Jim Cramer says these are the 5 stocks to buy during this market rotation
Investors shouldn’t fear the recent market rotation, CNBC’s Jim Cramer said Monday. Instead, he thinks it creates buying opportunities in many high-quality stocks that have been declining due to corporate selling.
“If you can observe a rotation and figure out what the theme might be, you can spot some incredibly bargain stocks,” the “Mad Money” host said.
Monday’s action follows last week’s June jobs report, which pointed to a slowdown in hiring from the previous month. That’s prompted some big money managers to reposition their portfolios, Cramer said. Because many institutional investors trade baskets of stocks tied to a particular economic theme, quality companies could sink further even if nothing changes in their business, he said.
“These rotations create shifts that seem to come out of nowhere. And sometimes those shifts can give you incredible opportunities to buy high-quality companies at a discount,” he said. “We encountered a group of them today.”
Cramer pointed out. PepsiCoHe said the recent pullback erased much of the rally that followed last quarter’s strong earnings report and created an attractive entry point ahead of the company’s July 9 results.
He himself expressed a similar situation StarbucksWhile CEO Brian Niccol continues to work on the company’s turnaround, he argued that investors finally have an opportunity to buy the stock after its recent decline. Cramer’s Charitable Trust, the portfolio used by CNBC Investment Club, owns shares of Starbucks.
For investors willing to take on more risk, Cramer emphasized: Constellation Brands. He said the alcohol company’s recent earnings show the beer business could stabilize despite ongoing concerns about alcoholic beverages.
Cramer said he “couldn’t think of a more advantageous place to buy” TJX Companiesanother Club holding. He argued that a leaner consumerism tends to benefit lower-priced retailers as shoppers discount, while excess inventory at traditional retailers allows TJX to sell more discounted items.
Apart from consumer stocks, another dynamic that characterized Monday’s move was the recovery of AI winners at the expense of well-performing healthcare stocks. This includes Club holding Johnson&Johnson. Cramer said the company is now a “fully operating pharmaceutical company” after his separation Kenvueconsumer health business, a few years ago and planning to move away from orthopedics. He said those changes make it a more attractive business ahead of its July 15 earnings report.
“Shares of J&J, Pepsico, Starbucks, Constellation Brands and TJX were in trouble today,” Cramer said. “I think this is a great place to do some buying because these are all collateral losses from this indiscriminate, sector-rotating selling.”
