A Covid hangover is upon us, which means we’re just not doing the things we’ve been doing during lockdown, CNBC’s Jim Cramer said on Friday.
We’re buying fewer PCs and spending less on our homes – prioritizing travel and leisure instead.
Pets could be subtle victims of the current “big money, little time” mode of spending, Cramer said.
At one point, money didn’t seem to be an issue when it came to caring for pets.
“Virtually anything related to pets made fortunes for investors and companies that squeezed into that category to capitalize,” Cramer said.
While the “humanization of pets” is still underway, not all businesses will benefit, Cramer said.
“Now you have to be more selective in pet games,” Cramer said.
Pure-play pet plays like Petco and Chewy have become “two of the most controversial stocks in the entire market,” Cramer said.
Petco still has too much debt as a $2.3 billion company with $4.2 billion in total debt, Cramer said. Meanwhile, Chewy is expected to barely break even next year based on pure earnings per share, he said.
But if you like the pet theme and don’t want to take a huge risk, General Mills is an option to buy. The company is a “great safety name” if you’re worried about the economy, Cramer said. The petcare segment was also instrumental in helping General Mills post the best quarterly earnings of any consumer goods company except Hershey, he said.
Smucker is also “another good safety game with a pet food kicker” that can work its way up, Cramer said. The company has doubled its milk-bone pet snacks business and otherwise promotes strong coffee and peanut butter brands.