Don’t panic, and start working on your buy list
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Jim Cramer
Scott Mlyn | CNBC
This article was first sent to Jim Cramer’s CNBC Investing Club members. Get the latest updates directly to your email subscribe here.)
The markets are selling off sharply Friday on news of a heavily mutated COVID-19 variant detected in South Africa that could put the global recovery at risk, and like everyone else right now we don’t know enough about the new variant.
Today’s economic uncertainties and travel restrictions make it a great time to review the names of those companies that did well at the peak of the pandemic.
Possible buy list — essential retail
Possible buy list — testing and treatment
Another reason for people to test positive for COVID-19 is that a new variation has been developed. Abbot Laboratories (ABT)Rapid home test results that are affordable and of high quality. Eli Lilly (LLY)Another name we like for healthcare is Lilly’s antibody cocktail. However, it is not known if Lilly’s cocktail can be effective in treating this variant.
Although we would not chase these stocks if the stock is up, we are happy to take a look at any shares that fall below 2%.
Stop playing the “stay-at-home” game
We want to make one thing clear about the list: these investments aren’t solely COVID-19-based. This is not the time to be a stay-at home mom. Instead we have highlighted stocks which will benefit from the return of pandemic behavior.
This list includes market share winners and companies that have attractive growth opportunities and pipeline potential, as well as favorable initiatives specific to the company.
These stocks, with or without Covid, are what we love.
Possible buy list — strong balance sheets
Other than specific pandemic winners we will be focusing our attention on companies that have strong balance sheets, steady share repurchase programs, and healthy dividend payments. All three of these companies are able to tolerate and support volatile markets. Investors need to be ready for volatility over the next few weeks.
We are currently looking into a new concept that’s not part of the Charitable Trust. Chevron (CVX). This oil company has an impressive dividend, with a yield of 5%. It also offers a steady buyback, which could increase next year. At $70/barrel, they have plenty of earnings and cash flow. Although we are not allowed to trade CVX until Monday, it’s an intriguing idea that will change as the prices rise.
Lower rates have been a major problem for banks today, however this group has the right profile. Morgan Stanley (MS)And Wells Fargo (WFC)The two Charitable Trust stocks that we have are well-capitalized and offer huge repurchase options. Because we recently bought Morgan Stanley stock at the same price as last Friday and Wells Fargo has a large position with an average cost of $33, we aren’t looking to buy these stocks at their current levels.
If Morgan Stanley falls below the price of our purchase (e.g. $93-$94), which would be where the dividend yield is 3%, we’ll likely consider buying shares from them next.
Here’s what we want to stay clear of
The group we think is just too hard to buy right now are the ones that need cross-border activity and are tied to travel & entertainment. Stocks are like Boeing (BA), Wynn Resorts (WYNN)And even more Disney (DIS)It is despite the fact that Disney+ may see a boost in popularity if more people are inclined to live at home. These are downright awful, and no one panicked. It is possible that the variant with new features could work out. Sometimes, it is best just to relax. That’s exactly what we have done with this group.
End result
We want to stress that Investing Club members should not panic over the news and instead look for new opportunities when stocks arrive. But even though the market has gone on sale, we don’t think it’s a hold-your-nose-and-buy-what’s-getting-hit-the-hardest type of day because we do not know enough about the transmissibility of the new variant and how much it has already spread. We may get better prices on Monday if we find out something negative this weekend.
My Charitable Trust now has an official home at the CNBC Investing Club. This is where I share my market intelligence and every move that we have made for our portfolio. Action Alerts Plus has ceased to be affiliated with my writings and the Charitable Trust.
Subscribers to CNBC Investing Club will get a trade alert prior to Jim making a trade. Jim usually waits approximately 45 minutes to send a trade alert before purchasing or selling any stock within his charitable trust portfolio. Jim will wait five minutes until the market opens to execute a trade if the trade alert has been sent before the trade is executed. Jim will execute the trade if the trade alert has been issued less than 45 minutes prior to the close of the trading day. Jim can wait 72 hours before execution if the alert is issued after he’s spoken on CNBC TV about a stock. See here for the investing disclaimer.
Jim Cramer Charitable Trust is long AMZN COST WMT UPS ABT MS MS WFC BA WYNN DIS.
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