CNBC’s Jim Cramer said Monday that investors should think about buying some industrial and energy names if the Federal Reserve keeps rates unchanged at this week’s meeting.
“If you think, as I do, that the Fed will keep the fires going, you’ll want to own a steel stock or a heavy machinery play or a chemical company,” Cramer said on “Mad Money.” “I even sanction some energy stocks because many of these companies have changed their suboptimal ways.”
Cramer recommended investors take a look at stocks like chemical-maker Dow Inc, heavy machinery company Caterpillar and Cleveland-Cliffs, the iron ore and steel products producer whose shares cratered 9% Monday. Dow Inc and Caterpillar also fell slightly on Monday. He also pointed to energy stocks Chevron, Exxon Mobil and Pioneer Natural Resources as potential buys for investors.
“These are the kind of companies that thrive when economies around the world are growing, and that’s exactly what I expect,” Cramer said.
The Fed is slated to start its two-day policy meeting on Tuesday. The central bank is not expected to move interest rates. However, investors will be looking for clues on whether the Fed has changed its stance on U.S. inflation. The meeting is set to wrap up on Wednesday.
Cramer’s comments came after gains in growth and technology names carried the Nasdaq Composite to a fresh record close. The S&P 500 staged a late-day rally to also close at an all-time high. The Dow Jones Industrial Average lagged, closing slightly lower.
The moves Monday in growth stocks — such as social media giant Facebook, cloud messaging platform Twilio, cybersecurity provider CrowdStrike and the e-commerce site Etsy — represented a belief the economy could be cooling down or the Fed could hike interest rates to keep the economy from overheating, Cramer said.
CrowdStrike shares rose about 1%, while Facebook advanced 1.7%. Etsy moved 2.7% higher, and Twilio climbed 3%.
“Until we see … the whites of the [Fed’s] eyes on Wednesday, you can expect the action to look like today, where we had lots of traffic in the junior and senior growth aisles, with shoppers fleeing from the messy industrial aisles and bank stock aisles,” he said.
Disclosure: Cramer’s charitable trust owns shares of Facebook.