In this article, we discuss Jim Cramer’s recession-proof stock picks. Go here to jump to the top four stocks on this list Jim Cramer’s Top 4 Recession-Proof Stock Picks.
The recession warning bells started ringing in 2022 and haven’t stopped since. As if investors weren’t already scared enough, a fresh warning comes from the horse’s mouth. On January 2, the head of the IMF, Kristalina Georgieva, warned the world that 2023 will be more difficult than the previous year, because the world’s three main 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 will go into recession.
“Even countries that are not in recession, this will feel like a recession for hundreds of millions of people,” Georgieva added.
He also said that China’s economic growth will be equal to or lower than global economic growth for the first time in 40 years. Over the past few decades, China has shown record economic growth and has stunned the world with its economic performance. However, the country’s growth trajectory has been hit by the spread of the coronavirus, the real estate crisis, and severe regulatory pressures that have spooked tech companies in the country.
The head of the IMF also said that the US economy looks strong and it may avoid recession. According to him, the labor market in the country remains strong. However, this strong labor market is something that could bring more pain for investors in the coming months.
“It’s a mixed blessing because if the labor market is too strong, the Fed may have to keep interest rates tighter to bring down inflation,” Georgieva said.
Major investment firms and financial institutions are now joining the chorus of recession. According to Bloomberg, Barclays Capital believes 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 global economic recession. Fidelity International thinks we’re headed for a hard landing.
Inflation Expected to Slow
A recent report from Dutch financial services firm ING said inflation in the US could start to fall and the Federal Reserve may start cutting interest rates before ending hikes. However, the report said that it will take some time for inflation to subside in Europe.
An Unexpected Positive Development
There has been at least one good news of late: an unexpectedly late start to the winter season is keeping natural gas prices low and reassuring investors around the world who expect a major energy crisis at the onset of winter.
Jim Cramer’s Handbook for Recession
Jim Cramer has a huge online following, with hundreds of thousands of people listening to his commentary on the US and global stock market and economic situation. Last November, 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 wants investors’ stock portfolios to fall.
Cramer said the Fed is not expected to stop raising interest rates anytime soon, which means you should continue selling tech stocks and flock to defensive stocks in sectors like oil, banks, healthcare and consumer staples. Cramer said stocks in those sectors could rise despite inflation because companies in those sectors are more “conservative.”
Jim Cramer then talked about the Dow Jones Industrial Average and said the index is loaded with relatively cheap stocks. Some think the 30 companies in the Dow are in recession, he said. But Cramer believes “that’s not just true, it’s wrong.” Cramer thinks the Dow companies can handle downturns quite well and advised investors to pick stocks from the index to prepare for a downturn.
In this article, we selected recession-proof stocks based on Jim Cramer’s investment philosophy, which we discussed above. Cramer is bullish on these stocks, and we’ve outlined his thesis for each of these stocks.
Jim Cramer’s Recession0Proof Stock Picks
11. American Express Company (NYSE:AXP)
American Express Company (NYSE:AXP) makes it on Jim Cramer’s list of 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 some time now. In October 2022, Jim Cramer reported that he was surprised that American Express Company (NYSE:AXP) stock was stuck 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 profit 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 likes Apple Inc. (NASDAQ:AAPL) and recommends the stock to the public as well as the investment club. In October, Jim Cramer said that “Apple is at the root of everything,” and that the decline in the stock has become synonymous with the decline of the entire market. That proved to be true as the stock market ended the first day of 2023 lower, largely due to Apple Inc.’s (NASDAQ:AAPL) decline. Cramer said in the same program that Apple is the “greatest stock of all time.”
Apple Inc. (NASDAQ:AAPL) is a major component of the Dow Jones index, and the company also pays a dividend. According to Jim Cramer, these two factors make Apple Inc. (NASDAQ:AAPL) a recession-proof stock.
Hedge funds agree with Cramer. At the end of the third quarter, 140 hedge funds reported holdings in Apple, compared with 128 in the previous quarter. This indicates that hedge fund sentiment around Apple stock has increased dramatically.
9. Chevron Corporation (NYSE:CVX)
As we mentioned in the introduction to this article, Jim Cramer recommends oil stocks to prepare for the coming recession. Because Chevron Corporation (NYSE:CVX) is the most important oil stock in the Dow Jones, we added it to Jim Cramer’s list of recession-proof stocks. Jim Cramer has long been a fan of Chevron Corporation (NYSE:CVX). Last April, Jim Cramer praised Chevron Corporation’s (NYSE:CVX) dividend yield and buybacks, saying 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 a downturn. The company has been increasing its dividend for 35 years. In the third quarter, Chevron Corporation (NYSE:CVX) easily beat analyst estimates with net income of $11.23 billion. Revenue increased 49% in the period.
8. The Coca-Cola Company (NYSE:KO)
Last July, Jim Cramer discussed in detail why he thinks The Coca-Cola Company (NYSE:KO) is a good stock pick for a recession. Jim Cramer said that during a recession you should hide behind defensive, recession-proof stocks, and The Coca-Cola Company (NYSE:KO) is a “textbook” example of such stocks. Cramer stated that the beverage business is not a hostage to the economy, meaning that because people continue to consume staple beverages such as Coca Cola, the business continues to thrive regardless of economic conditions.
Cramer said the economic slowdown could lead to lower prices for commodities such as aluminum and sugar, which would help The Coca-Cola Company (NYSE:KO) offset losses it could face due to rising inflation.
Recently, UBS analyst Peter Grom and his team said in a note that consumer staples are the clear winners in 2022 and believe many stocks in the group will outperform the market again in 2023. The firm’s analysts are bullish 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 it on Jim Cramer’s list of recession-proof stocks for obvious reasons. The company is a solid dividend payer, has plenty of cash, and operates in a segment not directly affected by recessions. Last month, Jim Cramer recommended shares of McDonald’s Corporation (NYSE:MCD) , saying it’s a classic defensive stock that typically continues to perform well during tough economic times.
McDonald’s Corporation (NYSE:MCD) has raised its dividend for the past 28 consecutive years.
A total of 53 hedge funds in Insider Monkey’s database of 920 funds reported holdings in McDonald’s at the end of the September quarter, compared with 50 in the previous quarter.
6. The Procter & Gamble Company (NYSE:PG)
In a lightning round on his show in October, Jim Cramer said he preferred The Procter & Gamble Company (NYSE:PG) to Walmart. The Procter & Gamble Company (NYSE:PG) is also a staple of the Dow Jones index, Cramer’s favorite index for finding stocks on the downside. The Procter & Gamble Company (NYSE:PG) is one of the best stocks to buy in 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) when he spoke about the company on a CNBC program last month. Cramer said that Caterpillar Inc. (NYSE:CAT) is one of the largest industrial companies. He said people “didn’t see” Caterpillar Inc. (NYSE:CAT) and the stock was undervalued. He also thinks President Biden’s infrastructure plan will help the company.
What makes Caterpillar Inc. (NYSE:CAT) a recession-proof stock is its stable dividend and recession-proof business dynamics. The Down Jones component company has consistently increased its dividend for the past 28 years. Demand for its construction equipment continues to grow as the government and private sector initiate more construction projects.
In the next part of the article, we will discuss the remaining four stocks on this list. All of these stocks belong to the healthcare sector. These stocks were recommended in a recent program by Jim Cramer, who said healthcare stocks are holding steady in 2022 because they “tend to be recession-proof stocks.” Let’s learn more.
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Disclosure. None. Jim Cramer’s recession-proof stock picks was originally published on Insider Monkey.