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Cramer: Defense Stocks ‘in the Doghouse’

Defense stocks are “in the doghouse,” Cramer said during Monday’s “Stop Trading.”

With the end of the year approaching, money managers don’t want these companies in their portfolio. Not when defense, along with health care, look to be the two segments most likely to see budget cuts.

“The performance funds are going to dump them between here and yearend,” Cramer said.

Cramer praised the sector’s CEOs for being “smart,” and he said they would find a way to make money despite their biggest client—the government—tightening the purse strings, but in the end the stocks themselves are in shaky territory for the next six weeks.

The “Mad Money” host recommended holding only Lockheed Martin for its 4.3-percent dividend yield, but predicted that Raytheon and General Dynamics could see declines.

The play on Caterpillar’s purchase of Bucyrus International is to buy Joy Global , Cramer said. But not yet. While he does think JOYG is “best of breed,” he recommended waiting until “a couple of days from now when everyone’s forgotten about Bucyrus.”

That being said, Cramer thinks Caterpillar “is still such a screaming buy.”

Call Cramer: 1-800-743-CNBC

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  • Jim Cramer

    Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

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