Financial markets have been roiled over the past week by the collapse of Silicon Valley Bank, triggering renewed worries a U.S. recession is closer than expected. And in these moments of economic uncertainty and market volatility, investors should look to buy up the stocks of companies with the highest-quality balance sheets. The Club’s Big Tech holdings — Google parent Alphabet (GOOGL), Meta Platforms (META), Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN) — check that box. Amid Wall Street’s flight to safety during Wednesday’s volatile session , all five companies solidly outperformed the S & P 500 , which lost 0.7%. Alphabet was the group’s biggest gainer Wednesday, climbing 2.3%, followed by Meta and Microsoft, which rose 1.9% and 1.8%, respectively. Amazon added 1.4%, while Apple ticked higher by 1.3%. Zoom out on this week, which has been colored by questions about the health of the U.S. financial system, and those five mega-cap tech stocks have been positive in every trading session — including so far on Thursday. Indeed, the top-four performing Club stocks week-to-date were Meta, Amazon, Alphabet and Microsoft. Apple came in ninth. META 5D mountain Meta Platforms (META) five-day performance. In some cases, company-specific headlines contributed to this strong performance. Meta on Tuesday announced it’s laying off an additional 10,000 employees , sending a message to investors the social media giant is serious about its “year of efficiency.” The stock, which has soared 66% year-to-date, closed up 7.3% that day. But in general, with a lack of clear direction on the state of the economy and the banking sector, investors have looked to park their cash in safe assets like U.S. government bonds. Classic defensive sectors in equity markets, such as utilities and consumer staples, have also been standouts because investors expect those companies’ top-line revenues to hold up relatively well in a slower economy. GOOGL 5D mountain Alphabet (GOOGL) five-day performance. Investors targeting Big Tech firms, though, may find comfort in those stocks due to their financial health. Rock-solid balance sheets matter to investors because sound financial positioning allows companies to withstand whatever economic situation may be on the horizon. A strong balance sheet essentially indicates a company has an impressive mix of assets — including cash on hand — and liabilities. The benefits of a sturdy balance sheet are manifold, especially when it comes to the cash piles Big Tech companies have accumulated. In addition to allowing companies to keep the lights on, it also enables them to invest in their businesses without needing to sell stock or raise debt. In times of economic upheaval, cash-rich companies can maintain investments in new products, technologies and innovations, while more debt-saddled firms might struggle to keep up. Bottom line The Club’s mega-cap technology holdings have compelling reasons to own them for the long term. But in moments of uncertainty like this past week, they also have the kind of balance sheets that investors covet. MSFT 5D mountain Microsoft (MSFT) five-day performance. (Jim Cramer’s Charitable Trust is long AAPL, GOOGL, META, MSFT and AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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Financial markets have been roiled over the past week by the collapse of Silicon Valley Bank, triggering renewed worries a U.S. recession is closer than expected. And in these moments of economic uncertainty and market volatility, investors should look to buy up the stocks of companies with the highest-quality balance sheets.
