Offense or Defense in This Market?

As Jim pointed out Tuesday night, the earnings of some of the most defensive stocks out there are poised to go higher thanks to increased prices for the companies' products and lower commodity costs.

That's why Cramer recommended Hershey (cocoa and sugar prices are down) and Chattem (plastic is cheaper now) this week on the show. Kellogg and Kimberly-Clark fall into this same category. These food and consumer-products companies raised prices to deal with higher raw costs, and then commodity prices collapsed. Now, thanks to increased prices, Hershey, Chattem and the others are seeing wider margins. That should lead to earnings beats come next quarter.

Earlier on we were calling these stocks "happier days are here again" plays, but I don't think that's such a great name anymore since, well, happier days are only here for the companies that buy commodities and have raised prices on their on products. Everybody else is decidedly unhappy.

Normally these are the kind of stocks that perform well in a recession because their earnings are stable and predictable as opposed to cyclical companies that make less money when the economy weakens. We don't usually buy these defensive names because their earnings will be higher when the recession hits, but this time around, that actually could be the case for a lot of companies. These companies aren't just defensive right now, they've also, courtesy of the commodity collapse, got growth. One more reason to hide in the supermarket and the drug store, and be wary of everything else.

Cliff Mason is the Senior Writer of CNBC's Mad Money w/Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Richand Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like.

Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.

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