Jim Cramer’s Recession-Proof Stock Picks
In this article, we discuss Jim Cramer’s stock picks for the recession. To jump to the top four stocks on this list, go to Jim Cramer’s Top 4 Recession-Proof Stock Picks.
Recession warning bells started ringing in 2022 and haven’t stopped since. As if investors weren’t already spooked enough, a new warning comes straight from the horse’s mouth. On January 2, IMF chief Kristalina Georgieva warned the world that 2023 would be tougher than last year because the world’s three major economies – the US, the EU and China – are slowing down simultaneously. The head of the IMF believes that in 2023, one third of the world economy would be in recession.
“Even countries that are not in recession, it would feel like a recession for hundreds of millions of people,” added Georgieva.
She also said that China’s economic growth will be equal to or below global economic growth for the first time in 40 years. Over the past decades, China has recorded record economic growth and has amazed the world with its economic performance. However, the coronavirus outbreak, the real estate crisis and heavy regulatory pressures scaring the country’s tech companies have wreaked havoc on the country’s growth trajectory.
The head of the IMF also said that the US economy looks strong and can avoid recession. She said the job market in the country remains strong. However, this strong job market is something that could spell more pain for investors in the months ahead.
“This is … a mixed blessing because if the labor market is very strong, the Fed may have to keep interest rates tighter for longer to reduce inflation,” Georgieva said.
Major investment firms and financial institutions are now joining the chorus of recession. According to Bloomberg, Barclays Capital believes that 2023 will be the worst year for the world economy in four decades, while Ned Davis Research Inc. thinks there is a 65% chance of a worldwide economic downturn. Fidelity International thinks we are headed for a hard landing.
The story continues
Inflation is expected to slow down
A recent report from Dutch financial services firm ING said that inflation may start to fall in the US and there is a chance that the Federal Reserve will start to cut interest rates before finally stopping the hikes. However, the report said inflation in Europe will take some time to ease.
An unexpected positive development
There is at least one positive news of late: an unexpectedly late start to the winter season is keeping natural gas prices low, reassuring investors around the world who expected a major energy crunch at the start of winter.
Jim Cramer’s Recession Playbook
Jim Cramer has a huge online following and hundreds of thousands of people listen to his commentary on the stock market and the US and global economic situation. In November of last year, Jim Cramer shared his inflation playbook on a program and spoke candidly about his strategy for surviving a recession. Cramer said Federal Reserve Chairman Jerome Powell doesn’t like inflation at all, and he wants investors’ stock portfolios down.
Cramer said the Fed is not expected to halt rate hikes anytime soon, meaning you should continue to sell tech stocks and pile into defensive stocks in sectors like oil, banking, health care and consumer staples. Cramer said stocks in these sectors can rise despite inflation because companies in these sectors are more “conservative.”
Jim Cramer then talked about the Dow Jones Industrial Average and said the index is full of relatively cheap stocks. He said some believe the 30 companies in the Dow are vulnerable to a recession. But Cramer believes that “that’s just not true, it’s wrong.” Cramer thinks the Dow companies can handle recessions pretty well and recommended investors pick stocks from the index to prepare for a recession.
Our methodology
In this article, we picked stocks that are recession-proof based on Jim Cramer’s investment philosophy that we talked about above. Cramer is bullish on these stocks, and we’ve outlined his thesis for each of these stocks.
Jim Cramer’s Recession Proof Stock Picks11. American Express Company (NYSE:AXP)
American Express Company (NYSE:AXP) makes our list of Jim Cramer’s recession-proof stocks because the company is part of the Dow Jones index, which Cramer believes you should look for if you want to find recession-proof stocks. as mentioned. in the introduction to this article. American Express Company (NYSE:AXP) has been on Jim Cramer’s radar for quite some time now. In October 2022, Jim Cramer expressed his surprise when shares of American Express Company (NYSE:AXP) fell after earnings. He said at the time that American Express Company (NYSE:AXP) stock was a buy and praised the company for raising its dividend in January. He also said the company is poised to benefit as consumers increase travel.
A total of 68 hedge funds tracked by Insider Monkey reported holdings of American Express Company (NYSE:AXP) at the end of 2022Q3.
10. Apple Inc. (NASDAQ:AAPL)
Jim Cramer loves Apple Inc. (NASDAQ:AAPL) and has recommended the stock publicly as well as its investment club. In October, Jim Cramer said that “Apple is at the root of everything” and the decline of the stock has become synonymous with the decline of the entire market. That turned out to be true as the stock market ended lower on the first day of 2023, largely due to the fall of Apple Inc. (NASDAQ:AAPL). Cramer also said on the same program that Apple is the “greatest stock of all time.”
Apple Inc. (NASDAQ:AAPL) is a key component of the Dow Jones index, and the company also pays a dividend. These two factors make Apple Inc. (NASDAQ:AAPL) a recession-proof stock, according to Jim Cramer.
Hedge funds seem to agree with Cramer. At the end of the third quarter, 140 hedge funds reported holding shares in Apple, compared with 128 funds in the previous quarter. This indicates a sharp increase in hedge fund sentiment around Apple stock.
9. Chevron Corporation (NYSE:CVX)
As we mentioned in the introduction of this article, Jim Cramer recommends oil stocks to prepare for the next recession. Since Chevron Corporation (NYSE:CVX) is the most important oil stock in the Dow Jones index, we added it to Jim Cramer’s list of recession-proof stocks. Jim Cramer has been a fan of Chevron Corporation (NYSE:CVX) for a long time. In April of last year, Jim Cramer evaluated Chevron Corporation (NYSE:CVX)’s dividend yield and buybacks and said that Chevron Corporation (NYSE:CVX) is the most attractive of the large-cap stocks on the market.
Chevron Corporation (NYSE:CVX) is an ideal stock for recessions. The company has been increasing its dividend for 35 years. In the third quarter, Chevron Corporation (NYSE:CVX) easily crushed analysts’ estimates and its net income came in at $11.23 billion. Revenues in the period increased by 49%.
8. The Coca-Cola Company (NYSE:KO)
In July of last year, Jim Cramer discussed in detail why he thinks The Coca-Cola Company (NYSE:KO) is an appropriate stock pick for recessions. Jim Cramer said that in recessions you should hide behind defensive, recession-proof stocks, and The Coca-Cola Company (NYSE:KO) is a “textbook” example of such a stock. Cramer said the beverage business is not hostage to the economy, by which he means the business continues to thrive regardless of economic conditions as people continue to consume staples like Coca Cola.
Cramer said the economic slowdown could cause prices for commodities like aluminum and sugar to fall, which would help The Coca-Cola Company (NYSE:KO) offset losses it could face from rising inflation.
Recently, UBS analyst Peter Grom and his team said in a note that consumer staples were clear winners in 2022 and they believe many stocks in the group are expected to outperform the market in 2023. The firm’s analysts are positive on The Coca-Cola Company (NYSE:KO), in addition to many other consumer companies.
7. McDonald’s Corporation (NYSE:MCD)
McDonald’s Corporation (NYSE:MCD) made Jim Cramer’s list of recession-proof stocks for obvious reasons. The company is a solid dividend payer, has plenty of cash on hand and operates in a segment that is not directly affected by recessions. Last month, Jim Cramer recommended shares of McDonald’s Corporation (NYSE:MCD) and said it’s a classic defensive stock that typically continues to perform well during tough economic times.
McDonald’s Corporation (NYSE:MCD) has increased its dividend for the past 28 consecutive years.
A total of 53 hedge funds in Insider Monkey’s database of 920 funds reported holding shares in McDonald’s at the end of the September quarter, compared with 50 funds in the previous quarter.
6. The Procter & Gamble Company (NYSE:PG)
In October, in a lightning round on his show, Jim Cramer said he prefers The Procter & Gamble Company (NYSE:PG) over Walmart. The Procter & Gamble Company (NYSE:PG) is also a key part of the Dow Jones index, which is Cramer’s favorite index to find stocks for a recession. The Procter & Gamble Company (NYSE:PG) is one of the best stocks to buy during tough times as the company has increased its dividend for 66 consecutive years. The stock has a dividend yield of 2.41% as of January 3.
A total of 69 hedge funds tracked by Insider Monkey reported holdings in The Procter & Gamble Company (NYSE:PG) at the end of the third quarter.
5. Caterpillar Inc. (NYSE:CAT)
Jim Cramer was extremely bullish on Caterpillar Inc. (NYSE:CAT) last month while talking about the company on a program on CNBC. Cramer said that Caterpillar Inc. (NYSE:CAT) is one of the large industrial companies. He said people are “ignoring” Caterpillar Inc. (NYSE:CAT) and the stock is undervalued. He also thinks President Biden’s infrastructure plan would help the company.
What makes Caterpillar Inc. (NYSE:CAT) a recession-proof stock is its stable dividend and recession-proof business dynamics. Components company Down Jones has consistently increased its dividends for the past 28 years. Demand for its construction equipment continues to grow as the government and private sector launch more construction projects.
In the rest of the article we will discuss the remaining four stocks on this list. All these stocks belong to healthcare sector. These stocks were recommended by Jim Cramer in a recent program, in which he said that healthcare stocks remained strong in 2022 because they “tend to be recession-proof stocks.” Let’s find out more.
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The discovery. None. Jim Cramer’s Recession-Proof Stock Picks was originally published on Insider Monkey.
