By Shawn Langlois, MarketWatch
Back in late April, CNBC’s Jim Cramer created an index of stocks he believed were positioned to benefit from the reeling pandemic-era economy, including household names like Netflix /zigman2/quotes/202353025/composite NFLX -0.13% , Johnson & Johnson /zigman2/quotes/201724570/composite JNJ -0.09% and Amazon /zigman2/quotes/210331248/composite AMZN -1.86% .
The index, which was up almost 5% as of Tuesday’s close, has lagged behind the major benchmarks amid the stock market’s big rebound. But Cramer isn’t so sure that will last.
“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 on Tuesday . “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.”
With that in mind, Cramer swapped 10 of the 100 stocks in the index for 10 new additions “that are better suited to this moment and more relevant,” he said. “I want to keep most of our defensive exposure. You don’t want to get rid of it all. You need to be protected in case something goes wrong.”
These stocks are out: Becton Dickinson /zigman2/quotes/205527610/composite BDX +0.36% , Digital Realty /zigman2/quotes/206785129/composite DLR -0.22% , Freshpet /zigman2/quotes/204676095/composite FRPT -1.08% , Inovio Pharmaceuticals /zigman2/quotes/202993817/composite INO +15.10% , Inseego /zigman2/quotes/205089483/composite INSG -3.59% , Kimberly-Clark /zigman2/quotes/201766540/composite KMB -0.15% , NextEra Energy /zigman2/quotes/200558509/composite NEE -0.10% , Owens & Minor /zigman2/quotes/204317691/composite OMI -1.18% , Roku /zigman2/quotes/205087179/composite ROKU -1.22% and Snapchat parent Snap /zigman2/quotes/205087158/composite SNAP +5.94% .
These stocks are in: DataDog /zigman2/quotes/214127379/composite DDOG +1.27% , Splunk /zigman2/quotes/203060494/composite SPLK -1.00% , Twilio /zigman2/quotes/205796518/composite TWLO -0.91% , Etsy /zigman2/quotes/202790087/composite ETSY -0.67% , Wix.com /zigman2/quotes/209382272/composite WIX +2.26% , Chegg /zigman2/quotes/205655041/composite CHGG -0.04% , Target /zigman2/quotes/207799045/composite TGT -0.99% , S&P Global /zigman2/quotes/208931849/composite SPGI +0.05% , Palo Alto Networks /zigman2/quotes/207599953/composite PANW -1.20% and Emergent /zigman2/quotes/204817890/composite EBS +4.31% .
“With those 10 changes, I’m feeling pretty better about the Cramer Covid-19 Index,” Cramer said, adding a caveat. “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.”
Watch the segment:
The broader stock market continues to show some strength this week, with the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.51% up again Wednesday after a strong showing in the prior session. The S&P 500 /zigman2/quotes/210599714/realtime SPX -1.08% and Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.86% , however, were in the red.