If the economy is truly slowing down, then what works the best here? What are some stocks that you can buy or at least get ready to buy, like PepsiCo (PEP) , if you are of the opinion that the world really is slowing and the Fed can't change the equation?
I have six of them.
The first is Estee Lauder Companies (EL) . Here is a company that is run by one of the best executives I have ever met, Fabrizio Freda, late of Procter & Gamble (PG) , who has taken this prestigious brand and made it the most-loved makeup company around the world. Because we are in the selfie-generation, where everyone has to look good anytime they step outside, it's Estee Lauder in the catbird seat. I like that Freda has created a reverse-mentor system where every so often the young people in the office mentor the old timers to be sure that they are up on the latest and greatest for the millennials. This a company with a fantastic Chinese business that has only gotten better during the trade tensions. Is there anyone else who can possibly say that? I don't think so.
Second, Starbucks (SBUX) . Have you seen this stock creep up from the $50s to $90 ever since Kevin Johnson took over from Howard Schultz? He's done it by a combination of taking $7.15 billion from a sale of a good consumer-packaged goods business that was making $2 billion in revenues for Starbucks, and using that money to buy back stock hand-over-fist, because it was so undervalued. Plus, Johnson formerly ran Juniper (JNPR) , a technology company, and he's used that knowledge to solve throughput problems that have bedeviled the company for ages. He's done that in his own quiet way. He's donned the green apron and, because he's not known, he could be both ubiquitous and anonymous. I really like that. He's improved the loyalty program and made good tie-ins with the Chinese and extended the friendship Howard had with Jack Ma. That's so important because the Chinese market is gigantic for Starbucks, and it had slowed down. Now it is coming back, with a vengeance.
Three: Today several firms upped price targets for Chipotle Mexican Grill (CMG) and I think they are right to do so. Here's the deal with Chipotle. Ever since Brian Niccol became CEO in February 2018, he has brought a system of expertise to the company that had been missing with the previous management. Like Starbucks, Chipotle suffered from incredibly spotty throughput. Niccol -- late of Yum! Brands (YUM) Taco Bell, of all places -- has pretty much solved the problems. Of course, his stewardship has coincided with the forgetfulness of the country. We've basically stopped thinking about food borne illnesses and instead are thinking of good tasting burritos. It didn't hurt that CFO Jack Hartung bought back a ton of stock during the bad old days. What a shrewd decision.
Next is an odd one: Nike (NKE) . Analysts didn't like Nike's last quarter. In fact, they hated it. And all that has happened is the stock has roared higher. How terrific is that? What does it mean? Pretty simple: People think the next quarter will be better and perhaps that's enough. I think that it's an amazing comeback done on nothing. But when a comeback is done on nothing, it usually means there's something afoot. I love their Chinese business. I love their European business, and I love their American business. What more can I say? This one comes down, you buy it.
Here's one that angers me every time I look at it: Procter & Gamble (PG) . Why? Because it never comes in. I have never gotten a chance to recommend this to you, so I want to put it out there because it has become everyone's favorite consumer packaged goods company. I think that David Taylor has done a fantastic job getting the growth up, and I believe that he has an ongoing partnership with Nelson Peltz, which has really helped the execution of the company. I see from the chemical companies that raw costs have come down. I see from the transport companies that freight costs have come down. Share take, raw cost, improving business in China ... what's not to like? Watch this stock. It never comes in. When it does, I think you need to be there.
Finally, I like McDonald's (MCD) . It's got easy comparisons. It's got an incredible grip on technology. Steve Easterbrook is a genius, just a genius. The first thing he did was win over the franchisees. That's the most important thing he could do. Then he worked on technology and costs -- taking them down. Now he is all about convenience and putting technology to work to make it happen.
Look, I know it would be great to rely on traditional growth. I like Facebook (FB) very much. I like Libra. But I feel that I am alone in supporting their virtual currency and it seems that no one is buying into the notion that Facebook has somehow reformed. I don't' care. I know Instagram is crushing it and the channel is a great one. The Libra overhang is a negative though for sure.
I like Amazon (AMZN) , but do you know how much hot money is ready to blow out of this thing on even a great number for Amazon Prime holiday? It is ridiculous. The expectations are way too high. I hated "Great Expectations" by Dickens and I hate Great Expectation in stocks. This one has way too high expectations. Plus I bought the Firestick last week. Had I waited a week, I could have saved a fortune.
Alphabet (GOOGL) ? I was thinking we might have a winner, but then Peter Thiel, who is rich as Croesus, started talking today about China and treason and if Google knows if its own company is compromised by the Chinese Communist Party. Thiel can make trouble. I think we haven't heard the last of these charges.
Apple (AAPL) ? Darn it, the stock's running again. Talk about the worst possible thing that can happen? When this stock runs, it is almost always bad news, and that's where I am coming out right now.
Sure, I like the cloud kings. But stocks like Workday (WDAY) , Splunk (SPLK) and Salesforce (CRM) have run so much. As have the rising web plays like Okta (OKTA) , Zscaler (ZS) and Zendesk (ZEN) . I think that the risk had gotten so high that I can't be glib. I need these to cool off, too. Tech's terrific; too terrific for the moment.
I wanted to list some drug companies until the President trained his guns against them. You have all the food stocks you need if you own PepsiCo.
So I return to the big six, Estee Lauder, McDonald's, Nike, Starbucks, Chipotle and Procter & Gamble.
No, I wouldn't just go out and buy them right now. Not with what I just said about earnings season.
But I am saying that these stocks are anointed by big money. They aren't going away. They will be the second-half stocks that the big money seems to want to be in no matter what. And now you have the list. Memorize them. They are winners. I believe they will be for the rest of 2019
Apple, Alphabet, Amazon, Facebook, and Salesforce are holdings in Jim Cramer's Action Alerts PLUS member club.
