Cramer’s 5 Recession-Resistant Stocks
To Cramer, you can’t have a recession portfolio without a dollar store and he prefers Dollar General.
The Goodlettsville, Tenn.-based company operates more than 10,000 stores in 40 states. Cramer noted it’s only started to expand to California, though, which represents a sizable chunk of the U.S. economy.
“One of the chief reasons I like Dollar General is that I’ve never seen the stock of a company eat through not one, not two, not three, but four secondaries, or large tranches of insider stock sales and still come out ahead after every one of them,” Cramer said.
“While the dollar store theme is no longer unknown and the price to earnings multiples of the whole group have expanded rather dramatically, Dollar General still sells at only a slight premium to its growth rate and I expect that growth rate will accelerate thanks to this expansion into California along with ever-improving same-store sales.”
Abbott Laboratories (ABT)
Contrary to certain pop song, Cramer said breaking up is not hard to do when it unlocks value for shareholders. In other words, investors can sometimes benefit from a company’s decision to break-up.
For his recession portfolio, Cramer suggests Abbott Laboratories. In October 2011, the company announced plans to split off its pharmaceuticals business into a separate publicly traded company to increase Wall Street's focus on the remaining diversified medical product line that includes medical devices, diagnostics and nutritionals.
“This split is all about creating two stocks that each appeal to a different constituency of money managers,” Cramer said. “Abbott’s pharma biz gives you a dividend vehicle [while] the medical products biz gives you a growth vehicle and I think both components will deserve to go higher, especially in a recession where portfolio managers will pay a premium for consistency.”