The food, drug and dividend stocks are “getting a rush of money,” Cramer said during Tuesday’s Stop Trading. That comes thanks to a “classic rotation” out of cyclical names and into less economically sensitive companies.
“If you have a short-term outlook,” he said, “this is where you go.”
Given this terrible day for the Dow, with the index down over 200 points, some may think investors are dumping Caterpillar and 3M and running for the sidelines. But that’s not the case, Cramer said.
He sees a switch into the so-called safety stocks – the Pfizers , Mercks and General Mills – as the American markets continue to absorb still more fears over European debt. Cramer said the action in the drugs stock in particular over the past three days virtually “foretold” today’s negative action.
A similar rotation has been happening in retail as well. Costco’s share price “has done nothing” compared to Target, Aeropostale and True Religion , but that seems ready to change. Cramer said COST and Walmart are now the go-to stocks in this sector.
The Mad Money host also offered other defensive plays to weather the market’s volatility. He liked Inergy’s most recent quarter, as well as that from Duke Energy , though he doesn’t like Duke’s coal exposure. And if investors are worried about the US consumer, they should consider private-label plays like Perrigo and Treehouse Foods .
Even the homebuilders could work. These domestic companies are not levered to Greece, Spain or Portugal. Cramer singled out DR Horton, saying the company right now has “so much momentum.”
Investors who are holding out for a cyclical play, though, should try Nike. The company holds its first analyst meeting in three years on Wednesday, and Cramer expects a lot of good news to come out of it.
Sure, the bears might point to Nike’s China exposure and the country’s slowing economy, but Cramer thinks the 300-million-strong Chinese middle class will be a hugely beneficial market for the company.
“That’s 600 million shoes last I looked,” Cramer said.
Cramer’s charitable trust owns Costco.
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