Cramer: Forget the Rumors Driving the Market
If you ask “Mad Money” host Jim Cramer, it was a number of rumors that caused stocks to rally more than 1 percent across the board Tuesday, wiping out most of the previous day’s declines.
In Cramer’s opinion, the biggest rumor was that the European Central Bank is going to guarantee all deposits in European banks in euros, which would mean that even if a euro zone country decides to issue its own currency, their deposits would still be denominated in euros. In turn, Cramer said people wouldn’t have to worry about losing their savings overnight if they keep their money in a Spanish or Greek bank because the money will be insured either way.
If the rumor proves true, Cramer said the problem will be that the Italians could say they can’t pay their debt because the budget deficit is too big, or perhaps Greece will leave the euro and there won’t be a contingency plan. Either way, Cramer thinks these kinds of stories will appear because the market has become a “gigantic rumor mill.”
Cramer thinks investors should stop listening to the rumors, though, because they aren’t investible. He thinks investors should stop thinking about how if European countries go down, it would be the “end of the world” for U.S. companies. Instead, he recommends investors consider the 52-week high list, a group of stocks that continue to go higher despite the rumor-filled market.
So who's on the list? He shared a few names.
Cramer said B&G Foods has fared well because it boasts “domestic security,” meaning it has no exposure to Europe. From Ortega brand Mexican food and Cream of Wheat to Vermont Maid Syrup and more, the Parsippany, N.J.-based company manufactures and sells a variety of food products in the United States, Canada and Puerto Rico. So the European debt crisis has little to no impact on its products, Cramer said. Plus, the company has a clean balance sheet and pays a juicy dividend yield.
While Cramer doesn’t like tobacco, he does like Altria Group’s stock. The Richmond, Va.-based company makes a variety of cigarette and smokeless tobacco products under the Marlboro, Virginia Slims, Parliament, Benson & Hedges, Basic and L&M brands. Not only does Altria pay a big dividend yield, it also has little exposure to Europe.
“A few years back the people who ran Altria said that they wanted to offer a pure domestic play on cigarette smoking with a big yield,” Cramer said. “They excised Europe for you and created the perfect albeit least politically correct stock in the world.”
In addition, Cramer likes soft drink maker Dr Pepper Snapple Group. The company has little exposure to Europe and pays a 3.2 percent dividend yield.
With housing turning around, Lumber Liquidators and Sherwin-Williams are doing well, too.
The bottom line? Every day, stocks appear on the 52-week high list. These stocks are rumor-proof, Cramer said, and they will continue to push higher despite whatever talk makes its way around Wall Street.
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