CNBC’s Jim Cramer on Tuesday updated his broad index of stocks well-positioned for the pandemic-era economy, a little more than a month after assembling the list of 100 stock picks.
Since its inception in late April, the index has posted a gain of 4.69% after pulling back almost 2% during Tuesday’s session. Those gains from April 24 compared to a 5.13% rise in the Dow Jones Industrial Average, a 5.46% advance in the S&P 500 and an 8.17% move in the Nasdaq Composite.
The major averages benefited from positive trading activity during the trading day. With the economy emerging from a monthlong lockdown, Cramer shook up his Cramer Covid-19 Index to reflect the current moment. The index reflects stock picks of companies that the market commentator sees as beneficiaries of the sudden economic downturn.
“The market’s gotten more confident that we’ll have a speedy, V-shaped recovery … and that makes the recession stocks less attractive,” the “Mad Money” host said. “But, I’ve got to tell you, I think it’s too soon to give up on the recession stocks. As much as I hope we’ll have a rapid recovery where America swiftly gets back to normal, it’s tough to bet on it.”
“That’s why I want to keep most of our defensive exposure. You don’t want to get rid of it all,” he added. “You need to be protected in case something goes wrong.”
Cramer dropped the following 10 stocks from the index, which span health care, real estate investment trust, exotics (miscellaneous), consumer packaged goods and home entertainment-oriented companies.
- Becton Dickinson, -13% from April 24
- Digital Realty, -7.79%
- Freshpet, -6.73%
- Inovio Pharmaceuticals, -0.89%
- Inseego, -14.03%
- Kimberly-Clark, -4%
- NextEra Energy, -2.25%
- Owens & Minor, 0.55%
- Roku, -13.81%
- Snap, 8.81%
“I am dropping 10 of the worst performers, replacing them with stocks that are better suited to this moment and more relevant,” Cramer said, adding that “some of these [former picks] are duplicative” of other stocks in the index.
- DataDog, 69.82% from April 24
- Splunk, 40.83%
- Twilio, 78.63%
- Etsy, 11.92%
- Wix.com, 56.12%
- Chegg, 57.33%
- Target, 6.77%
- S&P Global, 10%
- Palo Alto Networks, 19.5%
- Emergent BioSolutions, 14.61%
“With those 10 changes, I’m feeling pretty better about the Cramer Covid-19 Index,” Cramer said. “But — and this is a very big but — if the reopening goes smoothly and the economy comes roaring back, we’re going to need to abandon this whole index and swap into a totally different cohort of recovery stocks.”
“I don’t think we’re there yet, although I’m working on a separate recovery index so that we’ll be ready when it happens,” he said.