- Covid delta fears are a dominant theme on Wall Street right now, CNBC's Jim Cramer said Tuesday.
- The "Mad Money" host said money managers appear to be betting on "pseudo-lockdown stocks."
- Stocks included in that list are retailers such as Target and Costco, as well as delivery giants UPS and FedEx.
CNBC's Jim Cramer said Tuesday Covid delta variant concerns are a dominant theme on Wall Street right now, suggesting investors may want to position their portfolios to capture the market's sentiment.
The "Mad Money" host said much uncertainty remains about the future trajectory of the virus in the U.S. and policymakers' responses to it. However, he added, "I can tell you exactly what the big institutional money managers are buying as they try to find ways to play the delta variant."
The list constitutes something of a "going-to-get-worse-before-it-gets-better" portfolio, Cramer said, stressing that spring 2020-style lockdowns are off the table. Nevertheless, he said, previous stock winners are likely to be victorious again in the near term. At the top are Cramer's WATCH retailers, an acronym for Walmart, Amazon, Target, Costco and Home Depot.
"Target's been the strongest; it has great back-to-school numbers. You can't go wrong simply buying the stock of Target in August because it's the place to shop for everything from school supplies to cozies, sports team uniforms," Cramer said.
On the other hand, Home Depot is in a position to benefit from people who decided to build or upgrade their home offices as corporations delay return-to-work plans, Cramer said. "We know Costco made a fortune during the first lockdown — it should do well in a pseudo-lockdown scenario," he added.
Delivery giants UPS and FedEx benefit from increased online shopping, meaning their shares could see a lift now that money managers are worried about Covid's impact on consumer habits once again, Cramer said.
The "Mad Money" host also singled out Nike, Lululemon and Ralph Lauren, saying the companies' casual apparel is in demand. Apple may also benefit from prolonged remote work as people upgrade their electronics, Cramer said.
"Here's the bottom line: As the delta variant keeps spreading like wildfire [and] state governments bring back some of their Covid restrictions all over the country, I bet these pseudo-lockdown stocks will be big winners," he said.