In this article, we discuss the 10 stocks that Jim Cramer recommends for recession. If you want to read about some more stocks that Jim Cramer recommends for recession, go directly to Jim Cramer Recommends These 5 Stocks for Recession.
Recession fears have steadily been gathering pace at the stock market over the past few weeks, resulting in massive slide in all major indexes and spooking investors away from stocks towards safer options. The benchmark S&P 500 is down 18.45% year-to-date, as of June 27, the NASDAQ Composite is down 26.69%, while the Dow Jones Industrial Average is down 13.90%. In early June, these indexes registered their worst-day three day decline since the pandemic panic of March 2020, leading to a mass sell-off at the stock market.
As inflation soars and the central bank prepares to raise interest rates more aggressively to tame the trend, investors are flocking to stock market veterans for advice. Jim Cramer, the CNBC host and former hedge fund manager, is one of these veterans. In a recent show, Cramer warned that even “high-quality stocks with low price-to-earnings multiples could get beaten down by a recession”. He stressed that even though these stocks looked “investable”, they were not always “recession-proof”.
Some of the stocks that Cramer has been monitoring as inflation rises include Apple Inc. (NASDAQ:AAPL), Netflix, Inc. (NASDAQ:NFLX), and AT&T Inc. (NYSE:T). During his show in mid-June, Cramer noted that there were some high-quality names that investors could justify owning if they were feeling “sanguine about the economy”. Cramer added that when investors bought a stock with low price-to-earnings ratios and they still went down, it was because the stocks “only look cheap thanks to the fact that the earnings estimates are too high”.
Our Methodology
These were picked keeping in mind the latest calls that Cramer made on these equities on his Mad Money show aired by news platform CNBC. An extensive database of around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the popularity of each stock among hedge funds.
Jim Cramer Recommends These Stocks for Recession
10. ONEOK, Inc. (NYSE:OKE)
Number of Hedge Fund Holders: 25
ONEOK, Inc. (NYSE:OKE) is an oil and gas storage and transportation firm. In mid-June, Cramer included ONEOK, Inc. (NYSE:OKE) among a list of stocks that he thought would help investors withstand “geopolitical and economic issues” roiling the stock market. He said that when the market comes “so far, far down” it also opens new buying opportunities, naming ONEOK as one example. He noted that picking “defensive stocks that can hold fine even with inflation” was the key during this time.
On April 26, Morgan Stanley analyst Robert Kad maintained an Equal Weight rating on ONEOK, Inc. (NYSE:OKE) stock and raised the price target to $81 from $70, noting that there were “constructive management outlooks given the favorable commodity backdrop” for the oil firm.
At the end of the first quarter of 2022, 25 hedge funds in the database of Insider Monkey held stakes worth $174 million in ONEOK, Inc. (NYSE:OKE), the same as in the preceding quarter worth $94 million.
In addition to Apple Inc. (NASDAQ:AAPL), Netflix, Inc. (NASDAQ:NFLX), and AT&T Inc. (NYSE:T), ONEOK, Inc. (NYSE:OKE) is one of the stocks that hedge funds have their eye on as recession fears rise.
In its Q3 2021 investor letter, Miller Howard Investments, an asset management firm, highlighted a few stocks and ONEOK, Inc. (NYSE:OKE) was one of them. Here is what the fund said:
”In late August, we increased the portfolio’s cyclical exposure by trimming utilities after a period of relative outperformance and reallocating the capital to midstream energy, which had pulled back over the summer. We added ONEOK, Inc. (NYSE:OKE) with the expectation that it will benefit from increasing natural gas and natural gas liquids (NGL) recovery in the Bakken region.”
9. Huntington Bancshares Incorporated (NASDAQ:HBAN)
Number of Hedge Fund Holders: 26
Huntington Bancshares Incorporated (NASDAQ:HBAN) operates as a bank holding firm. On June 14, Cramer identified it as one of the stocks that was available for buying on the cheap. He believes the stock also offers investors some dividend protection. He stressed that investors should become “selective” in a horrific market. He also noted that the stock offered some protection against a Fed-mandated recession. He added that Huntington Bancshares Incorporated (NASDAQ:HBAN) offered “healthy growth” during this period too.
On April 25, Stephens analyst Terry McEvoy upgraded Huntington Bancshares Incorporated (NASDAQ:HBAN) stock to Overweight from Equal Weight and raised the price target to $17 from $16, noting that the firm had outsized loan growth opportunities over the next 18 months.
At the end of the first quarter of 2022, 26 hedge funds in the database of Insider Monkey held stakes worth $169 million in Huntington Bancshares Incorporated (NASDAQ:HBAN), up from 25 in the preceding quarter worth $402 million.
8. Advance Auto Parts, Inc. (NYSE:AAP)
Number of Hedge Fund Holders: 29
Advance Auto Parts, Inc. (NYSE:AAP) provides automotive replacement parts. The journalist investor, in mid-June, placed Advance Auto Parts, Inc. (NYSE:AAP) among a basket of equities that were expected to withstand inflation and recession pressures, even offering investors a chance of growth during the time and a decent dividend yield. Cramer noted that the stock was one for the “hard market” which had registered the worst plunge since the pandemic panic of March 2020 in June, with all major indexes down.
On June 22, MKM Partners analyst David Bellinger initiated coverage of Advance Auto Parts, Inc. (NYSE:AAP) stock with a Buy rating and a price target of $195, noting that the firm had pricing power in the auto parts retail sector.
At the end of the first quarter of 2022, 29 hedge funds in the database of Insider Monkey held stakes worth $695 million in Advance Auto Parts, Inc. (NYSE:AAP), compared to 36 in the previous quarter worth $872 million.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Advance Auto Parts, Inc. (NYSE:AAP) was one of them. Here is what the fund said:
“Several encouraging macro trends are emerging in support of two areas outside tech: consumer spending and industrial production. Unlike in past recessions and recoveries, consumer balance sheets have actually improved dramatically since the onset of the pandemic. We expect the supply chain constraints contributing to inflation and goods shortages will begin to lessen with an ambitious rebuilding of inventories. This should be a multi-year phenomenon beneficial to quality industrials with high levels of organic growth like distributors such as Advance Auto Parts, Inc. (NYSE:AAP).”
7. NRG Energy, Inc. (NYSE:NRG)
Number of Hedge Fund Holders: 31
NRG Energy, Inc. (NYSE:NRG) is an integrated power company. The former hedge fund manager was praiseworthy of the company during his show in mid-June, placing it on a list of his ten favorite stocks from among a group of 23 overall that were trading at less than 16.5 times their earnings, were expected to grow their earnings in 2022 and 2023, and also offered yields of more than 3.5%, staying above the benchmark 10-year Treasury yield. He said the stock will offer investors who were worried about tightening Fed policies with some protection.
On May 6, NRG Energy, Inc. (NYSE:NRG) posted earnings for the first quarter of 2022, reporting earnings per share of $7.17 and a revenue of $7.9 billion. For 2022, the firm guided net income of $480 million to $780 million and adjusted earnings of $1.95 billion to $2.25 billion.
At the end of the first quarter of 2022, 31 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in NRG Energy, Inc. (NYSE:NRG), compared to 28 the preceding quarter worth $1.8 billion.
6. Newell Brands Inc. (NASDAQ:NWL)
Number of Hedge Fund Holders: 31
Newell Brands Inc. (NASDAQ:NWL) makes and sells consumer and commercial products. The former Goldman Sachs employee was bullish on the company during a period of uncertainty at the stock market, backing it to grow earnings during the period while offering solid dividend protection as well. Cramer noted that as the markets crashed, it was time to do some buying even if it meant taking on some short-term hurt. He identified Newell Brands Inc. (NASDAQ:NWL) as a cheap stock that offered healthy growth and dividend protection.
On March 30, JPMorgan analyst Andrea Teixeira maintained an Overweight rating on Newell Brands Inc. (NASDAQ:NWL) stock and lowered the price target to $26 from $29, backing the demand for the products of the firm to remain resilient in the coming months.
At the end of the first quarter of 2022, 31 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in Newell Brands Inc. (NASDAQ:NWL), up from 26 in the previous quarter worth $1.7 billion.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Pzena Investment Management is a leading shareholder in Newell Brands Inc. (NASDAQ:NWL) with 36 million shares worth more than $776 million.
Just like Apple Inc. (NASDAQ:AAPL), Netflix, Inc. (NASDAQ:NFLX), and AT&T Inc. (NYSE:T), Newell Brands Inc. (NASDAQ:NWL) is one of the stocks on the radar of elite investors.
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Disclosure. None. Jim Cramer Recommends These 10 Stocks for Recession is originally published on Insider Monkey.
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