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In this article, we discuss Jim Cramer's top 10 stock picks for 2022. If you want to skip our detailed analysis of these stocks, go directly to Jim Cramer's Top 5 Stock Picks for 2022.
The beginning of 2022 has not been kind to the stock market. Major indices are down, inflation is up, and an interest rate hike is on the way. In this bleak environment, investors are increasingly turning to market experts, like journalist investor Jim Cramer, for advice on how to minimize the risk in their portfolios that have become growth-heavy in the past few years. Cramer is a former hedge fund manager and Goldman Sachs executive with an incredible career in investing. His hedge fund averaged returns of over 24% for more than a decade.
Cramer is not widely known as an advocate of restraint, but his 2022 outlook suggests that he wants investors to stay away from growth equities, at least for some months. During an appearance on CNBC in late December, Cramer said that it was prudent to focus on companies that “make stuff, that do tangible things, that innovate”. He also recommended that investors stay away from companies that “only grow sales but lose boatloads of money”.
Some of the top stock picks of Jim Cramer for 2022 include The Walt Disney Company (NYSE:DIS), Bank of America Corporation (NYSE:BAC), and The Procter & Gamble Company (NYSE:PG), among others discussed in detail below.
These stocks were picked keeping in mind the latest calls that Cramer made on these equities on his Mad Money show aired on CNBC as well as other appearances on the platform.
Data from around 900 elite hedge funds tracked by Insider Monkey was used to identify the number of hedge funds that hold stakes in each firm.
Jim Cramer's Top Stock Picks for 2022
10. Bausch Health Companies Inc. (NYSE:BHC)
Number of Hedge Fund Holders: 39
Bausch Health Companies Inc. (NYSE:BHC) is a diversified healthcare firm that markets pharmaceuticals and medical devices. Top hedge funds have turned exceedingly bullish on the stock in recent months. At the end of the third quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $3.8 billion in Bausch Health Companies Inc. (NYSE:BHC).
While discussing his stock picks for 2022 on CNBC, Cramer said that he had raised his price target on Bausch Health Companies Inc. (NYSE:BHC) for the Investing Club because he was confident that Joe Papa, the CEO of the firm, was heading in the right direction with a decision to split the company into three, reduce debt by $10 billion, and helping the firm stay the “Mercedes of eyecare” during his tenure so far.
Just like The Walt Disney Company (NYSE:DIS), Bank of America Corporation (NYSE:BAC), and The Procter & Gamble Company (NYSE:PG), Bausch Health Companies Inc. (NYSE:BHC) is one of the stocks in the limelight as investors look for stable businesses in a volatile marketplace.
“Bausch Health Companies (BHC) climbed 55% during the period. Glenview (6% owner) sent a letter to the company in early February arguing the company has not acted to unlock shareholder value and urging the company to sell its eye care business. Shortly after, activist investor Carl Icahn disclosing a 7.83% stake in the company. The company responded to the filing saying that they remain committed to splitting the business into two parts, but are open to pursuing all opportunities. The company reported strong 4Q results with better-than-expected 2021 guidance. 4Q revenue came in at $2,213M slightly ahead of consensus of $2,165M and EPS of $1.34 beat consensus of $1.12. The company guided for 2021 revenue of $8.6-8.8B coming in ahead of expectations of $8.55B with EBITDA of $3.4-3.55B ahead of $3.46B estimated. The company announced the transition of Paul Herendeen to an advisory role to be succeeded by Sam Eldessouky, previously senior vice president, controller and chief accounting officer. Finally, the company announced the sale of Amoun Pharmaceutical for $740M, which was relatively in line with estimates and should help support debt reduction targets ahead of the planned spin-off of Bausch + Lomb eye care business.”
BHC shares lost 6% over the last 12 months.
9. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 45
Honeywell International Inc. (NASDAQ:HON) is an industrial conglomerate with interests in the technology and manufacturing business. Cramer has turned bullish on the stock in recent weeks despite a broader lull around growth offerings, outlining on CNBC in early January that the shares “just ran”, an indication that the market was at the end of rotation into stocks with regards to earnings. Cramer believes that Honeywell International Inc. (NASDAQ:HON) is the last stock that attracts bids as investors rotate out of high growth names without earnings in a bear market.
Elite hedge funds recognize the long-term potential of Honeywell International Inc. (NASDAQ:HON) and have been piling into the stock. At the end of the third quarter of 2021, 45 hedge funds in the database of Insider Monkey held stakes worth $927 million in Honeywell International Inc. (NASDAQ: HON).
“The portfolio’s quality bias and valuation discipline have generated compelling returns over time with typically strong relative results in more challenging environments as it did through the first three quarters of 2020. However, that same quality bias tends to create a more challenging relative performance environment for the Strategy during periods of sharp economic acceleration, which tend to benefit stocks that are more commodity linked or of lower quality. This has been the case during the vaccine- and stimulus-driven rally experienced late last year and during the most recent quarter. Sectors that lagged in the quarter included industrials, Honeywell also lagged in the quarter after previously generating strong returns over extended periods.”
Honeywell shares are up 4% over the last 12 months.
8. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 50
Devon Energy Corporation (NYSE:DVN) is an independent oil and gas firm. It has generated lots of buzz in the hedge fund industry as a top oil play in recent weeks. Among the hedge funds being tracked by Insider Monkey, Adage Capital Management is a leading shareholder in Devon Energy Corporation (NYSE:DVN) with 7.5 million shares worth more than $219 million.
While discussing Devon Energy Corporation (NYSE:DVN) during his show in mid-January, Cramer underlined that he had turned bullish on the oil sector in general after years because oil firms had learned some “discipline” with regards to drilling and were now focusing on creating “value for shareholders” instead of “chasing profits”. He added that this newfound strategy had eliminated a cycle of “boom and busts” for the industry.
“After a rough start to the year our two biggest energy holdings – WPX Energy rebounded materially in the last six months though energy was still our biggest detractor for the year. I’ve previously written about deciding earlier this year to direct new capital towards better businesses versus adding more to the energy sector, but given the material optionality at WPX, we opted to maintain a material exposure. Recently WPX announced an all stock merger with a larger competitor – Devon Energy – which will leave the new company with plenty of cash flow at lower oil prices, less leverage, and material upside to higher commodity prices.”
DVN returned more than 200% over the last 12 months.
7. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 51
Chevron Corporation (NYSE:CVX) operates as an energy and chemicals firm. Cramer identified the company as one of his top picks for 2022 and said he felt that oil was still “undervalued” despite the fact that oil firms had newfound discipline, a reference to an earlier comment about the drilling practices of oil giants.
Chevron Corporation (NYSE:CVX) has been a favorite stock of hedge funds for the past several years due to the stability it offers to large portfolios. At the end of the third quarter of 2021, 51 hedge funds in the database of Insider Monkey held stakes worth $4.4 billion in Chevron Corporation (NYSE:CVX), up from 50 in the preceding quarter worth $4.2 billion.
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names, (including) Chevron. We are positive on the company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
CVX shares returned around 50% over the last 12 months.
6. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 62
Eli Lilly and Company (NYSE:LLY) develops and sells pharmaceutical products. Major hedge funds have been paying increased attention to the company as the market becomes more volatile and it becomes expensive to pick up shares in stable businesses. Among the funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Eli Lilly and Company (NYSE:LLY) with 1.6 million shares worth more than $376 million.
Cramer explained his bull base for Eli Lilly and Company (NYSE:LLY) during an appearance on CNBC in early January in which he lauded the progress that the company was making on drugs for the treatment of Alzheimer's and diabetes, two products that could significantly boost the earnings of Eli Lilly and Company (NYSE:LLY) in the coming months.
In addition to The Walt Disney Company (NYSE:DIS), Bank of America Corporation (NYSE:BAC), and The Procter & Gamble Company (NYSE:PG), Eli Lilly and Company (NYSE:LLY) is one of the stocks expected to shield large portfolios from risk in 2022.
In its Q1 2020 investor letter, Amana Mutual Funds Trust highlighted a few stocks and Eli Lilly and Company (NYSE:LLY) was one of them. Here is what the fund said:
“Even so, Lilly stood out as one, among a handful, of companies that registered a positive return for the first quarter. In January, Lilly reported excellent fourth quarter results, with revenue growing at a faster clip than over the first three quarters of the year. Lilly is also financially strong with debt equivalent to only two times EBITDA3 and 12% of market capitalization. Johnson & Johnson, while trailing Lilly, shares many of the same characteristics and also outperformed.”
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Disclosure. None. Jim Cramer's Top 10 Stock Picks for 2022 is originally published on Insider Monkey.