May 16, 2022
The S&P 500 is down 10% over the past month alone.
According to CNBC’s Jim Cramer, the recent plunge in stocks reflects a lack of investor confidence in the Federal Reserve. He says these investors believe that the Fed has lost control or is helpless to fix things given the state of the global supply chain.
Advertisement
But Cramer remains bullish — particularly on Fed Chairman Jerome Powell. “I think the consumer is strong. Jobs are plentiful,” he says. “Leaving the market is a mistake because Powell happens to be an incredibly thoughtful, good public servant who’s doing amazing.”
Earlier this month, Cramer bought stocks for his Charitable Trust, warning that if you wait until the Fed is done and inflation's broken, "it'll be too late to buy."
For bullish investors who agree with that sentiment, here are a few Cramer’s top recommendations.
More: Jim Cramer's net worth
AMD
Chip giant AMD is starting to look like the baby that gets tossed out with the bathwater. The shares are down more than 40% in 2022 despite boasting a thriving underlying business.
In Q1, AMD’s revenue was up 71% year over year to $5.9 billion.
Advertisement
Some of that topline growth was driven by the acquisition of semiconductor company Xilinx. Eliminating the impact of that purchase still gives us top-line growth of 55%. That’s excellent for a stock that’s currently trading at a forward price-to-earnings ratio in the high-teens.
More: Farmland could be the hedge you need against stock volatility.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Nvidia
Nvidia is another chipmaker in Cramer’s “good basket.” While the stock has also plunged by more than 40% year to date, Nvidia’s outlook remains relatively bright.
Nvidia is scheduled to report Q1 earnings later this month. Given the recent rout in the digital assets market, the report will likely reflect a plunge in crypto mining demand. But analysts still expect $8.09 billion in revenue and $1.29 in earnings per share.
Advertisement
Nvidia could be an ideal target for investors looking for growth at reasonable prices.
Tech growth
Picking the right stocks in a choppy market is difficult — particularly in the volatile tech sector. Instead of stock picking, investors can make a broad bet on the entire beaten-down space.
The Vanguard Information Technology ETF (VGT), for instance, offers exposure to the leading names in technology. The fund’s biggest holdings include Apple (APPL), Microsoft (MSFT) and Adobe (ADBE).
VGT is down 23% in 2022.
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Banks
Cramer believes a rising interest rate environment is good for big banks. “They’re gonna make a lot more money off you,” he says.
When rates increase, the spread between what banks charge in interest (to borrowers) and what they pay out (to savers) widens.
Blue-chip bank stocks are a great option. But investors can also bet on the entire sector through an ETF. The SPDR S&P Bank ETF (KBE) tracks the total return performance of the S&P Banks Select Industry Index — an index with an average price-to-book of 1.1.
The ETF’s top holdings include banks like First Bancorp (FNLC), Northern Trust (NTRS) and M&T Bank (MTB). Investors worried about rising rates and inflated valuations in the tech sector might want to put KBE on their watch list.
More from Moneywise
- Jim Rogers: Next bear market will be ‘worst in my lifetime’ — he'll rely on 3 assets
- Robert Kiyosaki says we're already in a 'technical depression' — he's using these 3 assets for protection
- Warren Buffett just said he doesn’t own bitcoin because ‘it isn’t going to do anything’ — he’d rather own these 2 tangible assets instead
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
