Jul 7, 2022
The S&P 500 has plunged nearly 21% in the first six months of 2022, marking its worst first-half performance since 1970.
But not everyone is bearish. CNBC’s Jim Cramer, for instance, still sees opportunity in the months ahead — particularly in the Dow Jones Industrial Average.
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“These tend to be boring, mature companies that typically pay nice dividends, which is what protects you when the Fed is tightening,” he says.
“I know this is a tough market, but I’m betting the second half turns out better than the first for the worst performers and be OK for the best performers.”
Among the 30 Dow components, Cramer picked out a few stocks that he thinks investors should consider. Here’s a closer look at three of them.
Salesforce (CRM)
Salesforce is a cloud-based software giant. More than 150,000 companies use its customer relationship management platform to scale their business.
Cloud computing is a booming industry, and Salesforce’s numbers completely reflect that.
In the three months ended Apr. 30, revenue surged 24% year over year to $7.4 billion. Management expects full-year fiscal 2023 revenue of $31.7 billion to $31.8 billion, which would translate into a year-over-year increase of 20%.
But the stock is down a staggering 31% in 2022, giving contrarian investors something to think about.
Cramer says investors should consider buying Salesforce shares before the company hosts its Dreamforce conference in September.
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Last month, Stifel analyst J. Parker Lane reiterated a Buy rating on Salesforce. While the analyst lowered his price target from $300 to $250, the new target still implies a potential upside of 43%.
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Merck (MRK)
Healthcare is a classic example of a defensive sector thanks to its lack of correlation with the ups and downs of the economy.
Cramer likes pharmaceutical giant Merck because it is recession-resistant and offers generous dividends.
Paying 69 cents per share on a quarterly basis, the stock yields just under 3%.
The business is growing, too. In Q1, Merck’s worldwide sales from continuing operations totaled $15.9 billion, up 50% year over year.
While the broad market is deep in the red in 2022, Merck shares are up an impressive 21% year to date.
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Mizuho analyst Mara Goldstein sees more upside on the horizon. The analyst has a Buy rating on Merck and a price target of $100 — around 8% above the current levels.
Coca-Cola (KO)
Cramer is optimistic about Coca-Cola, but that shouldn’t come as a surprise.
After the company’s Q1 earnings report in April, Cramer said that it showed “how a seasoned management team can overcome just about any challenge you might throw at them” and that it has “long-lasting strength.”
When it comes to delivering returns to investors through thick and thin, few companies have done a better job than Coca-Cola.
Coca-Cola went public more than 100 years ago. This February, the board approved the company’s 60th consecutive annual dividend increase.
It’s not hard to see why the payout has been so reliable: The company’s iconic products are sold in more than 200 countries and territories, and even in a recession, a simple can of Coke is still affordable to most people.
The stock is also defying the ongoing market sell-off, gaining 6% year-to-date.
Wells Fargo analyst Chris Carey has an Overweight rating on Coca-Cola and a price target of $74 — 17% above where the stock sits today.
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Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
