Whenever we get these big moves out of winning stocks because of a perception that all has changed and we aren't going to be thrown into a recession by Fed Chief Powell and the Chinese are going to play ball, I like to look at stocks that are thrown away without much thought even though their companies are doing amazingly well.
Exhibit A? McDonald's (MCD) . I have been saying that McDonald's is putting through a very important domestic restructuring that is raising productivity while reducing costs. The remodeling program is lifting those franchises that are getting the makeover. But it's been one of the quintessential winners since Powell made his intemperate remarks with the stock going from $163 to $188 in the wake of the Fed Chief's whip inflation now interchanges.
That remodel has nothing to do with the Fed. It's all about improving McDonald's. It's a buy.
Second, you have to like the stock of Johnson & Johnson (JNJ) which has a fabulous pipeline. I do not think that people realize how powerful its Esketamine nasal spray will be in fighting depression and suicide. Last week there was an article in the New York Times that talked about the benefits of ketamine drips as a way to combat hard-to-beat depression. I believe that FDA is totally aware of the high rate of suicide among veterans with post-traumatic syndrome disorder who take their lives. I believe that Esketamine will rapidly become THE standard of care, along with antidepressants used to combat suicide.
The stock of Coca-Cola (KO) has been hit incredibly hard, to the point where it now yields 3% and has retreated almost two points from its high. James Quincey is transforming the place, making it a faster grower and taking share. I am acutely conscious that PepsiCo's (PEP) stock is down big, it was up big Friday and that didn't make any sense. I would prefer, at these prices, KO over PEP but another point or two down and it's six or half dozen.
It takes a huge rotation to drive the stock of Clorox (CLX) down. It rarely sells off. I believe that you need to buy this one in pyramid style, some here, and then some down three from here, and then wait to see if it falls another three to five points. If it doesn't you are done. If it does you would have saved some room to buy.
I want to buy CBS (CBS) any time it is down. I think the company's going to soon be merged with Viacom (VIAB) given that it is leaderless with no one to put up a fight. It has not been forced down by the rotation but it makes too much sense not to buy here as the combination would be powerful and all of media is down today for little or no reasons.
Finally, Kimberly-Clark's (KMB) down badly and the paper products company's stock almost never seems to stay down. I like Procter & Gamble (PG) , too, but it is not down enough. Both do work, though, especially now that raw costs can come down courtesy the decline in energy. Sure, energy is up today but think about it like this: Qatar leaves OPEC, Canada's mandated cutbacks in oil, and the Russians and the Saudis are making a deal ahead of the OPEC meeting later this week. And that's all they can muster?
I don't trust oil at all. But I do trust the stocks of those who use it.