Last month, CNBC’s Jim Cramer revealed his hypothetical ‘Cramer Covid-19 Index’. The Mad Money presenter and one-time successful fund manager reckons we’re in a stock picker’s market. He says the coronavirus crisis has damaged some sectors and companies. So the old advice of just buying tracker funds following a market index may lead to underperformance going forward.
Cramer’s winning and losing sectors
I can see the logic. If we believe certain sectors are perhaps fatally damaged, why dilute our returns by holding them within a tracker? Even Warren Buffett ditched his holdings in airline companies recently. To quote Cramer: “There are just so many obvious winners and obvious losers. Please don’t make life difficult for yourself by owning the losers.”
He published the names of all the shares he picked for his Covid-19 Index, but most are US-listed firms. And not all UK investors will want to pick individual US stocks to hold. So let’s look at the sectors he named and identify some London-listed shares within them that could also do well from here.
I think the exercise is worth doing because, in aggregate, Cramer’s stocks have been doing well and his index appears to be rising.
Beverages
There are plenty of choices in this sector. I’d focus on Diageo, Fevertree Drinks, Stock Spirits, Britvic, Nichols, and AG Barr.
Cloud Software
This is an intriguing sector and a fertile hunting ground for investors in today’s markets. I like the look of Sage, WANdisco, IMImobile, and Beeks Financial Cloud, among others.
Consumer packaged goods
An enduring sector for always in my view. I’d look closely at Unilever, Reckitt Benkiser, PZ Cussons, Accrol, and Creightons.
By now you can see how easy it is to identify strong candidates just by focusing in on the sectors that Cramer identified for his notional index. Other sectors he mentioned include E-commerce and Financials. I’d look at firms such as Boohoo, ASOS, Rightmove, Auto Trader, and Prudential for these.
Rich pickings
He also mentioned the Video Games sector and we have several strong contenders on the London Stock Exchange, such as Codemasters and Frontier Developments. And in the Packaged Food sector, I’d look at Cranswick, Devro, and Greencore.
There are some rich pickings in the healthcare sector. Cramer has a long list of US firms under that heading and I’d consider AstraZeneca, GlaxoSmithKline, Vectura, and many others.
You can hunt down your own candidates for the rest of Cramer’s sectors. They are Home Entertainment providers and Enablers, Mega-cap Technology, Small-cap technology, REITS, Restaurant Survivors, Retail Survivors, Semiconductors, and ‘Exotics’.
One sector deserves a special mention because Cramer has labelled it Safety Stocks. And looking at his picks reveals energy and utility firms, which could perhaps be simulated on the London market with picks such as National Grid, SSE, Vodafone, and others.
Overall, I reckon Cramer’s stock-picking approach makes a lot of sense right now, and I hope this article has sparked a few ideas for you.