CNBC’s Jim Cramer on Thursday gave investors three options for packaged food stocks to take refuge in while the stock market continues to fluctuate.
“If commodity costs fall sharply, food stocks can become recession-proof safe havens. But you have to be selective, which means sticking with the winners who we know are doing well,” he said.
All three major indices fell on Thursday, the last day of the second quarter. The Dow Jones Industrial Average and S&P 500 had their worst quarters since the first quarter of 2020, while the Nasdaq Composite had its worst declines since 2008.
The Mad Money host said packaged food supplies are a great play in turbulent times and fit the current market for two main reasons.
“First, commodity prices have already started collapsing, and those savings flow straight into the bottom line. … Second, almost everyone seems convinced we’re headed for a recession, and while I’m not entirely convinced, that sets a much better backdrop for Steady Eddie’s packaged food supplies,” he said.
Here are his three top picks:
Third Place: Campbell’s Soup
Campbell topped its sales and earnings numbers last quarter and also raised its full-year sales guidance.
“It’s not my favorite food, but I haven’t felt this good about Campbell Soup in a very, very long time,” Cramer said.
2nd place: Kellogg
Kellogg said last week that it plans to split into three separate companies that will split its brands into snack food, cereal and plant-based segments.
The company, which houses celebrity brands like Froot Loops, Pop-Tarts and Rice Krispies, is expected to finalize the spin-offs by the end of next year.
“Their snacks business in particular is great, and I think it will be worth a lot more as an independent company that isn’t exposed to much slower growth [of the] Grain business in North America. Also, we don’t have a lot of good pure games for snacks,” Cramer said.
1st place: General mills
General Mills beat Wall Street estimates for sales and earnings in its most recent quarter, though its full-year earnings outlook is lower than analysts’ estimates. The stock hit a new 52-week high on Thursday.
Cramer praised the company’s “blowout district,” calling the company a best-of-breed operator that has been at the top of its game in recent years.
“I think it’s worth buying here, but you might want to leave some wiggle room to buy more next time we’re hit by a market-wide pullback,” Cramer said.
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