Jim Cramer, during Thursday’s “Monthly Meeting,” offered Club members tips to build a strong portfolio that can endure the Federal Reserve’s tempestuous battle to tamp down inflation. As the Fed struggles to stop prices from skyrocketing, they’re also worried wage inflation being fueled by the job-hopping nature of the labor market in the rush back to work after Covid. Remember, the Fed’s dual mandate calls for fostering price stability and maximum employment. Central bankers are — as a byproduct of their monetary policy tightening efforts — taking assets such as stocks and homes values down, a move that serves to make people feel less flush and want to stay put at work or get back into the workforce. Cramer said that begs the question: “So you may be asking yourself, how can I invest my hard earned money under with that backdrop?” His answer: Do it like us at the Club. Here’s quick look at some economic downturn-resistant sectors in consumer staples and health care; our energy inflation hedge; and how to play out-of-favor tech. Consumer staples Stocks in the consumer staples sector are often great names to keep in a portfolio because they can do well regardless of the state of economy. People tend to prioritize the purchase of necessities like food and household items over discretionary items — so companies, like Club holdings Costco (COST) and Procter & Gamble (PG), that sell and make products people use everyday tend to have steady performances even when overall consumer spending becomes weaker. Alcohol is an industry that tends to do well in tough times. People don’t tend to stop drinking in a recession. That’s where Club holding Constellation Brands (STZ) and its one-of-a-kind Mexican beer portfolio of Corona, Modelo and Pacifico comes in. Health care While these stocks are similarly strong even in a downtrodden economy, it’s still important to follow the Club mantra of investing in companies that make money, give it to shareholders and have strong balance sheets when it comes to this sector. Our health stocks including Eli Lilly (LLY) and Johnson & Johnson (JNJ). Like always, we advise investors to do their research on a company and its financials before investing in it. For health-care companies, keep an eye on the company’s services and products, as well as its pipeline of offerings. If a drug company looks appealing, for example, watch for how promising its trials and research appears. Energy While chartist Carley Garner’s analysis on “Mad Money” suggested that oil will bounce in the short-run and then head lower, we still believe oil is a great inflation hedge for investors’ portfolios and ours. It’s still unclear what inflation’s path will look like, and in the case that it does continue on the hotter side, oil would benefit. Current oil holdings are Coterra Energy (CTRA), Devon Energy (DVN) and Pioneer Natural Resources (PXD) also pay big dividends. We have trimmed some of our oil positions in recent weeks on strength, especially because we don’t want to be too overexposed to energy. Tech While tech names have taken a beating this year, there are good quality names that have proven time and time again they can come out on the other side of bad markets. We’re talking about Club names Apple (AAPL), Amazon (AMZN), Microsoft (MSFT) and Google-parent Alphabet (GOOGL) to name a handful. Some of these companies are trading at incredibly low price-to-earnings multiples relative to their historic values. So that’s tremendous value for buyers not seen in a very long time. All four of those big tech stocks are rated as a 1 , meaning we view them as buys at these levels. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Jim Cramer on Squawk on the Street, June 30, 2022.
Virginia Sherwood | CNBC
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