Investors can make long-term moves during this uncertain year for markets by buying shares of companies that are poised to make a lot of money with their “prestige power,” CNBC’s Jim Cramer said on Tuesday.
While consumer confidence dipped to its lowest point in 1.5 years last month, the “Mad Money” host says brands that have a loyal following will “hold up when the economy gets tougher” because customers will find a way to stick with their favorite products.
“People will pay up for prestige,” Cramer said. “Today, we had one of the most amazing displays of prestige power that I can ever remember with the stocks of Ralph Lauren, Estee Lauder, and Apple–three of the most prestigious brands around all exploding higher.”
Shares of Ralph Lauren and Estee Lauder gained more than 8 and 11 percent, respectively, after the luxury fashion label and beauty business beat earnings estimates and raised guidance for 2019. Apple is trading 12 percent higher “thanks to the endless parade of buying” since reporting mixed earnings on Jan. 29, Cramer said.
Cramer was impressed by Estee Lauder CEO Fabrizio Freda’s “intellect, his presence, and his innovation.” He praised the company for boosting sales in China, which now accounts for more than a third of its business, at a time where others are blaming the country for weak forecasts this year. The CEO is pouring more resources into the company’s winning brands and online presence, Cramer pointed out after speaking to Freda exclusively in a phone call.
“He says he is marrying data analytics with creativity to design prestige product,” Cramer explained. “‘Data,’ he told me, ‘is the new oil but only when it is connected to creativity does it pay off.'”
Cramer also gave kudos to Ralph Lauren CEO Patrice Jean Louis Louvet for building “a whole new fan base fawning over Ralph Lauren’s merchandise.” A big boost for the company, he said, is its influencer list, which includes celebrity names like former New York Yankee slugger Alex Rodriguez, Australian actress Nicole Kidman, hip-hop artist Chance the Rapper, and fashion model Jelena “Gigi” Hadid to target new customers younger than 35.
“You combine these influencers with Ralph Lauren’s classic products and put them in the right places, and you’ve got the makings of [a] potential multi-year move,” he said.
Apple CEO Tim Cook did not get a shoutout from the “Mad Money” host, but he did get a check of approval for the miracles the Apple Watch is capable of working in the health-care space. Cramer said the Watch is not only prestigious, but “actually useful,” pointing to a story in the New York Post. A 67-year-old Norwegian man credited the Watch for saving his life after its fall detection alerted local emergency after he fell in his bathroom Tuesday morning, the paper reported.
“Not only is it prestigious, it’s actually useful … and that’s without even mentioning the new iPhones, which have the same picture quality as $1,500 camera that makes you look darned good on Instagram,” especially for younger generations, Cramer said. “Remember, if your company has pricing power [and] thought leaders on board, … it has a stock that should go up over time.”
Disclosure: Cramer’s charitable trust own shares of Apple.
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