Jim Cramer named PepsiCo (PEP) his next stock idea on Wednesday's Mad Money, building the pick on falling oil prices instead of chasing Nvidia or Salesforce. According to reports from CNBC, Cramer framed PepsiCo as a value play tied to his broader view that oil is falling and inflation is peaking. He called it a starting point, not yet a position, emphasizing his preference for stocks trading at discounts to historical levels. As Cramer explained, "That's the genesis of an idea. Not a position." He stressed that finding a stock that fits his macro thesis is only the beginning, noting investors must "study the company over many years, check ingredients, see what management has to do and figure out if they'll do it."
Cramer pointed to easing crude prices as his clearest sign that inflation is topping out, with oil falling nearly 3% this week as Iran and Oman resumed talks on a Strait of Hormuz shipping corridor. As reported by CNBC, he argued that falling oil could remove the drag on consumer spending that high gas prices have weighed on PepsiCo's sales. The host also downplayed Federal Reserve Chair Kevin Warsh's Jackson Hole debut speech, arguing a rate hike is unlikely while the Treasury works to hold down long-term borrowing costs. On Wednesday's session, the broader market showed resilience with the S&P 500 losing less than 0.1%, while the Dow Jones Industrial Average dipped 0.2% and the Nasdaq lost roughly 0.1%.
PepsiCo fit Cramer's screening criteria of shares trading cheap against their own history with a 4% dividend yield. According to CNBC reports, PepsiCo has raised its payout for 54 straight years and now yields roughly 4%, near its highest level in more than a decade. The host emphasized his preference for stocks like PepsiCo, stating "I like them low. Some people like them hot. I like them cool." Cramer highlighted that PepsiCo offers a roughly 4% dividend yield and trades at about 16 times 2027 earnings, a valuation he considers attractive. He also pointed to CEO Ramon Laguarta's repeated comments that elevated gasoline prices have pressured sales, suggesting a decline in fuel costs could provide a meaningful tailwind.
Cramer explained why he chose PepsiCo over tech stocks like Nvidia and Salesforce, noting that tech was the obvious starting sector but both companies had already jumped on strong earnings. As reported by CNBC, he pointed to Nvidia's blowout quarter results as an example of stocks that had already rallied. He also downplayed travel and leisure names like Disney and Expedia, citing concerns about discretionary spending in a soft economy. Cramer noted that political opposition to data center development and other uncertainties have complicated the technology sector, while travel and leisure could benefit from cheaper fuel but depend heavily on discretionary spending, making them less attractive as inflation-weary consumers prioritize value and look for ways to save.
Cramer's process starts with a call on rates and inflation before naming any stock, with the economy looking stable barring a shock out of Iran or Ukraine. According to CNBC reports, he stressed that the economy is relatively stable and inflation could be nearing a peak, particularly if oil prices continue to fall, even as the personal consumption expenditures ran slightly hotter than expected in July, rising 3.7% from a year earlier. He emphasized that the idea remains a screening result, not a formal position, with whether the valuation gap closes potentially hinging on where oil and rates move after Warsh's speech Friday. As Cramer noted, "We have the start of a potential buy here with PepsiCo," but whether it becomes a formal position will depend on further analysis and market developments.
