Cramer’s Recession-Resistant Grab Bag
What’s the right move to make in this market? Chase higher yields and recession-resistant stocks, Jim Cramer said Monday on CNBC’s “Mad Money.”
By the closing bell, U.S. stocks may have rebounded from intraday lows but the major averages were still down across the board. The Dow Jones fell 101 points to 12,721, the Nasdaq was 35 points lower at 2,890 and the S&P 500 lost 12 points to close at 1,350.
In a market like this, it’s time to take advantage of the declines, Cramer said. With yields on the 10- and 30-year Treasury notes at record lows right now, investors should be drawn to higher-yielding stocks, even if only as a place to park their money. “The fact that the companies with high yields might actually be doing well is just an added bonus,” he said.
Take Johnson & Johnson. The company may have reported a less-than-stellar second quarter Tuesday and guided down due to exchange rate woes, but new CEO Alex Gorsky is gearing up to start streamlining the business and get things done, Cramer said. Johnson & Johnson is also offering investors a 3.5 percent yield — a full percentage point better than 30-year Treasurys.
“Sure, JNJ’s ugly, but how ugly?” he asked. “Let’s call it ugly enough to give you a discount.”
Last week, Verizon reported a “fine” quarter due in part to strength in its wireless business. Cramer said he likes VZ because it “has tons of spectrum, has been able to slow its capital spending and doesn’t have any European exposure.” He also likes its 4.5 percent yield.
In the oil and gas space, Baker Hughes and Halliburton have been brought down by falling natural gas prices, and takeovers are always an option if the firms get too cheap. U.S. companies can always join forces with China to substantially raise the value of their stocks if need be.
So what's the bottom line?
Even during periods of economic hardship, Cramer thinks there are always worth stocks buying. As avid "Mad Money" viewers know, he believes "there is always a bull market somewhere!"
Read on for Cramer's "Game Plan" for Tuesday
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