In this article, we discuss the 5 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 10 Stocks for Recession.
5. VICI Properties Inc. (NYSE:VICI)
Number of Hedge Fund Holders: 36
VICI Properties Inc. (NYSE:VICI) is a real estate investment trust that focuses on gaming and entertainment properties. Jim Cramer, in mid-June, placed VICI Properties Inc. (NYSE:VICI) among a list of companies that investors should look towards for protection in a recessionary market. He stressed that it was important for investors to focus on companies that made “real things, do real stuff, profit, and turn those profits to shareholders”.
On May 3, JPMorgan analyst Anthony Paolone reinitiated coverage of VICI Properties Inc. (NYSE:VICI) stock with an Overweight rating and a price target of $35, noting that the firm had the most efficient overhead among peers.
At the end of the first quarter of 2022, 36 hedge funds in the database of Insider Monkey held stakes worth $998 million in VICI Properties Inc. (NYSE:VICI), compared to 37 in the previous quarter worth $1.1 billion.
4. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 43
International Business Machines Corporation (NYSE:IBM) provides integrated solutions and services. The former hedge fund manager recently placed the stock among a basket of equities that offered investors “growth at a reasonable price” in a highly volatile stock market. He commented on the importance of buying high-quality names during a period of slow growth, noting that if investors wanted to survive in this market, it was crucial that they be selective in their stock choices.
On April 20, Bank of America analyst Wamsi Mohan maintained a Buy rating on International Business Machines Corporation (NYSE:IBM) stock and raised the price target to $165 from $162, noting that the firm had posted a strong outlook for 2022.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in International Business Machines Corporation (NYSE:IBM) with 4.4 million shares worth more than $579 million.
3. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 66
Devon Energy Corporation (NYSE:DVN) is an independent oil and gas firm. The journalist investor has been bullish on the energy sector in general over the past few months. But as recession fears have grown, he has doubled down on this sector further. On June 14, he named Devon Energy Corporation (NYSE:DVN) among a group of ten stocks that had become cheap after a larger selloff at the market, and offered investors “healthy growth and dividend protection”.
On June 14, Barclays analyst Jeanine Wai maintained an Equal Weight rating on Devon Energy Corporation (NYSE:DVN) stock and raised the price target to $90 from $73, noting that the oil sector had healthy upside and compelling yield despite secular headwinds.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Devon Energy Corporation (NYSE:DVN) with 15 million shares worth more than $888 million.
2. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 66
Cisco Systems, Inc. (NASDAQ:CSCO) provides internet-based networking and related products. The former Goldman Sachs employee has been advising investors to stay away from internet-related growth names as inflation soars and interest rates rise. However, in mid-June, he also stressed that the selloff in the sector had created several “buying opportunities” and proceeded to justify the buying of Cisco Systems, Inc. (NASDAQ:CSCO) stock with their earnings guidance and dividend history.
On May 19, Jefferies analyst George Notter maintained a Buy rating on Cisco Systems, Inc. (NASDAQ:CSCO) stock and lowered the price target to $52 from $65, noting that it was a bit early for economic pressures to filter through to the business of the firm.
At the end of the first quarter of 2022, 66 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in Cisco Systems, Inc. (NASDAQ:CSCO), up from 57 in the previous quarter worth $3.4 billion.
In its Q1 2022 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and Cisco Systems, Inc. (NASDAQ:CSCO) was one of them. Here is what the fund said:
“During the height of the tech bubble, Cisco’s stock peaked at ~$80 in March 2000, reaching up to a $500BN+ valuation (~26x Price / Sales, with ~17% operating margins or 156x operating profits). However, by the time it bottomed in September 2002, shares were trading at just ~$8.60 per share (~3.2x Price / Sales, ~21x operating profits). A little over a year later, the share price had doubled to ~$20, but then continued to trade around those levels in a range for the next 10 years.
So why were Amazon and Mercado Libre able to recover so quickly from their large draw-downs, while Cisco’s stock price remained anemic?
It seems the answer is in their differing growth profiles in the years afterwards. For example, Cisco Systems, Inc. (NASDAQ:CSCO) revenues were $18.9BN in 2000, $22.3BN in 2001, $18.9BN in 2002, $18.9BN in 2003, and $22.0BN in 2004. By contrast, Amazon was able to grow its business by ~120% in the 3 years after the stock bottomed, and Mercado Libre grew by ~118% in the following 3 years. For Cisco Systems, Inc. (NASDAQ:CSCO), it wasn’t until 2012 (11 years later) that revenues managed to double (to $46BN) from its original peak. Compare this to Amazon, who during those same 11 years, managed to grow its business 22x.”
1. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 69
Verizon Communications Inc. (NYSE:VZ) provides technology and communications services. Cramer recently identified the stock as one that investors should consider buying after the worst three-day stretch at the stock market since the pandemic crash of 2020 resulted in a mass sell off, leading to a correction in value for the overall market and opening up some buying opportunities. Cramer said investors were worried about the Fed tightening policy to curb inflation and Verizon offered portfolio protection in this scenario.
On June 22, RBC Capital analyst Kutgun Maral maintained a Sector Perform rating on Verizon Communications Inc. (NYSE:VZ) stock and lowered the price target to $54 from $57, noting that the firm had a track record that positioned it well for the coming period of uncertainty.
At the end of the first quarter of 2022, 69 hedge funds in the database of Insider Monkey held stakes worth $4.1 billion in Verizon Communications Inc. (NYSE:VZ), compared to 63 in the previous quarter worth $10.8 billion.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Verizon Communications Inc. (NYSE:VZ) was one of them. Here is what the fund said:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like telecom (Verizon Communications Inc. (NYSE:VZ)). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
You can also take a peek at 10 Russell 2000 Basic Materials Dividend Stocks to Buy and 10 Utilities Stocks with Over 3% Dividend Yield.
