The Mad Money host is always on the lookout for themes that operate independently of the economy and can propel stocks higher regardless of whether we are in recovery or recession.
Now, despite the economic recovery, Cramer thinks the habits of Americans have shifted during the great recession away from expensive branded, heavily advertised merchandise in the form of private label, knock off foods, drugs and soft goods. Take Walmart, they are expanding their private label plastic bags by taking shares from national brands like Glad, Hefty and Ziploc. And CVS Caremark emphasized the strength of private label on its conference call yesterday. Plus, Cramer keeps hearing similar things from all of the supermarkets.
“Name brands are out, knock-offs are in,” Cramer said, “and you should invest accordingly going forward.”
In the past knock-offs would thrive during a recession, but people would stop purchasing them and switch back to the more expensive national brands as the economy rebounded. Yet, for the first time, Cramer said, this simply not happening, not at all.
The private label trade-down plays are now genuine secular growth stories thanks to the reluctance of the consumer to revert to the expensive product when the cheaper one seems every bit as good. The Mad Money hosts likes to call this the POPOV factor: we like POPOV vodka every bit as much as we like Smiroff or even Ciroc; Diageo’s premium brand, despite POPOV’s plastic, motor-oil styled bottle and cheesy label, as compared to say Van Gogh. Judging by the sales being seen in these kinds of brands right, Cramer thinks people won’t go back to the more expensive ones.
The bottom line: “In fact,” Cramer said, “people are tired of being fooled by these expensive brands that are no better than the cheaper unbranded one.”
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