Cramer says rotation has left five consumer and health stocks attractive

CNBC’s Jim Cramer said Monday that the latest market rotation has created opportunities in Johnson & Johnson, PepsiCo, Starbucks, Constellation Brands and TJX Companies. The “Mad Money” host argued that broad institutional selling following the June employment report dragged down some companies for reasons unrelated to their underlying operations.

Cramer linked the shift to last week’s June jobs data, which CNBC reported showed hiring slowing from the prior month. He said large money managers often respond to such macroeconomic signals by changing exposure across groups of stocks tied to an economic theme, rather than trading each company on its own fundamentals.

That mechanism can put pressure on sound businesses, according to Cramer. When institutions sell baskets of shares, companies inside those baskets can fall alongside weaker peers even if their earnings outlook, competitive position or corporate strategy has not changed.

Consumer names in focus

Cramer said PepsiCo’s recent decline had taken back much of the stock’s advance after its previous quarterly earnings report. He described the pullback as attractive ahead of the company’s scheduled July 9 results, according to CNBC.

He also cited Starbucks, where Chief Executive Brian Niccol is working on a turnaround. Cramer said the stock’s recent weakness has given investors a chance to enter after waiting for a lower price. CNBC noted that Starbucks is held by Cramer’s Charitable Trust, the portfolio followed by the CNBC Investing Club.

Constellation Brands was presented as a higher-risk example. Cramer said the company’s latest earnings indicated that its beer business may be becoming steadier, while investors continue to have concerns about spirits. The company owns alcohol brands across beer, wine and spirits, and sentiment toward those categories can differ as consumer demand shifts.

Cramer also named TJX Companies, another holding of his Charitable Trust. He said a softer consumer environment can support off-price retailers when shoppers seek lower prices. He added that excess goods at conventional retailers can increase the supply of discounted merchandise available to chains such as TJX.

Rotation away from health care

Outside consumer stocks, Cramer said Monday’s trading also reflected a recovery in artificial intelligence-linked winners while some health-care shares weakened. He pointed to Johnson & Johnson as a company caught in that move.

According to Cramer, Johnson & Johnson has become more focused on pharmaceuticals after separating its consumer health unit, Kenvue, in a transaction completed a few years ago. He also referred to reported plans for the company to move away from orthopedics. Reuters reported in February that Johnson & Johnson was exploring a sale of an orthopedics unit.

Cramer said those changes make Johnson & Johnson more appealing before its July 15 earnings report. CNBC identified the company as another Charitable Trust holding.

The overall argument, as described by Cramer, is that Johnson & Johnson, PepsiCo, Starbucks, Constellation Brands and TJX were hurt by sector-level selling rather than company-specific news. His comments were framed as his market view on CNBC and should be distinguished from company guidance or official financial forecasts.

This story draws on original reporting from CNBC.