CNBC’s Jim Cramer on Monday offered investors two stocks they should consider adding to their portfolios.
Stocks in the materials sector tend to be highly cyclical, meaning they could get hammered if the Federal Reserve’s interest rate hikes tip the economy into a recession, he explained.
And while it’s far from the best-performing sector in the S&P 500, “even the weakest of these groups have some winners that managed to buck the overall trend and it’s important to figure out if they can keep doing what they did [this year] in 2023,” Cramer said.
Here are his thoughts on his two stock picks:
Cramer recommended that investors buy the seeds and agricultural chemical company stock on its next pullback. He reasons that strong crop prices this year have left farmers flush with cash and more likely to invest in efficient farming.
“Plus, even though the stock’s up 23% for the year, it still sells for less than 19 times next year’s earnings estimates — far from expensive,” he said.
Calling Nucor the “best steelmaker in America,” he said that he’s certain its stock will have an up year in 2023 after it flexed its ability to continue posting solid earnings results despite the Federal Reserve’s tightening. The company will also be a huge beneficiary of the over $1 trillion bipartisan infrastructure bill, Cramer predicted. Shares of Nucor are up over 15% year to date.
“Remember, a year ago the analysts thought Nucor could only make $16 in 2022 and they ended up trouncing those estimates. I wouldn’t be surprised if they put on a repeat performance,” he said.