Inflation and commodity booms often go hand in hand, with energy typically leading the charge.
In fact, the price of crude oil has already gone up over 70% year to date, while natural gas prices have more than doubled.
Of the big multinational energy producers, “I like Chevron the most,” Cramer says.
“[The company] yields nearly 5% [and is] committed to spending $10 billion in new technologies that are less energy-intensive.”
Cramer also likes domestic producers that seem to be returning more and more capital to shareholders in the form of dividends — naming Devon Energy and Pioneer Natural Resources as just a couple.
Banks tend to do well under rising interest rates. And facing growing inflation, the Fed is expected to raise rates as soon as next year.
Cramer points out how well Bank of America, Goldman Sachs and Morgan Stanley have been doing, but he also likes Wells Fargo for being a “wildcard turnaround of this entire stock market.”
After a 70% rally year-to-date, Wells Fargo shares now trade at about the same level as they did in January 2020. The other three stocks, however, are trading well above their pre-pandemic levels.
“Wells Fargo can have a ton of upside if it finally gets its house in order,” Cramer says. “And I’m telling you, it is getting its house in order.”
Cramer argues that if companies are having trouble finding employees during the current labor shortage, they will need to maximize their use of technology to improve productivity.
“So they need to hire Salesforce.com, Adobe, Workday, Amazon Web Services, Azure from Microsoft or ServiceNow… or Snowflake,” he says.
Tech has been one of the hottest sectors in the market for quite some time, and many of the tickers mentioned here have already gone up.
Microsoft shares climbed 47% over the past year, Workday surged 33%, while Snowflake and ServiceNow are both up around 36%.
That means these stocks have gotten pricey; ServiceNow trades at over $680 per share, for instance.
Thankfully, you don’t have to buy full shares. These days, you can use a popular investing app to buy fractions of shares with as much money as you are willing to spend.
Not all drug companies do well in an inflationary environment, but you may want to add Eli Lilly and Johnson & Johnson to your watch list.
“I’m increasingly confident about their Alzheimer’s drug,” Cramer said about Eli Lilly.
As for Johnson & Johnson, Cramer recalls how the stock “initially gets hit” when its most recent earnings report comes out, “then it rallies back to unchanged, then it gets hit again, and then boom, it takes off.”
In the third quarter, Johnson & Johnson’s sales grew 11% year-over-year to $23.3 billion. Adjusted earnings per share increased by 18.2% to $2.60.
A fifth option
While Cramer focused his advice on the stock market, you don’t have to limit yourself to stocks to hedge against inflation.
In fact, if you want something that has little correlation with the ups and downs of the stock market, you might want to consider an overlooked asset: fine art.
Contemporary artwork has offered an annual return of 14% over the past 25 years — easily besting the 9.5% return from the S&P 500.
Investing in fine art by the likes of Banksy and Andy Warhol used to be an option only for the ultra-rich, like Cramer.
But with a new investing platform, you can invest in iconic artworks, too, just like Jeff Bezos and Peggy Guggenheim do.
Generating regular income should be a top priority for risk-averse investors.
And you don’t have to limit yourself to the stock market to do that.
For instance, some popular investing services let you lock in a steady rental income stream by investing in premium commercial real estate properties — from R&D campuses in San Jose to industrial e-commerce warehouses in Baltimore.
You’ll gain exposure to high-end properties that big-time real estate moguls usually have access to.
And the best part? You'll receive regular passive income in the form of cash distributions without any headaches or hassles.