?? Jim Cramer expects high returns for ‘old tech’ stocks
?? Focus on companies that produce material goods
?? Strong performance despite Fed & Co.
Speaking to CNBC, Jim Cramer, host of “Mad Money,” recently outlined five tech giants that he thinks will perform strongly and deliver strong returns in 2022 – even if the US Federal Reserve tightens monetary policy.
“While most of the money-losing cloud-based software stocks are now off-limits, there are many tech names that are making real things and generating real profits,” Cramer explained to CNBC. So he has his eye on companies that produce material goods in particular. “What you want are boring, mature companies – the kind that are often derisively referred to as ??old tech??. I say: out with the new, in with the old.”
IBM: “Create value at any price”
Cramer sees IBM as one of the five “old tech” companies. On the New York Stock Exchange (NYSE), shares in the IT and consulting company rose by around 11 percent in 2021. “I still like IBM for two very simple reasons: the stock is incredibly cheap, it’s selling for 12 times earnings, and even after the Kindryl spin-off, they’ve maintained their pre-spin-off dividend, which means the stock has a 4.9 percent yield,” CNBC quoted Cramer as saying. He also supports CEO Arvind Krishna’s mission to “create value at all costs”.
Buying opportunity at Apple
In addition to IBM, Cramer’s choice falls on Apple. The share, which is listed on the NASDAQ, rose by around 34 percent in the past year. As soon as the delivery problems subside, demand should increase again and the manufacturer of iPhone, MacBook & Co. will benefit. “Despite a 34 percent gain in the last year, the stock has fallen $10 from its peak this week due to the tech industry meltdown. Whenever a buying opportunity like Apple’s presents itself, you have to seize it,” Cramer said in the first week of January. Another factor that speaks for Apple is the announced “Monster” share buyback program – especially in view of a possibly tighter monetary policy from the Fed, according to the “Mad Money” moderator.
Get “amazing price” entry with Oracle
Jim Cramer also thinks the shares of the US software and hardware manufacturer Oracle are still cheap – even after the stocks broke out last year. They ended up gaining nearly 35 percent on the NYSE in 2021. Most recently, however, they had to accept a setback again, because investors had reacted little to the news that Oracle is planning to take over Cerner, a company for electronic medical records. “This is another value where the recent setback is an amazing entry point,” Cramer told CNBC.
Strong development at Cisco
Cisco, a US company from the telecommunications industry, is also on Cramer’s list. The stock rose more than 41 percent last year on the NASDAQ. The expert emphasizes in particular the entry into the software sector and the associated recurring income. Since the end of November 2021, Cisco shares have also been developing strongly again. “The last two quarters weren’t bad because of demand. The problem was the crisis in the supply chain,” explained Cramer. Cisco CEO Chuck Robbins is also more optimistic about the future – according to CNBC, business should “take a turn for the better” in the second half of the fiscal year, which begins in February.
Good buying opportunity at Microsoft
Of course, Microsoft should not be missing from Cramer’s list of recommendations, whose shares on the NASDAQ have increased rapidly in the recently ended year. “This stock is up 51 percent over the last year, but thanks to the sell-off over the past few weeks, this presents a very good buying opportunity. The stock is down 10 percent from its late November highs. That doesn’t usually happen. Microsoft is exactly that.” Kind of tangible tech story that should work once the Fed starts slamming on the brakes to stop the economy,” Cramer told CNBC.
The new year will show whether Jim Cramer is right in his recommendation for “old tech” stocks.
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