In this article, we discuss the 5 best recession stocks to buy according to Jim Cramer. If you want to read about some more recession stocks to buy according to Jim Cramer, go directly to 10 Best Recession Stocks to Buy According to Jim Cramer.
5. Zoetis Inc. (NYSE:ZTS)
Number of Hedge Fund Holders: 67
Zoetis Inc. (NYSE:ZTS) is a drug company. Cramer had previously said that he is bullish on the “humanization of pets” business and forecasts lots of growth in the area. The journalist investor claims Zoetis is a “well-run” company and one of the best positioned to benefit from drug trends in the pet space. In recent advice for young investors on how to invest during a recession, Cramer highlighted that companies that had historical ability to weather storms, like in the drug sector – Zoetis is a spinoff of drug giant Pfizer – could be a solid bet.
On March 9, investment advisory Citi maintained a Neutral rating on Zoetis Inc. (NYSE:ZTS) stock and lowered the price target to $208 from $232. Navann Ty, an analyst at the firm, issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in Zoetis Inc. (NYSE:ZTS), with 3.3 million shares worth more than $627 million.
In its Q3 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Zoetis Inc. (NYSE:ZTS) was one of them. Here is what the fund said:
“Finally, exiting our position in Zoetis Inc. (NYSE:ZTS) was purely a function of valuation. With the business trading for up to 45x forward earnings, we felt we had more attractive alternatives. We maintain high conviction in the company and their competitive advantages and hope to be owners again, at a more attractive valuation. In short, we sold what we believe to be very a high-quality business at relatively high valuations to fund the purchase of equally high-quality businesses trading at lower valuations and even better long-term earnings growth prospects. While we are certainly not tactical in approach, we do aim to make prudent adjustments over time.”
4. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 67
NIKE, Inc. (NYSE:NKE) makes and sells athletic products. Cramer has said that there has been “too much fear” around names like Tesla, Apple, and Nike in light of their dependence on China in recent weeks. As China lifts virus lockdowns, these stocks, which delivered solid earnings even during the pandemic, could lift even higher. Cramer has advised investors to stick with firms that have “pricing power” during a recession, identifying Nike as one which caters to the high-end retail segment in this category.
On June 6, Stifel analyst Jim Duffy maintained a Buy rating on NIKE, Inc. (NYSE:NKE) stock and lowered the price target to $150 from $160, backing the firm to meet multi-year growth targets despite COVID and China restrictions.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in NIKE, Inc. (NYSE:NKE), with 6.7 million shares worth more than $905 million.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and NIKE, Inc. (NYSE:NKE) was one of them. Here is what the fund said:
“NIKE, Inc. (NYSE:NKE) is another play on e-commerce as well as the anticipated growth in consumer spending as we learn to live with COVID-19. After selling out of the stock in 2016 due to competitive concerns, we were motivated to repurchase shares because of optimism around a new management team’s focus on accelerating Nike’s shift toward e-commerce and direct-to-consumer (DTC) distribution. Near-term supply chain issues in Vietnam and retail weakness in China that we see as ephemeral provided a good buying opportunity. We do not believe the market is giving proper credit to Nike’s potential to deliver attractive, high-single-digit revenue growth while delivering operating margin expansion as more merchandise is sold direct. NIKE, Inc. (NYSE:NKE) is also still under indexed to the women’s category, which we see as a significant ongoing catalyst.”
3. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 72
The Procter & Gamble Company (NYSE:PG) markets consumer packaged goods. Cramer is bullish on the stock and has advised investors to stick to consumer staples during a recession. Cramer recently said that consumer staples tend to do well during a recession as people will keep buying staples regardless of the overall economic outlook. He has also highlighted the dividend history of the company, which goes back nearly six decades, as another reason to own the stock during an economic slowdown.
On June 1, Deutsche Bank analyst Steve Powers maintained a Buy rating on The Procter & Gamble Company (NYSE:PG) stock and lowered the price target to $171 from $177, noting that the firm had outperformed against an increasingly difficult cost, consumer, and supply backdrop.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in The Procter & Gamble Company (NYSE:PG), with 9.9 million shares worth more than $1.5 billion.
2. Danaher Corporation (NYSE:DHR)
Number of Hedge Fund Holders: 83
Danaher Corporation (NYSE:DHR) is a Washington-based conglomerate with interests in professional, medical, industrial, and commercial products and services. Cramer gave the stock a Buy recommendation during the Lightning Round segment of his show on June 1. The Investing Club of CNBC, which Cramer heads, has identified the firm as the “right kind of stock” for the present market given its reliable earnings history.
On June 1, RBC Capital analyst Deane Dray upgraded Danaher Corporation (NYSE:DHR) stock to Outperform from Sector Perform and raised the price target to $310 from $299, noting that the “high quality, defensive portfolio looks incrementally more attractive given the higher Wall of Worry/macro fear”.
At the end of the first quarter of 2022, 83 hedge funds in the database of Insider Monkey held stakes worth $6.1 billion in Danaher Corporation (NYSE:DHR), compared to 87 in the preceding quarter worth $7.3 billion.
In its Q1 2022 investor letter, Cooper Investors, an asset management firm, highlighted a few stocks and Danaher Corporation (NYSE:DHR) was one of them. Here is what the fund said:
“This combination of attributes was not in favour during a quarter where the market rotated into larger, more traditional index heavyweights that, while growing more slowly and generating lower returns on capital, typically trade on lower headline multiples. In Healthcare for example, we saw portfolio holdings Danaher Corporation (NYSE:DHR) fall 10-15% in the quarter. Given the relative business quality and growth prospects for a life sciences capital allocator champion like Danaher Corporation (NYSE:DHR) versus a large diversified pharma company, we think this period of underperformance is likely more a blip than a trend.”
1. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ) makes and sells healthcare products. Cramer gave the stock a Buy recommendation during the Discussed Stock segment of his show on May 2. The journalist investor had previously noted that the firm was one of the great American firms and that investors will not have time to buy the shares at such great prices if inflation were to fall.
On May 23, SVB Leerink analyst David Risinger assumed coverage of Johnson & Johnson (NYSE:JNJ) stock with an Outperform rating and a price target of $200, backing the firm to deliver consistent earnings growth to investors.
At the end of the first quarter of 2022, 83 hedge funds in the database of Insider Monkey held stakes worth $7.4 billion in Johnson & Johnson (NYSE:JNJ), the same as in the previous quarter worth $7.3 billion.
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