CNBC’s Jim Cramer said Monday that investors shouldn’t fear recent market rotations. Rather, he believes institutional selling has created buying opportunities in some blue-chip stocks that have fallen.
“If you can scout the rotation and figure out what the themes are, you can identify some incredibly undervalued stocks,” the “Mad Money” host said.
Monday’s action followed last week’s June employment report, which noted a slowdown in hiring from the previous month. Cramer said this has prompted some large asset managers to reposition their portfolios. He said many institutional investors trade baskets of stocks tied to specific economic themes, which can cause stocks of blue-chip companies to plummet even if nothing has changed in their business.
“These rotations create disruptions that seem to come out of nowhere, and sometimes those disruptions create incredible opportunities to buy high-quality companies at discount prices,” he said. “A lot arrived today.”
Kramer pointed out that pepsicoHe said the recent pullback has erased much of the rally following last quarter’s strong earnings report, creating an attractive entry point for the company’s July 9 results.
he made a similar claim starbuckssays investors are finally getting an opportunity to buy the company’s stock after the recent share price drop, as CEO Brian Nicol continues to work on turning the company around. Cramer’s Charitable Trust, a portfolio used by CNBC Investing Club, owns stock in Starbucks.
For investors who want to take on more risk, Kramer emphasized: constellation brand. He said the company’s recent financial results suggest the beer business may be stabilizing, despite continued concerns over spirits.
“I can’t think of a more advantageous buyer,” Kramer said. TJX companiesholding another club. He argued that consumer weakness tends to benefit off-price retailers as shoppers lower trade-in prices, while excess inventory at traditional retailers allows TJX to sell more discounted items.
Apart from consumer stocks, another defining move on Monday was a rally in artificial intelligence stock winners at the expense of outperforming health care stocks. This includes club holdings johnson & johnson. Kramer said the company became a “pure pharmaceutical company” after the spinoff. Kenviewlaunched a consumer health business several years ago and plans to exit orthopedics. He said these changes will make the company’s business more attractive as it prepares to report earnings on July 15.
“Stocks of J&J, PepsiCo, Starbucks, Constellation Brands and TJX all fell today,” Cramer said. “I think this is a great place to buy because they are all collateral damage from this indiscriminate sector rotation sell-off.”
