Many Covid shares will fail to maintain progress after the pandemic

CNBC’s Jim Cramer announced Tuesday that market participants are beginning to determine the pandemic-winning stocks that will hold their shape in a post-pandemic world.

With the advent of vaccines, forward-thinking investors are slowly focusing on re-opening games of stocks that benefit from a stay-home environment.

Cramer said it is now time to separate the sustainable Covid-19 winners from the unsustainable ones after many stocks made big gains in 2020.

“Once we have this vaccination program under control, the sustainable stocks should continue to rise, but the unsustainable ones will no longer be available at the moment,” said the Mad Money host, adding that “they will have to be cut if they are not sold until Covid is hit. “

The comments come after stocks reclaimed some of the losses they saw in the first trading session of the new year, when key averages all fell more than 1%.

The blue-chip Dow Jones index rose more than 167 points one day after falling 382 points to close at 30,391.60, an increase of 0.55%. The S&P 500 rose 0.71% to 3,726.86. The Nasdaq Composite was up almost 1% to close at 12,818.96.

After the coronavirus pandemic plunged global markets into bear markets and economies into recession nearly a year ago, tech and other companies in the US that benefited from an unexpected move to remote work and schooling made some of the biggest gains last year . This year’s pandemic investments have been largely driven by Zoom, Peloton, Amazon, and other companies driving digital transformation.

As governments around the world begin distributing coronavirus vaccines in hopes of halting the deadly Covid-19 outbreak, Cramer reiterated that investors should focus on companies that are tailored to high-performing long-term themes.

These topics include e-commerce, travel and leisure, digitization, cybersecurity, 5G, relationships with China, wealth management, remote working, healthcare and large retailers benefiting from the economic spending.

Last year’s winners had some spectacular rallies because people believe their strength is sustainable in a post-Covid world, Cramer said.

“I think we’re giving too many companies the benefit of the sustainable doubt here. Many of these steps are unsustainable,” he added.

The host commented on a handful of companies. In the “Sustainable” column, it included DocuSign, PayPal, and Johnson & Johnson. Unsustainable winners include Peloton, Kimberly-Clark, Coca-Cola, Moderna, Pfizer, and Square.

Cramer questioned Peloton’s $ 43.4 billion market valuation. The stock rose 434% in 2020.

“While Peloton has a great product,” he said, “you’d better believe they’ll get a hit when it’s safe for people to get back to the gym.”

Kimberly-Clark and Coca-Cola are household names and dependable defensive stocks. However, Cramer worries about their viability when the world puts the pandemic in the rearview mirror.

“I don’t expect Kimberly-Clark or Coca-Cola stocks to be sustainable investments in the immediate aftermath of taking Covid,” he said. “Once the economy recovers, Wall Street will have no more interest in these slow and steady producers.”

Square was another triple digit producer last year, rising nearly 248% to $ 217.64 to close the year. While the company’s payment systems are critical to a digital money world, Cramer fears the company faces fierce competition.

“Square is in a very crowded business and while they’re … great at what they do, they don’t have a real moat,” said Cramer. “I think it’s only a matter of time before banks or other fintechs find out their advantage at the point of sale and then duplicate it.”

Disclosure: Cramer’s charitable foundation owns shares in Amazon and Johnson & Johnson.

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