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Jim Cramer’s ‘Covid-19 Index’ is thrashing the market. Here’s how you can build yours

Last month, CNBC’s Jim Cramer revealed his hypothetical ‘Cramer Covid-19 Index’. The Mad Money presenter and one-time successful fund manager reckons we’re in a stock picker’s market. He says the coronavirus crisis has damaged some sectors and companies. So the old advice of just buying tracker funds following a market index may lead to underperformance going forward.

Cramer’s winning and losing sectors

I can see the logic. If we believe certain sectors are perhaps fatally damaged, why dilute our returns by holding them within a tracker? Even Warren Buffett ditched his holdings in airline companies recently. To quote Cramer: “There are just so many obvious winners and obvious losers. Please don’t make life difficult for yourself by owning the losers.”

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He published the names of all the shares he picked for his Covid-19 Index, but most are US-listed firms. And not all UK investors will want to pick individual US stocks to hold. So let’s look at the sectors he named and identify some London-listed shares within them that could also do well from here.

I think the exercise is worth doing because, in aggregate, Cramer’s stocks have been doing well and his index appears to be rising.

Beverages

There are plenty of choices in this sector. I’d focus on Diageo, Fevertree Drinks, Stock Spirits, Britvic, Nichols, and AG Barr.

Cloud Software

This is an intriguing sector and a fertile hunting ground for investors in today’s markets. I like the look of Sage, WANdisco, IMImobile, and Beeks Financial Cloud, among others.

Consumer packaged goods

An enduring sector for always in my view. I’d look closely at Unilever, Reckitt Benkiser, PZ Cussons, Accrol, and Creightons.

By now you can see how easy it is to identify strong candidates just by focusing in on the sectors that Cramer identified for his notional index. Other sectors he mentioned include E-commerce and Financials. I’d look at firms such as BoohooASOS, Rightmove, Auto Trader, and Prudential for these.

Rich pickings

He also mentioned the Video Games sector and we have several strong contenders on the London Stock Exchange, such as Codemasters and Frontier Developments. And in the Packaged Food sector, I’d look at Cranswick, Devro, and Greencore.

There are some rich pickings in the healthcare sector. Cramer has a long list of US firms under that heading and I’d consider AstraZeneca, GlaxoSmithKline, Vectura, and many others.

You can hunt down your own candidates for the rest of Cramer’s sectors. They are Home Entertainment providers and Enablers, Mega-cap Technology, Small-cap technology, REITS, Restaurant Survivors, Retail Survivors, Semiconductors, and ‘Exotics’.

One sector deserves a special mention because Cramer has labelled it Safety Stocks. And looking at his picks reveals energy and utility firms, which could perhaps be simulated on the London market with picks such as National Grid, SSE, Vodafone, and others.

Overall, I reckon Cramer’s stock-picking approach makes a lot of sense right now, and I hope this article has sparked a few ideas for you.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of and has recommended ASOS, GlaxoSmithKline, and Unilever. The Motley Fool UK owns shares of PZ Cussons. The Motley Fool UK has recommended AG Barr, Auto Trader, boohoo group, Diageo, FRONTIER DEVELOPMENTS PLC ORD 0.5P, Nichols, Prudential, Rightmove, and Sage Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.