The Dow’s high 5 shares for the top of 2018 had been a defensive group: client merchandise large Procter & Gamble, drugmaker Merck, fast-food chain McDonald’s, telecommunications play Verizon and soft-drink maker Coca-Cola.
“Traditional slowdown inventory” Procter & Gamble took first place with a 10 p.c achieve, a troubling signal for many who are anxious about U.S. financial development, Cramer stated.
“When Procter’s the very best performer, you realize one thing’s flawed with that financial system,” he stated, acknowledging that the Bounty guardian continues to be a “high-quality firm” and has benefited from decrease uncooked prices and better market share.
“That is precisely the type of inventory you wish to personal when you’re involved a couple of slowing financial system,” Cramer stated.
Cramer additionally blessed shopping for shares of runner-up Merck, the drugmaker behind main anti-cancer remedy Keytruda. He famous that Bristol-Myers’ huge deal to purchase Celgene speaks to the ability Merck wields over its opponents.
“They by no means would’ve carried out one thing so radical if Merck weren’t successful some head-to-head trials towards them,” he stated. “Plus, Merck sports activities a 2.9 p.c yield right here, it is obtained a rock-solid stability sheet, and, similar to Procter & Gamble, it is a fabulous slowdown inventory. You have got my blessing to nonetheless purchase this into weak spot.”
Cramer appreciated McDonald’s, noting that its inventory additionally tends to thrive throughout slowdowns. He dubbed the inventory of Verizon, which sports activities a four.three p.c dividend yield and has no publicity to the Chinese language markets, an outright “purchase.”
Coca-Cola, the one different Dow inventory that rallied within the closing months of 2018, “is virtually the right inventory for this setting,” Cramer added, noting that it seems low-cost contemplating its three.three p.c yield and accelerating development.