CNBC’s Jim Cramer on Tuesday compiled a list of companies that benefit from inflation, suggesting investors look there for performance while price pressures weigh on other parts of the market.
“Don’t fall into the trap of thinking that the whole market will get wrecked by persistent inflation, except for the oils,” the “Mad Money” host said.
“We are now discovering there are vast swathes of the market that benefit from inflation,” which also includes the banks and currently parts of technology and large pharmaceuticals, Cramer said. “That’s a huge chunk of this market, unlike any combination I’ve ever seen. Plenty of winners out there if you just stop freaking out and start looking at the opportunities.”
Here are the winners Cramer identified in each of the aforementioned sectors.
Chevron is Cramer’s favorite of what he called the “big, boring internationals.”
“They’re basically along for the ride, doing what they always do, but making more money doing it” because the price of oil is above $80 per barrel, Cramer said. “I’ve liked Chevron the most, yields nearly 5% [and it has] committed to spending $10 billion on new technologies that are less energy-intensive.”
Domestic producers Devon Energy and Pioneer Natural Resources are exercising more discipline on drilling, Cramer said, and both companies instituted variable dividends that are very attractive.
In the natural gas industry, Cramer pointed to Coterra Energy, Cheniere Energy and the “far more speculative” Tellurian as three names to consider.
As for master limited partnership pipeline players, Cramer highlighted Enterprise Products Partners and Williams Companies for their dividend yields.
Brian Moynihan, CEO, Bank of America
Scott Mlyn | CNBC
Banks stand to benefit as interest rates go higher, Cramer said, calling out Bank of America, in particular, as one firm that will “make a killing if the Federal Reserve is forced to tighten.”
On the investment banking side, Cramer said Goldman Sachs is a good option “for the more aggressive” investors, while the “more risk-averse” should look at Morgan Stanley.
Wells Fargo also represents “the wildcard turnaround story” for the market, he said.
Bill McDermott, CEO of ServiceNow.
Adam Jeffery | CNBC
Cramer classified these firms as the “labor and cost savers,” as other companies look to technology to combat the worker shortage and wage pressures: Salesforce, Adobe, Workday, Amazon Web Services and Microsoft‘s Azure.
He also said to consider ServiceNow, “which makes it so your information technology department can do far more with fewer people, or Snowflake, which gives you a cheaper way to analyze data as you rent the cloud.”
In the semiconductor space, Cramer pointed to Nvidia, AMD, Lam Research and Applied Materials as names to consider.
Cybersecurity companies — led by Palo Alto Networks, CrowdStrike and Cloudflare — have been able to shake off inflation fears, Cramer said, as well as social media plays Snap and Facebook.
Cramer said pharmaceutical giants have been “getting a pass here as long as they have exciting, new products,” such as Johnson & Johnson and Eli Lilly.
“If I’m right and big pharma has legs, then Eli Lilly might be the perfect stock for this moment,” he said, noting he recently bought the company for his charitable trust.
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