Energy
Thursday, August 17th, 2023 12:10 pm EDT
Here’s a rapid-fire update on all 36 stocks in Jim Cramer’s Charitable Trust, the portfolio we use for the CNBC Investing Club. Jim ran through each stock during our August Monthly Meeting on Thursday. Apple (AAPL) : Apple didn’t have a perfect fiscal third quarter at the start of the month, but it didn’t need be . The launch of the next-generation iPhone 15 is on the horizon, while the company’s Vision Pro mixed-reality headset rollout is on track for early next year — though that may take some to gain traction among consumers. Apple remains an “own it, don’t trade it” stock, Jim said. Advanced Micro Devices (AMD) : The artificial-intelligence chip market is big enough for both AMD and fellow Club holding Nvidia, even if Nvidia is likely to maintain its dominant position . But Jim said it’s hard to know where AMD goes next, calling the stock a real quandary. Amazon (AMZN) : A lot is going right for Amazon in this moment, with AI providing a tailwind for its profitable cloud-computing division, along with growth at its high-margin advertising business and solid development at its membership-only Amazon Prime operation. We’re not worried about the Federal Trade Commission’s actions targeting the company . Bausch Health (BHC) : The Canadian specialty pharmaceutical firm’s legal battles render the stock basically an all-or-nothing situation. Beyond the lingering Xifaxan patent fight , some investors have also sued to block the spin-off of Bausch + Lomb (BLCO). In order to create value, the troubled drugmaker needs to be able to sell more of its stake in the eye-care company, which began to trade on its own in May 2022 . Caterpillar (CAT): Caterpillar has proved the bearish contingent wrong , rewarding us for our patience and belief in this industrial powerhouse. At this point, though, it’s prudent to be a bit careful until we see more federal infrastructure money — at the heart of our investment thesis — unleashed. We took some profits earlier this month. Costco (COST): Costco’s value-oriented ethos continues to appeal to bargain-seeking consumers, while its membership-only model is a boon for profitability. We also think a membership-rate hike is long overdue. Salesforce (CRM): Jim said he’s waiting for the company’s annual mega-conference, known as Dreamforce, in September, where he’ll get a chance to speak with Salesforce management and enterprise software firm’s customers. The stock has been a dog over the past month, down about 10%. Coterra Energy (CTRA): Fundamentally, the Coterra story looks solid, rooted in its mix of quality natural-gas-and-oil assets. But with the stock up around 20% since the start of June and given our 400-share purchase earlier this month , we’re not in a hurry to add any more. DuPont de Nemours (DD): Our second-newest stock in the portfolio, Dupont is a stock worth buying at current levels, Jim said. The special chemical maker’s mosaic of businesses is optimal for this point in the economic cycle. Plus, its ability to buy back stock checks another important box. Danaher (DHR): Danaher, which has suffered through a disappointing three-quarter stretch, is another stock that Jim said can be bought here on the belief that it may have just issued its last dismal earnings report . Among the catalysts working in its favor are a de-risked China business and a potential wave of initial public offerings for its biotechnology customers. Walt Disney (DIS) : There’s more heavy lifting to be done before this iconic American company is back on sturdy footing. Its linear television challenges and the fact it still needs to buy the rest of Hulu from Comcast (CMSCA) are two big hurdles that must be cleared. Comcast is the parent company of NBCUniversal and CNBC. Estee Lauder (EL): The reversal of fortunes for Estee Lauder has been stunning and frustrating this year. The maker of prestige beauty products reports earnings Friday, but Jim said it’s too difficult to know whether that will be the last bad quarter. Estee Lauder needs a strong economic recovery in China to rebound. Emerson Electric (EMR): Consider us possible sellers if Emerson Electric shares break above $100 each. On Thursday, they traded around just below $97 apiece, within spitting distance of its 52-week high of $99.65 reached in January. The stock has fortunately been a strong performer over the past three months, but Jim’s trust in management after the National Instruments saga hasn’t been fully restored. Ford Motor (F): The automaker is down more than 15% over the past month, and there could further room to fall amid concerns about a potential United Auto Workers strike . Rival Telsa ‘s (TSLA) willingness to be aggressive on the price of its EVs also isn’t helping Ford. Foot Locker (FL): We need to see the sneaker retailer’s upcoming quarterly results, scheduled to be released Wednesday, before we can assess whether to buy more of this languishing stock. The numbers and accompanying conference call with analysts should shed light on the state of CEO Mary Dillon’s turnaround efforts . GE HealthCare Technologies (GEHC): Jim urged investors to buy shares of this medical-technology firm. We did just that last week , adding 100 more shares to give the stock a roughly 2% weighting in the Club’s portfolio. He said Wall Street and the rest of the investment community are underestimating the company’s opportunity to benefit from the rollout of new Alzheimer’s drugs. Alphabet (GOOGL): Of all the Big Tech firms, Google’s parent company may be the most unsung, Jim said. The company is entering its first NFL season owning the Sunday Ticket package, which Jim said could prove to be another reason to own the stock. Halliburton (HAL): Given we just added a new stock to the portfolio, Jim said Halliburton may be the stock we look to cut ties with. He said if oil prices were to fall back toward the $70-per-barrel range — West Texas Intermediate crude was trading around $80 a barrel Thursday afternoon — shares of the oil-services firm could get clobbered. Honeywell International (HON): Our decision to scoop up 25 shares of Honeywell on Tuesday is rooted in view that the market is overlooking this industrial giant’s high-quality aerospace business. Armed with a long-term perspective, the stock’s roughly 10% drop since late July presented an opportunity to boost our position. Humana (HUM): We bought into the teeth of Humana’s June sell-off, and fortunately the situation has improved since then, as its second-quart results showed . But, at this point, Jim said Humana may become a candidate for sale if the stock trades back above $500. It’s around $490 per share Thursday. Humana’s next quarterly results will likely add clarity on our path forward. Linde (LIN): Linde has been a terrific investment, and our expectation is that it remains that way given the industrial-gas giant’s exposure to semiconductor manufacturing, green hydrogen and health care. Eli Lilly (LLY): There’s no reason to sell this pharmaceuticals firm yet, Jim said. Its diabetes drug, Mounjaro , may soon be approved for weight-loss use, while Jim said its Alzheimer’s drug looks to be the best there is. Despite Lilly’s impressive recent performance, there’s likely still room for upside. Meta Platforms (META): The Instagram and Facebook parent’s advertising prowess is practically unmatched. Our concern is that CEO Mark Zuckerberg’s aggressive spending on the metaverse, through its Reality Labs division, has not yet resulted in any financial benefits. Apple’s Vision Pro headset makes Meta’s Quest devices look amateurish, Jim said. Still, the stock is attractively valued, at around 19 times forward earnings, and the company maintains strong earnings power. Morgan Stanley (MS): The bank’s stock looks cheap, at less than 13 times forward earnings, but the issue is whether that profit outlook can be trusted, given the continued uncertainty that faces the banking sector. Plus, venerable CEO James Gorman will soon retire. Taken together, it’s hard to pound the table on MS here. Microsoft (MSFT): We bought into Microsoft’s post-earnings weakness late last month because the tech giant’s fundamentals offer plenty to like. The Street’s sour reaction to the print may be more about the company’s messaging than its actual business outlook. On the next decline for tech stocks, Jim said Microsoft will likely turn into a table-pounding situation. Nvidia (NVDA): Sell-side research analysts have grown even more bullish ahead of the AI chipmaker’s upcoming earnings report Wednesday. But Jim said he believes the quarter is simply too hard to trade around, reiterating his “own it, don’t trade it” perspective. Oracle (ORCL): Our newest holding Club is a buy here, Jim said. The computer-technology firm, which joined our portfolio Tuesday, is an underrated way to play growing AI adoption. And Oracle is trading at a fairly reasonable price, around 20.5 times forward earnings. Palo Alto Networks (PANW): Palo Alto is set to report earnings after the close Friday, which is usually viewed as an ominous sign on Wall Street. But we’re willing to give CEO Nikesh Arora the benefit of the doubt. The long-term outlook for cybersecurity is still incredibly favorable, and Palo Alto is a leader in the industry. Procter & Gamble (PG): After closing at roughly $157 per share Friday, P & G has started to trend lower this week. Jim said he thinks the stock is in a no-man’s land of sorts. It’s not exactly high enough to recommend trimming, as we did in July , but also not low enough to step in and add to our position. The lesson with P & G is that, sometimes, there’s nothing to do but hold a stock, Jim said. Pioneer Natural Resources (PXD): Similar to Coterra, we’re comfortable with our current Pioneer position after a nice move higher for the stock. Its most recent quarterly results suggested the energy firm will be able to produce more oil at lower costs going forward, a great one-two combo. Starbucks (SBUX): Despite wishing the coffee chain’s latest quarter was a little stronger , we’re still believers in the company’s long-term positioning, especially in China. Yes, the world’s No. 2 economy is in a rough patch right now, but the opportunity ahead for Starbucks in the country still looks promising. Constellation Brands (STZ): Activist investor Elliott Management’s involvement with the beer-and-spirits producer is a good thing for all shareholders . The recent weakness in the stock isn’t ideal, but we’re willing to own it as we await any Elliott-induced changes that are likely to create more value. Stanley Black & Decker (SWK): The maker of DeWalt and Craftsman tools is one of the best bargains in our portfolio, Jim said. It was confusing to see the stock fall more than 1% on both Tuesday and Wednesday, Jim said, given tools were one of the six merchandise departments that Home Depot (HD) highlighted as posting positive comparable sales in its second quarter . With SWK trading below our cost basis, Jim said he’s tempted to buy more. TJX Companies (TJX): It’s never been as good a time to be an off-price retailer, and TJX is the best-run company in the space. On Wednesday, the operator of stores like T.J. Maxx, Home Goods and Marshalls raised its full-year guidance alongside strong fiscal second-quarter results. Our new price target is $100 per share. Wells Fargo (WFC): As much as we like Wells Fargo’s story under CEO Charlie Scharf — controlling costs, impressive technology improvements and a big-time stock-buyback program — the bank’s stock faces similar industry headwinds to Morgan Stanley. That makes it hard to recommend buying it here. Wynn Resorts (WYNN): The casino operator’s business is doing well across all regions, but its business in the all-important Chinese special administrative region of Macao isn’t quite strong enough to make us buyers of the stock at this level. If shares were to fall below the $90-per-share level — nearly $5 below where its trading Thursday — then the stock could become too cheap to ignore. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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.
Here’s a rapid-fire update on all 36 stocks in Jim Cramer’s Charitable Trust, the portfolio we use for the CNBC Investing Club. Jim ran through each stock during our August Monthly Meeting on Thursday.
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