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CNBC's Jim Cramer on Tuesday compared a cosmetics company to one of the country's most dominant sports franchises.
"He's the Bill Belichick of cosmetics. He gets the job done. He does his assignment," Cramer said. "Estee Lauder's the stock market equivalent of the Patriots."
Those comments come after the makeup, fragrance and hair care products maker posted strong quarter results on Monday. Estee Lauder's share price has surged more than 15% since Wednesday's close last week. The stock traded at an all-time high of $206 on Tuesday.
As investor fears about the bond market ease and many "assume we're right back in boom town," portfolio managers rotated money back out of the slowdown stocks to cyclical names during Tuesday's session, Cramer said. He pointed to the more than 4% drop in spice company McCormick and TJ Maxx-parent TJX's slight dip.
"I think it's crazy to switch back and forth between the slowdown stocks and their more cyclical compatriots — that's something only hedge funds can get away with," Cramer said. "You're better off not trying to game these rotations. Find the stocks of high quality companies where management has figured out the competitive landscape and knows how to take risks rather than becoming outmoded."
Estee Lauder is a slow down stock, but Freda had tunnel vision to shift distribution focus from the malls and department stores to online and Ulta Beauty, one of the company's top channels, Cramer said. Sales in its skincare business grew more than 15% in the June quarter, according to FactSet. The company projects full-year sales to grow as much as 8%, above analyst expectations of less than 7%.
Because of the company's new channels, Cramer said Estee Lauder wasn't beholden to the woes that Macy's saw in its last quarter. The company also could've said that protests in Hong Kong affected sales, he added.
"But Freda didn't go there — he doesn't do that, he doesn't make excuses. He saw the problems coming and avoided them. His team just recognized buying patterns and used them to figure out where the company was most likely to be challenged," Cramer said. "That's how a company that sells the ultimate in discretionary goods can thrive in an environment that everybody else is whining about."
Estee Lauder has $73.2 billion of market cap.