We're adding to a recession-proof stock using a favorite earnings season strategy

Published Fri, Apr 29 20221:14 PM EDTUpdated Fri, Apr 29 20221:21 PM EDT

We're buying 100 shares of Procter & Gamble (PG) at roughly $161.66. Following Friday's trade, the portfolio will own 400 shares of P & G, increasing its weighting to about 2.08 % from 1.57%. The S & P Oscillator was in oversold territory after Thursday's close, so our discipline states that we have to approach selloffs like Friday opportunistically and look for stocks of high-quality companies to buy into the broader market weakness. Even though this P & G buy slightly violates our average cost basis, we're circling back to the consumer packaged goods giant because we know the company is performing at a very high level. Last quarter, the company reported 10% organic sales growth and we're confident in the company's outlook based on its ability to raise prices to offset inflation. P & G tends to be rather recession-proof because people still need laundry detergent to wash their clothes and toothpaste to brush their teeth regardless of the ups and downs in the economy. This brings up one of our favorite portfolio management strategies when times get tough during earnings season: Go back and look at companies that already reported good numbers. When volatility rears its ugly head due to concerns about the future — and Amazon 's weaker than expected revenue outlook may be triggering this — we like to take advantage of this broader market weakness by buying stocks of companies that reported great numbers and provided strong outlooks. We believe those companies are the ones that have the greatest amount of visibility into the future because their conference calls are still fresh. Procter & Gamble reported better-than-expected earnings on April 20 , and we highly doubt anything has changed in the past nine days that would put their outlook at risk. With shares now trading below their post-earnings pop to $163 each, we believe Friday's 1% pullback represents an opportunity to add to our position. Lastly, we appreciate the consistent nature of Procter's capital return program. The company is a routine purchaser of its stock and the dividend has increased for 66 consecutive years. (Jim Cramer's Charitable Trust is long PG and AMZN. See here for a full list of the stocks.) 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.

Tide, a laundry detergent owned by the Procter & Gamble company, is seen on a store shelf on October 20, 2020 in Miami, Florida.

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