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Cramer: As Utilities, Pharma Advance, Should You Retrench?

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Conventional wisdom would suggest it's time to get out of the market about now. Both the utilities sector and the pharma sector are making noteworthy gains.

"It's a confusing thing," said Jim Cramer. "Pfizer and Lilly hit multi-year highs. Meanwhile, Dominion and Public Service Enterprises hit hit all time highs."

Typically when these defensive sectors advance, other areas of the market decline, especially those areas viewed as higher risk.

"You might think that means trouble lies ahead," said Cramer. But if you think that - you'd probably be wrong.

Other areas of the market are also advancing, areas that are extremely economically sensitive.

"And one of the most economically sensitive sectors I know is real estate," Cramer said. "Yet, real estate trusts have a huge presence on the 52-week high list."

Don't believe it? Cramer said just check out the price action in a slew of REITs including Kimco Realty, Tanger Factory Outlet Centers, Eastgroup Properties as well as Ventas and Medical Properties Trust.

All of those stocks appear to be marching higher and higher.

"If things were that challenged in this economy, you simply couldn't get this kind of action. These are economically sensitive companies and they are doing incredibly well," Cramer said.

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And that kind of advance is more than enough to offset any concern Cramer may have entertained due to strength in pharma and utilities.

"As an investor you must be a keen observer of stocks," he added. "They reflect the value of their underlying enterprises and in these cases that value is increasing."

Milan Zeremski | E+ | Getty Images

In fact, as the market flirts with all-time highs, Cramer thinks real estate investment trusts may be an ideal place to put money to work – here and now.

First there are dividends, "The industry paid out $29 billion in dividends last year," Cramer said.

Also the low interest rate environment benefits these companies. "They have been able to refinance taking advantage of Ben Bernanke's largesse," he added.

And finally Cramer thinks the chase for yield will benefit these stocks. "They have harnessed what people want, a stable and growing dividend stream attached to a consistent and increasing stream of revenues. I think they offer one of the best risk reward dynamics in the market today."


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Symbol
Price
 
Change
%Change
PFE
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LLY
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D
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PEG
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KIM
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SKT
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EGP
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VENTAS
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MED PROP TRST
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XLV
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SPDR UTL SEL
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