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Cramer: Investors need a new playbook now that the Fed ended rate hikes this year

CNBC logo CNBC 3/21/2019 Tyler Clifford
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Investors need not worry that the Federal Reserve induced a market "sea change" by calling off interest rate increases this year and adjust their game plan to make money, CNBC's Jim Cramer said Thursday.

The major averages all rose higher during the session on the agency's monetary policy reversal, he said.

"This is a dramatic shift—we don't need to worry about more rate hikes—and that's why it's causing a sea change in the stock market right now because we're in a low growth environment again," the "Mad Money" host said.

Although Chairman Jerome Powell and the central bank reduced the forecast on GDP growth and inflation, there are more stocks that can perform well in low-growth rather than high-growth conditions, he added.

As a guideline, Cramer suggests picking stocks whose sales won't get knocked down by an easing economy, focusing on high-yielding dividend stocks, buying the fastest-growing names while inflation is near flat, and loading up on companies that do a lot of business overseas, including those impacted by the trade war with China, because the dollar is getting weaker.

The Fed's benchmark funds rate will remain in a range of 2.25 percent to 2.5 percent.

"I'm not saying you should swap out of the losers and buy the winners immediately," Cramer said. "But the bottom line is that you need to be in the right frame of mind for this new market for this playbook" below.

Read more from Jim Cramer and other top money experts

Buy

Amazon: Amazon is nearly invincible to growth, both domestically and globally, Cramer said.

"It's got management that knows how to deal with the lower prices that may be needed to attract consumers who may not be doing as well as last year ... [and] it has Amazon Web Services," he said.

Apple: Cramer said he doesn't like that the stock rallied so high Thursday as analysts anticipate its product reveal, but the stock is "perfect for this kind of environment. The company is a lot less economically sensitive than most people think ... [and it] gets a huge boost from a weak dollar."

Cloud stocks: Cramer name dropped Salesforce.com, ServiceNow,and Twilio, the company that powers soon-to-be-public Lyft.

"Take your pick of the cloud kings. They're all expensive as all get out here, but they're also the fastest growers and they aren't particularly economically sensitive at all," he said.

Semiconductors: Cramer said he likes Nvidia, Advanced Micro Devices, Micron Technology, and Lam Research.

The chipmakers "have long cycles and their customers are going to put in orders six months from now, which could make 2020 a good year," he said.

Pepsico: Cramer predicted that Pepsi will have good growth because of the products it has in the pipeline.

"If you want a safe growth stock with a dividend and some exposure to a weaker dollar, may I suggest you're describing Pepsico," he said. "I like the stock. I like the 3 percent yield. It's marvelous."

Johnson & Johnson: "I know a ton of people are worried about JNJ, Johnson & Johnson, over this talc situation ... I think JNJ's pipeline, that's what I'm focused on, is magnificent ... Plus, it's a fabulous weak-dollar play."

General Mills: "I also like General Mills [only on a pullback], which reported a better-than-expected quarter and sports a 4 percent yield. I think you gotta buy it on pullback..."

Don't buy

Banks: The banks still have a mound of challenges, Carmer said.

"The economy isn't strong enough to entertain big construction. The net interest margins aren't going anywhere, now that the Fed is not going to raise rates," the host said. "Bad loans should start showing up in the third quarter. It's just a suboptimal situation until their stocks give you higher yields, which means they have to go lower."

Big cyclicals: "The big cyclicals have historically been wrong in a worldwide slowdown."

Oil: "The oils are simply lame with few redeeming qualities in a low inflation environment."

Disclosure: Cramer's charity trust owns shares of Apple, Amazon, Nvidia, Salesforce.com, and Lam Research.

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