CNBC’s Jim Kramer on Friday outlined an investment case for five legacy tech companies that he believes could show strong returns in 2022.
The Mad Money host said the following shares are in line with his main theme for this year, which is investing in profitable tangible goods companies: Apple, Cisco, IBM, Microsoft and Oracle.
“While most of the losing cloud software stocks are not currently available, there are many tech names that do real things and make real profits,” Kramer said, arguing that they can perform well despite the Fed’s tightening of monetary policy.
“You want boring, mature companies — the ones that are often derisively referred to as ‘old technology,’” Kramer added. “I speak to the new and to the old.”
“Even though stocks were up 34% last year … they are now back $ 10 from their highs reached earlier this week, thanks to the technology crisis. Whenever you have this opportunity to buy with Apple, you should take advantage of it, ”said Kremer.
Kramer said he believes Apple will benefit from the deferred demand that consumers can unleash. as soon as the supply chain problems subside. The “monstrous” iPhone maker’s share buyback program is even more profitable amid the Fed’s tightening of the Fed, Kramer said.
Cisco shares have rallied since late November, Kramer said, as investors began to take notice of the company’s recent income statements.
“The last two quarters have not been bad because of demand. In fact, we are seeing a surge in corporate technology spending; the problem was a supply chain crisis, ”said Kramer, who also touted the computer networking company’s shift to software and the recurring revenue streams that accompany it.
“[Cisco CEO Chuck Robbins] says things are set to change in the second half of Cisco’s fiscal year, which begins in February. I tend to believe him because he is a real shooter, ”said Kramer.
Kramer said he won’t be surprised if IBM shares sell off when the company announces earnings in a couple of weeks, but he holds a favorable view of the longer term.
“I still like IBM for two very simple reasons: it’s incredibly cheap, it sells 12x the price, and even after Kindryl retained its dividend prior to the split, which means that the stock return was 4.9%, ”Kramer said.
He also said that he supports “CEO Arvind Krishna’s mission of unleashing value at all costs.”
“This stock is up about 51% last year, but with the sale in recent weeks, you have a very good buying opportunity here. The stock fell 10% from late November highs. This usually doesn’t happen. ” happen, ”said Kremer. “Microsoft is exactly the kind of tangible technical story that needs to kick in when the Fed starts to slow down to stop the economy.”
Even after the breakout in 2021, Kramer said he still sees Oracle stock as cheap. The last quarter for the enterprise software giant has been fantastic, Cramer said. However, the stock lost the profit it made after the report, in part due to Wall Street’s backlash on Oracle plans to buy electronic health record company Cerner.
“This is yet another time that the recent pullback allowed you to enter at an astonishing price,” Kramer said.
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Disclosure: The Cramer Charitable Foundation owns shares in Microsoft, Apple and Cisco.