Jim Cramer Recommends 4 Consumer Staples Stocks Beyond Tech

On Friday, CNBC's Jim Cramer advised investors to consider diversifying their portfolios by looking beyond technology stocks, which have faced recent difficulties. The Nasdaq-100, a key index that tracks major tech companies, dropped nearly 7% in October. In contrast, investors shifted their attention to more defensive sectors, with the S&P 500 Equal Weight Index rising about 5% during the same period. This index gives equal importance to all stocks in the S&P 500, unlike the traditional market cap-weighted version.

Among the sectors, consumer staples stood out by gaining 11.4%, making it the second-best performer behind energy. Consumer staples include companies that produce everyday essential products people buy regardless of economic conditions, such as food, beverages, and household items.

Cramer emphasized the importance of adapting to current market trends, suggesting that until the challenges facing the tech sector are resolved, investors might find safer opportunities in consumer staples. "You've got to take what the market is giving you, and until we sort out some of the issues for the tech sector, some other groups might be better bets for the time being," he said. He expressed a preference for holding positions in staples stocks for the near term.

He identified four consumer staples companies he finds particularly promising, all known for their recognizable brands and steady demand.

Known for products like Kleenex tissues and Huggies diapers, Kimberly-Clark is a recent addition to Cramer's Charitable Trust portfolio, managed by CNBC's Investing Club. Cramer is optimistic about its upcoming merger with Kenvue, which owns brands such as Tylenol and Band-Aid. He believes this merger will create operational efficiencies and establish a strong consumer products leader. Despite a nearly 11% gain in October, Kimberly-Clark's shares still trade below 15 times earnings and offer a dividend yield of 4.7%. Cramer remarked, "I think the move is just getting started."

Although the Investing Club sold its long-held P&G shares in July, Cramer still regards the company as a solid defensive investment. This view follows P&G's quarterly results, which surpassed expectations. He also expressed confidence in the leadership of new CEO Shailesh Jejurikar. The stock rose 11% in October, but Cramer noted he prefers Kimberly-Clark due to its comparatively lower valuation and higher dividend payout.

This company, famous for beers like Modelo and Pacifico, is showing encouraging signs of recovery. Its core beer segment is gaining market share, and the smaller wine and spirits division reported a 15% increase in shipments last quarter. Constellation Brands' shares jumped 20% in October. However, Cramer still views the stock as undervalued, with a price-to-earnings ratio near 11 and a dividend yield above 3%. He commented, "It increasingly looks like the worst is behind Constellation Brands."

Cramer singled out Coca-Cola as his preferred choice among major soda manufacturers. The company recently released a strong quarterly report driven by volume growth rather than price hikes. He also highlighted Coca-Cola's innovation in zero-calorie drinks and its protein beverage options through the Fairlife milk brand. The stock gained 9% in October.

Consumer staples stocks tend to be less volatile because their products are essential regardless of economic cycles. This quality can make them attractive during periods of uncertainty or when sectors like technology face headwinds. Cramer's recommendations reflect a broader trend among investors to seek stability through familiar brands and steady dividend yields amid fluctuating markets.

As the market continues to evolve, watching shifts between growth-oriented tech shares and defensive consumer staples may offer insights into investor sentiment and economic forecasts. The companies highlighted by Cramer carry strong brand recognition and consistent demand, factors that can provide resilience in varying market conditions.