Transcript
Bank of America (0:01)
As America's leading business lender, bank of America is on your corner and in your corner. With $215 billion in business loans and over 3,700 business specialists across the nation, we help businesses thrive so communities prosper. What would you like the power to do? Learn more@bankofamerica.com LOCALBUSINESS bank of America Official bank of FIFA Club World Cup 2025 Copyright 2025 bank of America Corporation. All rights reserved.
Multicare (0:31)
Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@ multicare.org.
Jim Cramer (1:26)
Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramer America. I'll be with my friends. I'm just trying to make you a little money. My job is not just to entertain, but to explain. So call me at 1-800-743-CNBC tweet Meyim Kramer. When interest rates go up, even if they go up just a little, you can see lots of very good, well known stocks with juicy dividends just get pummeled right now. Some amazing stocks, some amazing companies are just getting thrown out with proverbial battle. There's just one problem. Plenty of not so amazing stocks get hit too. And they deserve to have their stocks go down the drain. You need to avoid those like the play, which means it's very important to know, well, how do you tell the difference? So in a decidedly mixed day where The Dow dipped 89 points but the S&P advanced point one overseas and the Nasdaq gained point 72%, should you consider going against the grain to buy something that's totally out of fashion right now but may not stay that way, particularly if you have a slowdown. Do you want to buy the stock of let's say a red hot core, weave a big in after hours or maybe buy a tried and true well known company with a very nice dividend? Oh, it's a tricky situation because we're taught to like value with income. But the stocks that are both value and income right now are getting slaughtered while aggressive growth stocks, they're soaring. Why are the stocks of the tried and true companies getting crushed despite their solid dividends? Oh, there are a host of reasons. First and most important, interest rates are going higher. Specifically the ten year Treasury. It's a fierce competitor to these Stocks and The yield crossed 4.5% today. That's the magic number where investors say ooh, I like that piece of paper. Solid yield, no risk. Get me out of stocks that yield about the same and into the bonds. Second reason why these stocks might be dangerous government. We got a wildcard. Department of Health and Human Services Bobby Kennedy Jr. We don't know whether he's for or against the companies he's regulating probably gets and we we don't know if he has the authority to do anything real negative but he sure has the purview to look at them. So with those two caveats in mind, let's get started with the stocks that sold off hard today because I think it's really important because you know most if not all of these companies. Why don't we start with Bristol Myers which we own for the charitable trust. Now here's a drug company with a decent oncology franchise that happens to be facing what's known as as a huge patent clip. All right. It meaning it's about to have some highly lucrative drugs lose their power protection therefore not make them much money at all. We own it in part because of the yield they're paying you to wait for new drugs that turn things around. The chief one is Copan Fee. It's a potentially revolutionary drug that treats some tough neurological problems including schizophrenia. Now we sold some of this stock when it had this ridiculous spike right here have a some bizarre rotation into safety. But now Bristol's in the mid-40s. Now we haven't bought back all the stock that we sold. We're waiting for the bottom because its most recent studies using Kobenphi it's one study came up Snake eyes management has said over and over again that it can pay the dividend which gives you a 5.6% yield. Why not buy more honestly, because I think you can go lower still without evidence that co Benfi is doing better. Or how about one of my absolute favorites right here to AbbVie. Now here's a drug company with no patent clip in sight whatsoever. Got tremendous franchises in neurology, oncology, immunology and medical esthetics among others because of today's vicious bond market inspired sell off this fine stocks down a quick 10 points today or more than 5%. But it only yields 3.7%. With rates going higher, you have to wonder if Abbvie is worth the risk even as it's among the safest, if not the safest stock in the group because of these amazing franchises. I think it makes a Ton of sense to start a position in the stock right now. If only because of the amazing Skyrizi and Rinvoq immunology drugs as well as Botox which right now is sainted for those who get too many wrinkles as their skin sags from taking GLP1. Those are the drugs that combat obesity and diabetes. I don't know. Tempting or let's consider Johnson and Johnson triple A balance sheet. Many drugs in the pipeline. One of the best run companies in America if not the world with perhaps the most billion dollar franchises of any pharmaceutical company I know. But JJ only yields 3.55% and it's got this terrible legal overhang related to allegations that his talcum powder no longer the market caused ovarian cancer. We don't know how open ended the claims are. Can you tolerate that risk? I'd love to say just go buy J.J. but. But where? What price that yield is no longer enough to compensate you for the risk. Especially if you don't know if RFK Jr just like some of their drug delivery mechanisms and for formulas. So people are staying away from that too. Not just because of the bonds. J and J down 3.3%. I've always believed that there are two consumer packaged goods companies that make a ton of sense whenever they go down and that's Procter and Gamble and Colgate. Now the former is the most unassailable consumer product lines in the world. Proctor is also what we call a dividend aristocrat. Increasing its payout by a little more each year for more than 70 years. Procter is such a winner. That is an amazing record. But here at $158 and we're focused on Procter and Gamble. Less than two points from its low. Approximately 22 points from its high. I mean you might be thinking how can you miss easy. You can miss because Procter only yields 2.68% at these levels despite all those dividend boosts. Well that's just not enough to compensate you for the risk. Colgate's worse again. Two points off its low. More than 20 points from its high. With amazing toothpaste and pet food businesses among so many others. But it only yields 2.37%. So why can't you buy it here? Could go lower. How does it bottom then? Let's go food. PepsiCo is by all standards an amazing company. Worldwide franchises and beverages. Snacks while snacks. While its beverage business has a formidable competitor in Coca Cola. They're Frito Lay snack business. Come on. It's the Best world. I've never seen the stock so from its, from its high, it's at $128, down from $183. It's down to the point where it yields roughly 4.4%. But what happens if the Secretary of Health and Human Services goes after the snack business for excess salt? I don't know. Because you can have excessive weight if you eat too many of them. Like what else wouldn't? Or maybe says that soda has to be a natural color. Whatever color that is. Does 4.42% in yield protect you from that? Obviously today's sellers don't think so, but this company is worth a lot more than it's selling for. I just don't know when it stops going down. General Mills, which makes top drawer pet food. Let's go over that one. Incredibly popular cereals. You know them. Trix, Lucky Charms, Fruity Cheerios. When you were a kid, was there anything more fun than eating these for breakfast? I mean, they're practically addictive children, even for adults. I had some last week and that's the problem. Bobby Kennedy Jr. Wants to demagnetize these cereals as well as make many other products that have artificial coloring that kids can't resist. Question becomes, what if he gets his way? Will kids eat Lucky Charms without those colorful hearts and rainbows? Imagine if you took the color out of tricks. It wouldn't be for kids. This stock's 1 point off its low, 22 points away from its high yields 4.5%. Hmm. 4.5%. Let's think about this. General Mills now yields the same as the ten year Treasury. If you're nervous, if you fear Bobby Kennedy Jr. Would you fear the ten year? Nah. But you know what? You might fear General Mills. So why buy a company that could be in the government's crosshairs when you can get the equivalent yield from something that's backed by the full faith and credit of the same government that might be coming after them? I am tempted to buy General Mills, but I do fear Bobby Kennedy Jr. More than I care about how much I might make with this stock. So here's the bottom line in a very uncertain tape for what used to be called safety stocks. I'd rather just own a piece of paper like the 10 year treasury where if worse comes to worse, at least I get my money back. Howard and Maryland Howard. Hi Jim, how are you? I am real good, Howard. How about you?