CNBC’s Jim Cramer on Monday presented his investment manual for two economic scenarios that could materialize as a result of the Covid omicron variant.
The heavily mutated variant scared some investors, especially during Friday’s shortened vacation session when the Dow Jones Industrial Average recorded its worst day since October 2020. However, US stocks ended higher on Monday, so that President Joe Biden has indicated that broad economic bottlenecks are presently ‘. t needed.
Cramer agrees with Biden, saying similar strict restrictions in the early stages of the pandemic are highly unlikely. However, the host of “Mad Money” said the Covid omicron variant could have an effect on the economy and investors should prepare accordingly.
To slow down
If the spread of the variant reaches a point that ultimately causes an economic downturn, Cramer said his first choice of stocks is Amazon.
“It’s a business that does well when people are afraid to go to the mall. And it is doing well as more businesses embrace the cloud, as Amazon Web Services is indeed the dominant player in cloud infrastructure, ”he said, saying the transition to the cloud is cloud continue even as overall economic growth pauses.
Microsoft is another great way to counter a potential slowdown caused by omicron, Cramer said. “We know their products sold well during the initial lockdown and that didn’t stop with the subsequent reopening or panic of the Delta variant. I expect continued software upgrades at the level of the company, ”he said.
Cramer said he also likes tech giants Netflix and Alphabet to continue to be successful in this possible scenario.
Outside of tech, Cramer said utility companies like American Electric Power are great places to be, as well as healthcare games like UnitedHealth Group.
Cramer said a riskier approach for investors includes home builders, who benefit from higher interest rates, and retailers who benefit from spending around the house.
Cramer said it was possible that Friday’s market sell-off could be as bad as investor concerns about the omicron could be.
“If the omicron freakout turns out to be a lot of ado about nothing, you need to get back to travel and recreation first,” said Cramer, naming Norwegian Cruise Line Holdings as a top option in this category.
American Express, down 9% over the past month, is another stock to consider if the new variant doesn’t mean much to the economy, Cramer said. “If you’re more risk averse you can buy some here and then buy more once we have the first confirmed cases of omicron in America and, yes, travel stocks are selling again,” he said. -he declares.
Likewise, Cramer said he would look to hotel operator Marriott the next time negative news from omicron causes that basket of stocks to pull back. Clothing-focused retailers like Macy’s and American Eagle Outfitters should also be in good shape if the U.S. economy continues to return to something that looks like normal, Cramer said.
“I’m not necessarily saying that the economy can continue to blow without overheating now that we have a new variant, but it is a real possibility and you have to prepare for it,” he said.
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