Jim Cramer Blog

The Skinny on Kraft (NYSE: KFT - News) and Proctor and Gamble (NYSE: PG - News)
After Tuesday's dismal trading day, Cramer believes the Fed will be willing to accept a recession, anything that will beat inflation, "even if even if it means the electric bleachers for my hedge fund and trading fund friends." As expected, Cramer recommended defensive stocks, and especially KFT, which may sell "loser brands" such as Maxwell House, especially since Carl Icahn and Nelson Peltz have a stake in the company. He also thinks PG will jettison brands that aren't working to preserve its capital.

CEO Interview: Timothy Wallace, Trinity Industries (NYSE: TRN - News)
Timothy Wallce doesn't think TRN's steep 20% slide last month is an indication of a longer-term decline for the company, and comments Trinity purchased 20% equity in TRIP Rail Holdings. While Cramer thinks TRN may have a good long-term story, he would be careful since, "the numbers may be too high here."
Treehouse Foods Inc. (NYSE: THS - News) and B & G Foods Inc. (NYSE: BGS - News)
While Kraft and Proctor and Gamble are getting rid of "crummy" brands, THS and BGS are masters of acquiring tired names and giving them new life. Cramer described THS as a risky stock which has been on an acquisition spree, and owns household brands Santa Fe, Del Monte and Oxford. THS' profits have increased 42% year-over-year in the second quarter. B & G's buys neglected brands such as Ortega, Cream Of Wheat and Underwood, is a conservative investment which reported a 12.3% increase in net sales last quarter and is worth owning for the dividend, according to Cramer. He says both companies are "thrice-blessed" because they are recession-proof and consolidate their expenses to reduce raw costs; "We like the dividends, and we like the brands."
The Last Man Standing; The Travelers (NYSE: TRV - News)
In spite of the current environment, Cramer says money can be made from insurance companies which continually invest and are "gigantic cash machines." He would stick with TRV which is the "last man standing" and is ranked 89 in the Fortune 500. He predicts TRV will go higher on the current housing situation.
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Labels: BGS, Jim Cramer, KFT, Mad Money, PG, THS, TRN, TRV

Getting Defensive: Alliant Techsystems Inc. (NYSE: ATK - News)
Cramer expressed his hope that viewers took advanatage of Tuesday's morning upsurge to sell financials, brokers and housing stocks and to invest in his six wild bull markets: aerospace, minerals, infrastructure, oil, agriculture and machinery. He added a seventh wild bull market to the list: defense. Cramer believes the U.S. will be in Iraq for a long time, because both parties want to prove they are tough on security. He discussed three things that characterize a good defense stock: it's cheap, it's mostly levered to defense, and it's a U.S. company. Cramer's second favorite defense stock is ATK, a lead play which is "in almost every single projectile that the U.S. can launch at an enemy, be it a bullet or a tank round" and derives 86% of its sales from defense. ATK is cheap with an 11% long-term growth rate, and a 14.4x multiple. He added ATK is buying so much stock, it seems to be taking itself private. ATK bought back 10% of its own company last year, and a substantial increase in its orders, Cramer thinks an upside surprise is in store. He would buy half a position before and half after the company's earnings report.
Pull the Trigger on Raytheon (NYSE: RTN - News)
Cramer's favorite defense stock is RTN which is 95% levered to defense. It is cheap, with a 16x growth rate, and RTN sells as just 15x earnings; "It's just plain undervalued," Cramer remarked. RTN just won two major contracts and raised its guidance by 20 cents. In addition, RTN has been buying back stock aggressively and still has $611 million left in the repurchase authorization.
Related: Scott Sacknoff notes P/E is not the only consideration when looking at defense stocks.
CEO Interview: David Wenner B&G Foods (NYSE: BGS - News)
David Wenner discussed the company's strategy of revamping small, overlooked brands; "We focus on them and are typically successful in turning them around." Cramer recommended BGS for those who are worried about the pain caused by mortgages.
Published By SeekingAlpha

Labels: ATK, BGS, Jim Cramer, Mad Money, RTN