GO
Loading...

Cramer: Why 'this stock is radioactive'

Rising raw food prices—from milk to almonds—caused "high-profile blowups" among several big food stocks, CNBC's Jim Cramer said Tuesday.

Cramer singled out one company, Dean Foods, as a stock that investors should avoid. He called the stock "radioactive," and investors seemed to heed his advice—the shares dropped more than 10 percent in early trading Tuesday.

"Jeez, it's a milk company," Cramer said on "Squawk on the Street." "People are going to think it's radioactive milk. No. What I mean is that the raw costs are going up here."

(Read more: Dean Foods warns of quarterly loss as raw milk prices rise)

The stock joins ConAgra Foods, Annie's and WhiteWave Foods as companies suffering from the same kind of pricing problems, Cramer said. Dean Foods, the largest dairy processor in the U.S., warned on Tuesday that it could post a loss in the first quarter because of rising milk costs.

Dean Foods said that milk prices rose sooner than expected in 2014 because of growing global demand.

"The whole food chain is rebelling against the stocks," Cramer said.

Rising almond prices hurt WhiteWave, a Dean Foods spinoff that specializes in plant-based dairy products, and increasing organic wheat prices hurt the snack business of natural food maker Annie's, Cramer said.

(Read more: Cramer: Can't shake faith in this fast food stock)

Cramer added that the ongoing drought in California is "playing havoc with a lot of the raw food costs," including almond and avocado prices.

—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street." Reuters contributed to this report.

Disclaimer

Contact Stocks

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More