher than it was during the buyback, he said. Goldman just announced another buyback this week, and Cramer expects similar results. Lockheed Martin ( LMT - Get Report), on the other hand, also announced a buyback this week. But, Cramer said Lockheed's track record isn't so rosy. Last quarter, Lockheed bought back stock, and the stock is now trading about 5% lower, he said. The bottom line, said Cramer, is not all buybacks are created equal. Goldman Sachs knows how to do a buyback. Lockheed Martin "accomplished nothing" with its last buyback and will probably fail again, he said.
Lightning RoundBullish Cramer was bullish on Genentech ( DNA), Urban Outfitters ( URBN - Get Report), KOS Pharmaceuticals ( KOSP), Goldcorp ( GG), Ultra Petroleum ( UPL - Get Report), Schering-Plough ( SGP), Penn National Gaming ( PENN - Get Report), Statoil ASA ( STO), United Technologies ( UTX - Get Report), Amedisys ( AMED - Get Report), Garmin ( GRMN - Get Report), Superior Industries International ( SUP - Get Report), Coach ( COH), Cemex ( CX - Get Report) and Microsoft ( MSFT - Get Report). Bearish Cramer was bearish on American Eagle Outfitters ( AEOS), Abercrombie & Fitch ( ANF - Get Report), Aeropostale ( ARO), Sirius Satellite Radio ( SIRI - Get Report), Wells Fargo ( WFC - Get Report), WPT Enterprises ( WPTE), Newmont Mining ( NEM - Get Report), Plantronics ( PLT - Get Report), Fleetwood Enterprises ( FLE), Independence Community Bank ( ICBC), IBM ( IBM - Get Report) and Microtune ( TUNE).
Interested in more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here. It's a series of articles from Cramer on how to become a better investor. The following table lists some of the rules that Cramer dissects.
|1.||Pigs Get Slaughtered||2.||It's OK to Pay the Taxes|
|3.||Don't Buy All at Once||4.||Buy Damaged Stocks|
|5.||Diversify to Control Risk||6.||Do Your Homework|
|7.||Don't Panic||8.||Buy Best-of-Breed|
|9.||Defend Some Stocks||10.||Don't Bet on Bad Stocks|
|11.||Own Fewer Names||12.||Cash Is for Winners|
|13.||No Regrets||14.||Expect Corrections|
|15.||Know Bonds||16.||Don't Subsidize Losers|
|17.||No Room for Hope||18.||Be Flexible|
|19.||Quit When Execs Do||20.||Patience Is a Virtue|
|21.||Be a TV Critic||22.||When to Wait 30 Days|
|23.||Beware the Hype||24.||Explain Your Picks|
|25.||Find the Bull Market|
|Check back for more of Cramer's Rules|