Investing Club: Jim Cramer adds new layer to his 2022 stock-picking strategy

Published Fri, Feb 4 20222:40 PM ESTUpdated Fri, Feb 4 20223:49 PM EST

Kevin Stankiewicz @in/kevinstankiewicz @kevin_stank

CNBC's Jim Cramer on Friday added another layer to his primary investing theme for 2022, a move he said is intended to help Investing Club subscribers navigate the market's choppy start to the new year. Cramer's theme — first detailed at length on Dec. 9 — is to buy companies that make products and sell them at a profit, while staying away from unprofitable, more speculative stocks, as the Federal Reserve tightens monetary policy. He's hammered home the point for weeks, before expanding it Friday. "Not only does it have to make a profit, but it has to have such excess demand that it can raise prices and maybe even raise prices at will," Cramer said during the CNBC Investing Club's Monthly Meeting . "That would've kept us out of a couple stocks that you and I both know we are not proud of," Cramer admitted. The "Mad Money" host said it's necessary to add this corollary because the strength of the U.S. economy requires aggressive action from the Fed to rein in rising prices. "Until the Fed gets inflation under control, it's how you deal with inflation and how you deal with it better than others that matters," Cramer said. "Can you raise prices? Can those prices stick because there's such demand? Can you outrun not only your raw costs, your supply problems, but the competition as well?" Investors need to place a greater emphasis on the level of demand for a company's product, Cramer contended, suggesting that it needs more attention than the litany of supply chain problems. "If demand exceeds what you can produce, then you can take price and then you can have bigger profits," he said. "Isn't that the problem today with Clorox ?" Cramer asked rhetorically, as shares of the cleaning products maker tumbled 14% Friday, one day after it reported a sharp decline in second-quarter gross margins and lowered its full-year outlook. "Thank heavens we don't own it. They have way too little demand and way too much product," Cramer said. (See here for a full list of 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

Scott Mlyn | CNBC

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