Jim Cramer: 2022 is the year to invest in companies that actually make money — and these 3 stocks fit the bill
Mr. Mad Money isn’t known for his restraint, but even he says investors need to tame their hunger for growth in 2022.
“We do not want companies that only grow sales but lose boatloads of money,” Jim Cramer said during an episode of CNBC Investing Club in December.
While many rapidly growing, unprofitable companies saw their share prices rise for much of last year, Cramer says it’s been “all bad” for them more recently as appetites for volatile growth stocks dwindled in the final months of 2021.
“I believe [2022] is the year that you want to own companies that make stuff, that do tangible things, that innovate,” Cramer says.
He points to three companies that do just that: create unique products consumers are happy to pay for. Here’s a look at each — plus one more unorthodox way to invest in something tangible this year.
Eli Lilly (LLY)
While the sale of COVID antibodies helped pharma giant Eli Lilly generate a projected $28 billion in sales last year, the company is also making what appears to be excellent progress with its treatment for type 2 diabetes and its experimental Alzheimer’s drug, donanemab.
In June, the Food and Drug Administration designated donanemab a “breakthrough therapy” based on preliminary clinical evidence. That means the FDA will expedite the drug’s review, and a decision is expected in the second half of 2022.
“This one works,” Cramer says.
The World Health Organization estimates that more than 55 million people currently suffer from Alzheimer’s. A workable treatment for the disease would be revolutionary.
Yet a bet on Eli Lilly is by no means a speculative play based on unapproved drugs. The company’s stock is up more than 250% in the last five years — that would have been a very lucrative pickup, especially if you invested for free.
AbbVie (ABBV)
This U.S. biopharmaceutical company has been soaring in the last few months. Since Oct. 27, the company’s stock price has increased almost 25%.
Like Eli Lilly, AbbVie is having success with one of its key drugs, an arthritis treatment known as Rinvoq. The FDA recently approved Rinvoq for use in adults, a development Cramer feels could help AbbVie exceed earning expectations in 2023 and increase investor demand this year.
“We think the stock goes higher in 2022,” he told the CNBC Investing Club in December.
AbbVie’s Q3 earnings report was an exciting one. With net revenue topping $14.3 billion, the company announced it would increase its 2022 quarterly dividend by 8.5% to $1.41 per share.
AbbVie makes for an intriguing defensive play in uncertain times. Health care and pharma are commonly considered both inflation- and recession-proof.
The Walt Disney Company (DIS)
Disney shares have fallen more than 10% in the last six months, following weak earnings reports and renewed fears around COVID-19 affecting theme park attendance.
The company brought in over $18.5 billion in revenue in the fourth quarter of 2021, but diluted earnings still only worked out to $0.09 per share.
Disney’s parks remain one-of-a-kind experiences known for giving visitors lifelong memories, so some of Disney’s struggles may disappear alongside the pandemic.
In the meantime, Disney’s foray into streaming should continue bolstering its bottom line. Just two years of Disney+ has already netted the company 179 million subscribers.
“When you have an iconic franchise like Disney and you can buy it 50 points below where it’s been, I say you start buying some,” Cramer said in December.
That said, if you’d rather not gamble on individual stocks amid today’s uncertainty, you can always create a diversified portfolio of blue-chip stocks just by using your “spare change.”
An exciting tangible asset
Cramer is putting his faith in companies that “do tangible things,” but if you want to put your money in something truly tangible, consider investing in real assets to diversify your portfolio.
One type of real asset that is becoming increasingly popular with investors is fine art, which has outperformed the S&P 500 almost every year since 1995.
Contemporary artwork has bested the index by a commanding 174% over the past 25 years, the Citi Global Art Market chart shows, while remaining independent from broad stock market trends.
Investing in art used to be a hobby for the rich, but new platforms are making it easier and more accessible than ever for the average investor.
You can now purchase shares in modern masterpieces by iconic artists like Monet, Warhol and even Banksy without having to spend millions of dollars.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
