The ‘Best of Breed’ Is Working
As U.S. stocks closed near highs of the session Wednesday with the S&P 500 index finishing at its highest level since July 2011, Cramer said 2012 has already become a year where stock-picking among the “best of breed” is actually working.
The “Mad Money” host noted that pet food and supply retailer PetSmart , for example, is by far the best of breed in an area given to growth. He thinks PetSmart does the best job at servicing the pet owner. In turn, its stock rose sharply Wednesday.
Meanwhile, food and beverage retailers McDonald’s , Panera Bread , Starbucks and Yum! Brands all saw shares hit an all-time high Wednesday. Each of these companies have developed marquee products that customers love. These companies have also figured out how to gain a following overseas, not including Panera. So even as Europe struggles with its sovereign debt crisis, France and Germany are among McDonald’s leading markets in terms of growth.
Speaking of food, Whole Foods Market’s stock popped Wednesday. It was no surprise to Cramer, though, because he thinks there is real demand for supermarkets that sell healthy foods, as Whole Foods does so well.
Elsewhere in the market, financial services name Visa hit an all-time high Wednesday. To Cramer, it’s the perfect combination of finance and technology; the two dominant cohorts of the S&P. It’s also a very well-run company, he added.
Apple also saw sharp gains. Cramer has long been behind this technology stock. He likes that it’s created “the world’s first ecosystem” that is incredibly visionary.
Nike’s stock also climbed, too, because it’s the “most technologically advanced apparel business in the world” with global appeal.
The financials were noticeably missing from the list of stocks that hit their highs, Cramer observed. Apart from Apple, tech stocks couldn’t seem to get going either.
The bottom line: Stocks of “best of breed” companies with strong management teams will likely continue to outperform, Cramer said.
When this story was published, Cramer’s charitable trust owned Apple.
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