• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Here's Where to Invest When the Fed Pulls the Trigger

Consolidating industries means expanding gross margins.
By JIM CRAMER Sep 16, 2015 | 08:23 AM EDT
Stocks quotes in this article: XRAY, SIRO, TAP, AET, HUM, ANTM, CI

In all of the talk of the Fed, let's not forget that there is a day after.

The rate hike that so many expect is not a death sentence for equities, but it is a body blow, compounded by the fact that most of the companies I deal with are in a soft patch when it comes to the numbers.

But let's not forget there are companies that can still take matters into their own hands and produce results, companies like Dentsply (XRAY), which announced a deal last night to acquire Sirona Dental (SIRO), a principal competitor that would make the Big Three of Dentsply, Sirona and Henry Schein into the Big Two.That's terrific for the gross margins in the business of dental equipment. This kind of deal for an industry that was already consistent and doing well could raise numbers for everyone.

Or how about the possibility of a deal between AnBev and SAB Miller, which would eliminate competition in the already not-all-that-cutthroat beer industry because of all of the combination in that business. This deal cannot get Justice Department muster unless it spins off its majority Miller stake, presumably to Molson Coors (TAP), which could be the biggest winner of the combination.

We know the biggest winner of the Anbev combination was Constellation Brands (STZ) because it got the Corona Modelo stake as part of a gift from the Justice Department to get that deal blessed. It's been an incredible horse and I think it will stay that way. The last quarters have been fabulous.

Now these deals can't make up for the damage that I think the Fed will cause with a hike. But I know that these combinations are fantastic for margins and that means that they are all logical places to go. I did like Henry Schein without this deal, having spoken with them many times as part of their usual routine.

I have not been a huge fan of Molson Coors because competition has hurt them. That competition goes by the wayside, so it will be a buy, too

You have to be resourceful ahead of a rate hike. You can't just sit there and decide nothing works. You can't just say, OK I don't want to buy the market because FedEx (FDX) just reported and guided down or because China was simply and obviously propped up at the last hour and how much money do they really want to waste as they buy stakes in what may be worthless companies.

But when you get combinations you get relief, as you can tell from the upgrades of all of the big HMOs -- Aetna (AET), which is buying Humana (HUM), and Anthem (ANTM), which is snaring Cigna (CI) -- at JPMorgan.

Consolidating industries means expanding gross margins. Expanded gross margins of companies like these, ones that have little to do with the economy -- we always need our teeth fixed, we always drink beer, we always need health care -- are logical places to go when the Fed does pull the trigger either Thursday or any Fed meeting going forward.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.

TAGS: Investing | U.S. Equity | Stocks

More from Stocks

Melvin Capital's Demise Presents a Beauty of an Opportunity

Brad Ginesin
May 22, 2022 1:20 PM EDT

The top holder in several companies, the hedge fund's abrupt liquidation has contributed to weakness.

I'm Organizing a Bottom-Fishing Expedition

Bret Jensen
May 22, 2022 11:00 AM EDT

It is easy to see the value of this retail play.

Here's the Secret to Market Timing

James "Rev Shark" DePorre
May 21, 2022 10:00 AM EDT

You've probably been told timing the market is futile, but here's a way to make it possible -- if you're willing to do the work.

It's Official: That Hairy Animal With Claws and Sharp Teeth Is a Bear

James "Rev Shark" DePorre
May 20, 2022 4:31 PM EDT

Along with the media proclamation of a bear market, we have some improvement in the charts of many smaller stocks, but ...

Applied Materials Slips on Miss: Where Will the Chips May Fall

Bruce Kamich
May 20, 2022 1:00 PM EDT

Let's see what the charts say.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:24 PM EDT PAUL PRICE

    An interesting chart

    I'm betting heavily that stocks will be way up aga...
  • 10:10 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "Market Timing for Dummies"
  • 01:44 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10 Portfolio

    We're making a series of trades here.
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login