(To sign up for the CNBC Investing Club with Jim Cramer, subscribe here.)
CNBC's Jim Cramer thinks investors next year need to buy companies that actually make money so they can see strong returns in their portfolios.
"I believe next year is the year that you want to own companies that make stuff, that do tangible things, that innovate," Cramer said Thursday. "We do not want companies that only grow sales but lose boatloads of money and pay themselves richly in cash and, more importantly stock, while we're left holding the bag."
Cramer, who shared these thoughts during a special live event "CNBC Investing Club: Jim Cramer's Game Plan for 2022," also advised investors to avoid what he called "Silicon Valley gibberish."
Cramer noted that fast-growing companies that didn't make money saw their shares jump for much of 2021, but "once we recognize that inflation wasn't 'transitory' … and couldn't be tamped down without raising rates, it's been all bad for those companies."
The broader market has rallied in 2021, driven in part by supportive monetary and fiscal policies as well as a recovery in the global economy. The S&P 500 is up about 25% year to date.
However, the Federal Reserve is widely expected to speed up the rollback of its easy monetary policies and start raising rates next year.
Cramer said the Fed has no choice but to raise interest rates, given the inflationary pressures seen throughout the economy. He noted that he'd like to see the Fed raise rates incrementally.
Because of this, investors should keeps "profits" on their mind at all times next year.
Cramer's stock picks
Cramer also shared some of his preferred stocks heading into the new year.
He said Eli Lilly is a buy at current levels, given the positive data coming from the company's Alzheimer's drug. "This one works, it rolls back plaque," Cramer said.
Cramer also highlighted AbbVie, saying the stock is undervalued even after its recent run. Over the past three months, the stock is up 16%.
Cramer pointed to Disney as well as a stock to watch. In fact, he announced his team would be adding 75 shares of the media giant to the Charitable Trust portfolio following Thursday's event.
"When you have an iconic franchise like Disney and you can buy it 50 points below where it's been, I say you start buying some," Cramer said.
We'd love your feedback on the CNBC Investing Club event. Please fill out this survey here.
The CNBC Investing Club is now the official home to my Charitable Trust. It's the place where you can see every move we make for the portfolio and get my market insight before anyone else. The Charitable Trust and my writings are no longer affiliated with Action Alerts Plus in any way.
As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Typically, Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If the trade alert is sent pre-market, Jim waits 5 minutes after the market opens before executing the trade. If the trade alert is issued with less than 45 minutes in the trading day, Jim executes the trade 5 minutes before the market closes. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. See here for the investing disclaimer.
(Jim Cramer's Charitable Trust is long LLY, DIS, ABBV.)