Investors who are concerned about the recent uptick in coronavirus cases in multiple states and the odds of another economic lockdown can find solace in playing the cloud stocks, CNBC’s Jim Cramer said Monday.
In the event that U.S. states take the advice of public health officials and reimpose strict social distancing guidelines, he recommends Zoom Video as a stock to get behind.
The Centers for Disease Control and Prevention on Friday warned that tough mitigation efforts, such as rules in place during the height of the global pandemic, would be needed again if Covid-19 transmissions increase “dramatically.” Coronavirus data shows that nearly two dozen states saw cases increase in the past week, while Covid-19 hospitalizations in Texas — one of the first states to ease business shutdowns and physical distancing requirements — reached multiple new highs in that same period.
Zoom Video, a videoconferencing platform, has been one of the bigger winners during the pandemic as companies scrambled to make way for employees to work from home. Since Feb. 19, when the S&P 500 topped before the coronavirus meltdown, Zoom shares are up nearly 130%. The broad market index remains down nearly 10% from that closing high.
“If we were really afraid of a second wave, the health-care stocks would have been doing much better today. I think Wall Street recognized that this virus is way too contagious to be truly contained,” Cramer said.
“We knew the reopening was risky. When those numbers started spiking, the averages plummeted last week. Remember, the market’s a prediction machine — this was already baked in.”
The comments come after a volatile day of trading on Wall Street, where the major averages all finished positive. The Dow Jones rose about 157 points, or 0.62%, to 25,763.16. The S&P 500 moved 0.83% to 3,066.59, and the Nasdaq Composite gained 1.43% to reach 9,725.
Cramer advised investors to maintain a level head and keep things in perspective when approaching the uncertain stock market.
“Don’t be dismissive of the pandemic — it’s real and it’s vicious — but also don’t be dismissive of everything our scientists are doing to beat this thing,” he said. “You’ve gotta let yourself be a pessimist and a bit of an optimist at the same time; it’s the only way to understand this moment.”
Cramer said investors should stick to a two-pronged investment strategy to give their portfolios exposure to stocks that can benefit from the ongoing economic reopening on one end and stocks that can perform in this pandemic environment. The 100 stocks on his Cramer Covid-19 Index, which rallied more than 2% on Monday, can do the trick, he said.
“If we do come up with a cure, then all these Cramer Covid stocks are going to collapse, which is why you need to have a barbell portfolio here, with some of the better recovery stocks thrown in,” Cramer said.