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Soft Goods Make Strong Defense

Tuesday, 7 Aug 2007 | 8:00 PM ET

While the Fed today recognized the troubles in banks, brokers and homebuilders, it doesn't seem quite willing to do anything about it just yet. The resultant slowdown is great for defensive stocks like Unilever.

Spotlight on Unilever
Mad Money host Jim Cramer takes an in-depth look at Unilever.

Most people would recognize the brands: Lipton, Breyers, Ben & Jerry's, Hellman's, Dove, Slim Fast, Close-Up toothpaste. These are the products consumers buy no matter which way the market goes, Cramer said. Suprime woes or not, people shower and brush their teeth...hopefully.

Since Unilever is based outside the U.S., it's even less sensitive to the credit problems we're having here, Cramer said. The international exposure totals more than a third of Unilever's sales and profits coming from emerging and developing markets, such as China and India, where the company has a first-mover advantage.

An even better reason to own the stock, though, is for the yield -- 3.6%, which is a nice cushion. According to Cramer, investors run to stocks with big dividends when times are tough. The lower the stock drops, the higher the yield. And that attracts more investors, which carries the stock price back up.

Unilever is a great turnaround play as well. Since Patrick Cescau took over in 2005, jobs have been cut -- unfortunate for the workers, necessary for the business - the biggest brands have been promoted and new products are coming to market quicker.

"He took at company that had become bloated with way too many employees, factories and brands and he turned it into a great international soft-goods company that's just three points or so off its 52-week high," Cramer said.

To top it off, there's speculation that Colgate-Palmolive is interested in buying Unilever. Cramer doesn't think it's going to happen, but expect to keep hearing about it.

"I don't care how bullish or bearish you are right now," Cramer said, "how about a little defense? Unilever is a great candidate."

Questions for Cramer? madmoney@cnbc.com

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