Jim Cramer names packaged food stocks likely to do well in a slower economy

CNBC’s Jim Cramer on Friday named packaged food stocks that might be good additions to portfolios, especially if the economy is headed for a slowdown. Though they were not perfect, he was encouraged by earnings this week from Campbell Soup and J.M. Smucker.

“We’ve had enough signs of weakness that it might be a good idea to own some recession stocks — the stocks of companies that make the same money in good times and bad because their products are essential,” he said. “For example, the packaged food plays.”

Cramer said he thinks Campbell Soup and J.M. Smucker both told “compelling” stories this week, but that he prefers the former. According to Cramer, Campbell Soup reported solid earnings but weaker guidance, due in part to its pricey acquisition of pasta sauce maker Sovos Brands. He suggested the acquisition will pay for itself over time and was encouraged that the company seems to be growing sales without raising its prices.

J.M. Smucker’s sales were softer than expected, but Cramer was heartened that the company managed to pull off a sizeable earnings beat. He also noted that J.M. Smucker’s brands were growing well, like Uncrustables sandwiches and pet food, but said it needs to improve its coffee business.

He stressed that the whole packaged food group usually does well in a slowdown and suggested also looking into Tyson Foods, Hormel, General Mills, Conagra and Kellanova.

“Ultimately, I feel incrementally more positive on the packaged food space after hearing from Campbell’s and Smucker,” he Cramer said. “For those two stocks specifically, I do prefer Campbell’s … but Smucker still has a good value proposition.”

J.M. Smucker and Campbell Soup did not immediately respond to a request for comment.