Consumer goods companies are gaining momentum reminiscent of the 1980s, said CNBC's Jim Cramer.
Consumer goods such as Coca-Cola and Kimberly-Clark are evolving just as they did when the US economy shifted to a post-industrial economy that allowed a company like Merck to outperform Ford or General Motors. the "Mad Money" host, who was a stock broker at Goldman Sachs and later hedge fund manager this decade.
Key averages All rose 0.68% during the session on Tuesday, resembling the start of the "big bull market" in the 1980s, apart from the semiconductor sector, Cramer said.
"These supplies of consumer goods do not have much to offer compared to the technicians, they have incredible pricing power, untapped markets overseas, and great dividends," he said. "If I'm right that this is back in the 1
Kimberly-Clark, parent of Kleenex and Cottonelle, announced organic growth of 5% on Tuesday, double-digit sales growth in China's emerging markets, and improved gross margin in the last quarter.
Coca-Cola, which Cramer Kimberly-Clark described as a companion stock, outperformed analysts' estimates in the second quarter of the fiscal year and increased the organic sales growth forecast for 2019 from 4% to 5%. The beverage giant is also seeing secular growth in emerging markets, reminding Cramer of the 1980s.
Coca-Cola shares gained more than 6% on Tuesday, while Kimberly-Clark gained 0.6%.
"Believe it or not, a boring old company like Coke has become an innovation machine again, with almost a quarter of its turnover coming from new or reformulated products, up from 15% two years ago," he said. "Both companies have a dividend yield of around 3%, both of which are able to buy back large quantities of stock, and could be just as good in 1985." Technology stocks like Cramer's FANG shares and Cramer's "Cloud Kings" group would tend to suffer. Adobe, VMWare and Salesforce.com saw a decline of up to 1.7%.
Consumer stocks will also suffer According to Cramer, yields could improve as the Federal Reserve continues to cut interest rates.
Coca-Cola and Kimberly-Clark could also see an upswing in US-China trade talks.
"These are slower stocks, and if we have a weaker economy, as people keep saying, they will still be able to make the numbers, and their stocks will be much more attractive," he said.
WATCH: Cramer Reviews The Runs in Coca-Cola and Kimberly-Clark
Disclosure: Cramer's charitable foundation owns shares in Goldman Sachs and Salesforce.com.