CNBC’s Jim Kramer on Wednesday advised investors to own secular growth stocks instead of cyclical stocks and be careful to distinguish.
“The market is still interested in secular growth, which does not depend on the economic cycle and will probably not be affected by the Federal Reserve raising interest rates,” said the host of “Money Money.”
“At this point in the business cycle, almost every company wants to see it as a secular growth story. Take the skepticism with them,” he added.
Devon Energy, Deere, Tesla and Apple are examples of secular stocks that could be a great addition to an investor’s portfolio, Kramer said. He added that RH, formerly recovery hardware, is an example of a stock that is still sensitive to business cycles.
RH reported an earnings beat on Tuesday and announced a stock split for three in the spring, but Wall Street’s earnings on revenue fell short of expectations.
According to Kramer, investors can find circular stocks by observing when “large demand creates a supply deficit, which in turn leads to more production, resulting in a surplus of supply, causing the whole building to fall below its weight.”
“Although don’t cry for cyclists. You can make a fortune in these things on the way up, if you know when to jump. But if you don’t jump at the right time, it can hurt,” he said.
Sign up now Following every step of the Jim Kramer market for the CNBC Investing Club.
Disclosure: Kramers Charitable Trust owns shares in Devon Energy and Apple.