Jim Cramer says he likes these 3 financial stocks for 2023

CNBC’s Jim Cramer on Tuesday named three financial stocks he believes are worth buying.

Stocks closed higher on Tuesday, snapping a four-day losing streak that had been driven in part by Wall Street’s fears that the Federal Reserve’s interest rate increases could tip the economy into a recession next year. 

But while investors continue to worry about a potential economic downturn, Cramer reminded them that that scenario is still avoidable.

“If you think the Fed will stop bringing the pain at some point in 2023, then … these names could become tremendous performers,” Cramer said.

Here are his picks:

Wells Fargo

Cramer called the stock a great “turnaround story” that could roar higher next year if the economy doesn’t tip into a severe recession. He added that he believes the company’s performance will fare better once it pays off a $3.7 billion settlement with the Consumer Financial Protection Bureau over past customer banking practices, as well as any related legal fees.

Morgan Stanley

The company’s yearslong pivot into the asset management business will pay off in the long term, Cramer predicted. While its asset management business does take a hit when the stock market goes down, since lower stock prices mean lower assets, it’s still steadier than any business related to capital markets, he added.

S&P Global

Cramer said the company has struggled this year because its biggest business involves rating bonds, and bond issuance took a hit this year due to the Fed’s interest rate hikes and ensuing market volatility. However, its stock could stage a major comeback if the Fed stops tightening the economy in 2023, he said.

Disclaimer: Cramer’s Charitable Trust owns shares of Wells Fargo and Morgan Stanley.