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Jim Cramer dismisses recession fears and names sectors poised to soar after Fed meeting

CNBC’s Jim Cramer said the Federal Reserve’s decision to hold rates steady is a win for the bulls and is a sign the tightening cycle is coming to an end. With inflation easing and the potential for rate cuts next year, Cramer said the economy has managed a soft landing and more sectors are ready to soar.

“Sure, the easy money has been made in a couple of sectors — mostly tech — but now it’s time for a bunch of other sectors to shine, the economically sensitive ones that were supposed to be crushed by an inevitable recession,” Cramer said. “These stocks aren’t liked. May I suggest you cotton to them because the plane has landed, our seatbelts are unbuckled, we’re going down the gangway, calling an Uber and getting the heck out of the airport.”

The Fed held its key interest rate steady for the third straight time, and committee members indicated there could be at least three rate cuts in 2024.

Some on Wall Street worry this Fed action suggests there’s a recession on the horizon, but Cramer said it would be wise to ignore this outlook, adding that a strong labor report on Friday indicates the contrary. To Cramer, potential rate cuts would mean “smooth sailing” for stocks, with investors becoming less interested in bonds.

Although the market has been up for weeks, Cramer said there’s still money to be made in cyclical stocks and sectors that benefit from lower interest rates such as homebuilders, autos and financials. Cramer suggested buying financials that have hit lows recently, including Bank of America, JPMorgan Chase and even regional banks that suffered after the banking crisis in March. He also named Caterpillar, Stanley Black & Decker, Ford and General Motors.

“Not only is the Fed no longer our enemy, it’s much more likely to become our pal, assuming the economy stays on its current, slower course,” Cramer said. “This is the about-face that the bulls were waiting for.”

The recession is not coming, says Jim Cramer

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Caterpillar and Stanley Black & Decker.

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December 13, 2023

Here’s a rapid-fire update on all 35 stocks in the Club’s portfolio, including a new buy

Jim Cramer ran through all 35 Club stocks during our September Monthly Meeting on Thursday.

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September 21, 2023

CNBC Daily Open: Don’t worry about August’s hotter-than-expected CPI

Gasoline prices for full serve and self serve are displayed at the Union 76 gas station ahead of the Labor Day weekend on August 28, 2023 in Beverly Hills, California.

Mario Tama | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Biggest monthly jump this year
The U.S. consumer price index for August rose 3.7% from a year ago and a seasonally adjusted 0.6% for the month, mostly in line with the expected 3.6% and 0.6%, respectively. Though expected, it’s still the biggest month-on-month increase in prices this year. Energy prices, which soared on the month, were mostly to blame. Core inflation, which excludes food and energy prices, was up 4.3% on the year and 0.3% on the month.

Optimistic markets
U.S. markets were mixed Wednesday, with the Dow Jones Industrial Average the only major index to fall. Asia-Pacific stocks mostly rose Thursday. Japan’s Nikkei 225 climbed 1.47% even as shares of Softbank slipped slightly. Australia’s S&P/ASX 200 added around 0.55% as data showed unemployment rate in the country holding steady at 3.7% in August.

The risks of shadow banks in China
The difficulties faced by China’s real estate sector recently have highlighted, once again, the risks of shadow banking — a term that refers to financial services offered outside the highly regulated banking system. Chinese developers “were able to borrow liberally from shadow banks,” a researcher said, which pushed up land prices and housing costs. That contributed to the developers’ huge debt today.

Taiwan is ‘not for sale’
At the All-In Summit, a conference on technology and markets, Elon Musk commented that China probably views Taiwan as “analogous to Hawaii or something like that, like an integral part of China that is arbitrarily not part of China.” It drew a swift rebuke from Taiwan’s Ministry of Foreign Affairs, which said Taiwan is “not part of the PRC and certainly not for sale!”

[PRO] An Arm and a leg
Arm is pricing its initial public offering at $51 per share, the top of its expected price range. That values the company at over $54 billion, giving it a price-to-earnings multiple of about 104. It’s a lofty multiple, comparable to Nvidia’s 110 for the previous 12 months. Read what four analysts have to say about the risks and benefits of buying Arm shares.

The bottom line

At first glance, August’s CPI report seems bad news. The month-over-month jump in prices is the highest in a year. And even core inflation came in hotter than expected. But look more closely and you’ll find things aren’t as terrifying as they seem.

The headline number was pushed up by rising oil prices, which have been steadily increasing in recent weeks, as we’ve talked about. Gasoline prices soared 10.6% in August, the largest contributor to inflation last month, according to the U.S. Bureau of Labor Statistics.

But it’s likely gasoline prices will fall after a month or two, according to Andrew Hunter, deputy chief U.S. economist at Capital Economics. And gasoline prices have actually retreated 3.3% from a year ago, suggesting that they’re still on a downward trend in the long run.

Excluding volatile energy prices, monthly core inflation was up 0.3% against the expected 0.2%. Here, shelter costs were the main culprit for the hotter-than-expected increase. “Housing continues to contribute an outsized share to the inflation measures,” said Lisa Sturtevant, chief economist at Bright MLS.

But, Sturtevant added, “rent growth has slowed considerably and median rents nationally fell year-over-year in August.” That slowdown in prices will show up in future reports, meaning that August’s core CPI numbers is just “a little bump in the road,” as Kayla Bruun, senior economist at Morning Consult, put it.

“It doesn’t mean it’s turning around and going in the other direction,” Bruun said. “Overall, most of the pieces are headed in the right direction.” Indeed, the annual measure of core CPI still dropped from 4.7% in July to 4.3% in August.

Markets took the numbers in their stride. The Dow was the only major index to fall, losing 0.2% as shares of 3M and Caterpillar sank. The S&P 500 added 0.12% and the Nasdaq Composite rose 0.29%, helped by gains in Tesla and Amazon. And traders are still betting the Federal Reserve won’t raise rates next week, according to the CME FedWatch Tool.

Markets can act in irrational ways sometimes. But sometimes, the crowd psychology of markets manifests as collective wisdom.

— CNBC’s Jeff Cox and Greg Iacurci contributed to this report

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September 13, 2023

CNBC Daily Open: August’s CPI report isn’t as bad as it seems

A view of a gas station as gas prices are at the highest level from last year in Virginia, on August 16, 2023.

Celal Gunes | Anadolu Agency | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Biggest monthly jump this year
The U.S. consumer price index for August rose 3.7% from a year ago and a seasonally adjusted 0.6% for the month, mostly in line with the expected 3.6% and 0.6%, respectively. Though expected, it’s still the biggest month-on-month increase in prices this year. Energy prices, which soared on the month, were mostly to blame. Core inflation, which excludes food and energy prices, was up 4.3% on the year and 0.3% on the month.

Markets shrugged
U.S. markets were mixed Wednesday, with the Dow Jones Industrial Average the only major index to fall. The pan-European Stoxx 600 fell 0.32% as European dealmaking sentiment remains cautious, according to a new report from law firm CMS and Mergermarket. Meanwhile, the U.K.’s economy shrank 0.5% month on month in July, more than the 0.2% expected.

An Arm and a leg
Arm is pricing its initial public offering at $51 per share, the top of its expected price range. That values the company at over $54 billion, giving it a price-to-earnings multiple of about 104. By comparison, Apple’s multiple is around 30, Tesla’s is 77 and Nvidia’s is 110 for the previous 12 months. Softbank, Arm’s current towner, will control about 90% of the company’s outstanding shares.

Rebuilding Citi
Citigroup CEO Jane Fraser reorganized the firm, dividing it into five main business lines that report directly to her. Previously, the bank had only two main divisions. The corporate shuffling will include job cuts, though the number is yet to be decided. Shares of Citigroup have declined about 40% since Fraser assumed the top job in March 2021, and trades for the lowest valuation among U.S. big banks.

[PRO] Joining the Tesla party
On Monday, Morgan Stanley published a note asserting Tesla could rally 60%. But that’s nothing compared to the call made by Ron Baron, the billionaire investor who founded Baron Capital in 1982. Baron thinks Tesla could grow to as much as five times its current stock market capitalization — here’s what he has to say about the electric vehicle manufacturer and Elon Musk’s other companies.

The bottom line

At first glance, August’s CPI report seems bad news. The month-over-month jump in prices is the highest in a year. And even core inflation came in hotter than expected. But look more closely and you’ll find things aren’t as terrifying as they seem.

The headline number was pushed up by rising oil prices, which have been steadily increasing in recent weeks, as we’ve talked about. Gasoline prices soared 10.6% in August, the largest contributor to inflation last month, according to the U.S. Bureau of Labor Statistics.

But it’s likely gasoline prices will fall after a month or two, according to Andrew Hunter, deputy chief U.S. economist at Capital Economics. And gasoline prices have actually retreated 3.3% from a year ago, suggesting that they’re still on a downward trend in the long run.

Excluding volatile energy prices, monthly core inflation was up 0.3% against the expected 0.2%. Here, shelter costs were the main culprit for the hotter-than-expected increase. “Housing continues to contribute an outsized share to the inflation measures,” said Lisa Sturtevant, chief economist at Bright MLS.

But, Sturtevant added, “rent growth has slowed considerably and median rents nationally fell year-over-year in August.” That slowdown in prices will show up in future reports, meaning that August’s core CPI numbers is just “a little bump in the road,” as Kayla Bruun, senior economist at Morning Consult, put it.

“It doesn’t mean it’s turning around and going in the other direction,” Bruun said. “Overall, most of the pieces are headed in the right direction.” Indeed, the annual measure of core CPI still dropped from 4.7% in July to 4.3% in August.

Markets took the numbers in their stride. The Dow was the only major index to fall, losing 0.2% as shares of 3M and Caterpillar sank. The S&P 500 added 0.12% and the Nasdaq Composite rose 0.29%, helped by gains in Tesla and Amazon. And traders are still betting the Federal Reserve won’t raise rates next week, according to the CME FedWatch Tool.

Markets can act in irrational ways sometimes. But sometimes, the crowd psychology of markets manifests as collective wisdom.

— CNBC’s Jeff Cox and Greg Iacurci contributed to this report

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September 13, 2023

These non-tech stocks are ‘back from the dead.’ Here’s where we stand

A number of Club stocks that were unloved on Wall Street earlier in the year have seen their fortunes rebound in recent months, including oilfield-services firm Halliburton (HAL) and industrial Caterpillar (CAT) — creating potential opportunities to lock in gains. It’s been the year of technology on Wall Street. But, as Jim Cramer said Wednesday stocks in other parts of the market have started to come “back from the dead.” But how should investors navigate their positions in these resurrected stocks? In that vein, we screened our 35-stock portfolio to isolate the companies that have underperformed the S & P 500 so far in 2023 — meaning that, as of Wednesday’s close, they had gained less than 18.9% year-to-date. This allowed us to focus on a universe of stocks that haven’t necessarily been red hot like technology names such as Nvidia (NVDA), which has more than tripled in value this year. From there, we calculated each stocks’ lowest closing price since May 1 — roughly a month before this year’s rally started to broaden beyond tech — and how much each has climbed since that low to determine which have had the strongest momentum. We found eight stocks with double-digit percentage gains off their recent lows: Halliburton, Caterpillar, Wells Fargo (WFC), Constellation Brands (STZ), Emerson Electric (EMR), Coterra Energy (CTRA), Morgan Stanley (MS) and TJX Companies (TJX). Between May 1 and Wednesday’s close, the S & P 500 advanced 9.6%. Here’s a look at where we stand on these eight Club stocks, starting with the biggest gainer, Halliburton, and concluding with the eighth-best performer, TJX Companies. HAL 3M mountain Halliburton’s stock performance over the past three months. Recognizing Halliburton’s recent strength, we trimmed our position in the oilfield-services firm last week , locking in a small profit. Its second-quarter earnings report Wednesday underscored the company’s cash-generation abilities, and drilling activity may pickup further if oil prices climb. Plus, the stock remains cheap on a historical basis. Taken together, we’re comfortable holding onto our Halliburton position. CAT 3M mountain Caterpillar’s stock performance over the past three months. Similar to Halliburton, we made a disciplined, 30-share Caterpillar sale on July 10 because the stock’s strong momentum allowed it to break above our cost basis. We wanted to make sure we didn’t give back any of that move higher in what’s proven to be a battleground stock. Still, our multiyear thesis around CAT as an infrastructure spending winner remains intact, and we’re willing to let the position ride here. WFC 3M mountain Wells Fargo’s stock performance over the past three months. Wells Fargo is finally getting the respect it deserves, after issuing better-than-expected second-quarter results and raising its 2023 net-interest income guidance. The stock remains attractively valued — trading at 9.6 times forward earnings versus its five-year average of 11.4, per FactSet — and carries a respectable dividend yield around 2.5%. Those are reasons to feel comfortable owning it. But from a portfolio management perspective, Wells Fargo now carries a nearly 5% weighting, making it our second-largest holding behind only Apple (AAPL). For that reason, we may look to trim some WFC if its rally continues. STZ 3M mountain Constellation Brand’s stock performance over the past 3 months. Our outlook on Constellation Brands is even brighter knowing activist investor Elliott Management is involved and sees “meaningful growth potential” for the Corona and Modelo beer maker. We booked some profits Monday in Constellation, taking advantage of its recent momentum, and now feel comfortable to let the position run as we wait for Elliott’s influence to lead to improved financial discipline at the company. “If you get frustrated, you end up selling too low,” Jim said earlier this week. On Thursday, he suggested STZ shares could reach $300 per share . EMR 3M mountain Emerson Electric’s stock performance over the past three months. Following the bounce off its May 31 low, Emerson Electric has broken above our cost basis — a very welcome development for this hot-and-cold position. If Emerson is able to mount another run higher, we may look to sell some stock because of our uncertainties around management’s execution. It’s no secret that the way Emerson’s National Instruments acquisition played out left us frustrated. CTRA 3M mountain Coterra Energy’s stock performance over the past three months. Coterra Energy is another stock on this list that we’re willing to just hold here. If its recent momentum fades and a meaningful pullback ensues, we may look to add to our fairly small position, at a roughly 1% weighting. Energy prices have increased, and we know that the oil-and-gas producer can break even with relatively low oil prices, which should bode well for free cash flow and capital returns to shareholders. MS 3M mountain Morgan Stanley’s stock performance over the past three months. Morgan Stanley’s stronger-than-expected quarterly results , released Tuesday, demonstrated that the bank’s once-struggling stock price didn’t reflect its underlying fundamentals. But, similar to Wells Fargo, portfolio management may eventually win the day. “Discipline always trumps conviction,” Jim said earlier this week . “My conviction is that Morgan Stanley’s stock goes higher. It doesn’t matter. My discipline says you already have too much of it.” As of Thursday, Morgan Stanley had the third-largest weighting in our portfolio, at approximately 4.5%. TJX 3M mountain TJX Companies’ stock performance over the past three months. The parent of TJ Maxx and Home Goods closed out Thursday just shy of Wednesday’s all-time high, validating our selective approach to the retail sector. While we’re always cautious about adding to a position near a peak, the story at TJX continues to look solid. Jim said last week he could see TJX ascending to $95 per share, representing more than 10% upside from Thursday’s close, at $85.44 apiece. The off-price retailer has an opportunity to gain market share not only due to Bed Bath & Beyond’s bankruptcy, but from consumers who are increasingly seeking out value. (Jim Cramer’s Charitable Trust is long HAL, CAT, WFC, STZ, EMR, CTRA, MS and TJX. 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.

Workers walk towards Halliburton Co. “sand castles” at an Anadarko Petroleum Corp. hydraulic fracturing (fracking) site north of Dacono, Colorado, U.S., on Tuesday, Aug. 12, 2014.

Jamie Schwaberow | Bloomberg | Getty Images

A number of Club stocks that were unloved on Wall Street earlier in the year have seen their fortunes rebound in recent months, including oilfield-services firm Halliburton (HAL) and industrial Caterpillar (CAT) — creating potential opportunities to lock in gains.

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July 20, 2023

Cramer: This is my game plan for the week ahead after Friday’s surprise rally

What the heck really did happen on Friday, when the Dow jumped 700 points on a strong jobs reading ? Why such a viscerally positive reaction to an employment number that was hotter than expected? Was it because wages didn’t spike? Was it all that perfect — a Goldilocks report? Here’s my take on Friday’s rally. Going into the debt ceiling crisis, there was a belief that House Speaker Kevin McCarthy couldn’t control his own Republican party. Senate Majority Leader Charles Schumer wasn’t much better off with the Democrats. Both had lost control of their parties to the extremists. That meant the United States would default on its debt. It seemed pretty logical. I truly believe the extremists never believed a default would mean more than a few weeks of setbacks and more brinkmanship. Who can blame them? President Joe Biden lamely floated that he could invoke the 14th Amendment to avoid this and any future debt limit fights; the amendment includes a clause that some legal scholars say overrides the statutory borrowing limit set by Congress. No matter what, it was pretty clear that chaos was our destiny. But when McCarthy and Biden agreed to temporarily suspend the debt ceiling and cap some federal spending in order to prevent a default, we got a deal that was even less contentious than the 2011 bargain . (The coming together brought to mind the legendary coalition of President Ronald Reagan and House Speaker Tip O’Neil in the 1980s, memorialized in Chris Matthews’ “Tip and the Gipper: When Politics Worked.”) It was the compromise debt limit deal — not the employment number — that caused the market to rally. Sure, the jobs report showed wage inflation was cooling, which is good news in the Federal Reserve’s fight against inflation. But the job creation in May and the revisions were insanely strong. What matters most is that Fed Chair Jerome Powell, who is far more powerful than the independents on the Fed’s board who have such a hard time keeping their mouths shut, is reasonable. He seems to understand that it’s time to wait a bit on any more rate hikes. Not because he thinks things are cooler, but because he actually doesn’t even know. We have a young workforce coming into the market akin to when I got out of school in 1977 — nary a job to be had anywhere. This is potentially a monumental moment. The new debt limit legislation sets the date for resuming federal student loan repayments, which have been on hold since March 2020. We have the end of Supplemental Nutrition Assistance Program (SNAP) benefits and other pandemic breaks. Why not wait two months to see if unemployment naturally goes up and wages come down? To sum things up: We came into Friday shocked that there was a shocker of a deal and a not-red-hot employment number (at least one that didn’t send rates higher). This is what triggered the long-awaited buying of stocks outside of the Magnificent Seven that have led the market all year: Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), Tesla (TSLA), Meta Platforms (META), Apple (AAPL), and Nvidia , which briefly joined the $1 trillion valuation club. We each have our own way of monitoring these things. I used Club name Caterpillar (CAT) as my judge. On Thursday afternoon, CEO Jim Umpleby went into the lion’s den of Sanford Bernstein and told a tale about de-cyclization. Shares of the heavy equipment maker had a tiny snap back. One day later and armed with the budget deal and the employment number, CAT shot up seventeen points — an unheard-of short squeeze. This took the stock back to when it reported a good number that was converted into a bad number by bearish analysts still unwilling to admit that the company had changed its bi-polar ways. Of course, the bears would say that it only went up because of one more silly stimulus by China, this time to adjust rents. I say Caterpillar went up because it was overly shorted, like so much of the market, including retail, health care, financials, other industrials including the commodities (the oils!). We even saw the imperfect chipmakers and heavily challenged enterprise software stocks come alive. The shorts were correct to press their bets if there was no debt deal and we got an employment number that was a steamer. But they were wrong on both counts. This plus a rare wave of new money coming in and massive buybacks by companies capable of plundering after their reports, caused the broadening that had been bemoaned as non-existent as recently as the day before. You could argue it was a short squeeze of monumental proportions. A short squeeze happens when short sellers having to buy stocks to cover their short positions, pushing prices higher. But every time there has been a broadening since FANG, it’s always been called a short squeeze. That’s just how things work, although it’s never been acknowledged by anybody. Which brings us up to date for Monday. We have a blackout of the Fed speakers. We have no real macroeconomic data. We have no landmines of earnings. And no Fed meeting until mid-June. A true interregnum. We are going to have to take more things off the table if we get a rally into an overbought setting. Yes, we have some real stinkers — Disney (DIS), Foot Locker (FL), Emerson Electric (EMR), Estee Lauder (EL) — and we can battle them. But the important thing is that we have so many winners that we have to ring the register on some stocks if all goes our way. Of course I obsess on the losers. I didn’t think that Fabrizio Freda at Estee Lauder and Mary Dillon at Foot Locker could both blow it that badly. I had reason to dislike the Emerson team, but it still gave me more than I can handle. I have no idea how Disney’s stock could be this weak in a long-on-money-short-on-time moment. I am furious at myself for not seeing around any of these corners. But I am not going to throw good money after bad and I see no good on these names — yet. This leaves us with the big question: Which winners to trim? As long as we are not subsidizing losers, we aren’t breaking protocol. But we have two tasks. One is to come up with a new name that hasn’t moved that we actually like. And two is to trim into strength as we get overbought. I want both resolved by our next Club meeting on June 14. That’s what I am working on right now. Do we need so much Salesforce (CRM), even as it reported a good quarter all things considering? Do we even need Advanced Micro Devices (AMD) when it has nothing to rival Nvidia? I just don’t know. I want the market to tell me what to do. I think it will. Where does this leave us? In a sanguine week that will allow us to see if the short squeeze continues. If it does and continues to broaden, we can both peel some winners. See which caterpillars can develop into, well, Caterpillars. Maybe add Take-Two (TTWO), which gave us a two-year outlook, possibly aided by a new Grand Theft Auto game and better Nvidia cards. Just one of many ideas. But one Jeff Marks and I are trying to get our arms around. Some who read might ask: “Shouldn’t there be more of a thesis behind a bullish move?” I say no, no more than you needed in 2011, when the debt ceiling deal led to a fantastic rally because Armageddon was avoided. We cannot sit back and relax. But what we can do is accept that it is a better moment than we thought not that long ago. There are cracks. The Dollar General (DG) call was a compendium of weakness for the lower middle class and the Macy’s (M) call was a confusion of negativity. But who is to say that these companies just don’t have the “it” of Five Below (FIVE) or Lululemon (LULU). We are close enough to the infrastructure money wave to handle another rate hike if we need it. But Powell recognizes the futility of another rate hike right now because it lowers mortgage rates, making his job even harder. What we can do is watch and wait as battlegrounds get resolved — like CAT did on Friday. We can anticipate better things from a Johnson & Johnson (JNJ) — especially with a 3M (MMM) deal — and from GE Healthcare (GEHC). We can lick our Estee and Foot Locker wounds. And we can be glad that we got through the debt deal and wax in the wave of new money that will at last be coming in. No, we can’t be complacent. Too many needs for the shorts to save themselves. They have been run over in so many places that they have to make a comeback somewhere. Their number didn’t get so strong before the debt ceiling deal that they can’t all cover at once. Nevertheless, we have enough money to put to work if we want to in a new name that hasn’t moved and has a special situation thesis. But I do not want to be so relieved as to think there is no woods, just that we are out of it for now. Personally, the last few weeks have been hard ones, ameliorated by members who have made money with the club. Some mistakenly believe that we missed this entirely rally. It galls me because I gave up being a hedge fund manager years ago and I know the truth: This may be the best we’ve ever been, and this time it is for you, not the entitled class. I thank you all for letting us have the floor to help and not be tools of the traders who have infiltrated our ranks. So let’s take and make some gains and be ready for the next storm after the calm, wherever it might be coming from. Rest up. We have gotten past the systemic chaos into business as usual, where we can glow in a world where stock picking matters. (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.

US President Joe Biden, accompanied by Speaker of the House Kevin McCarthy, Republican of California, arrives for the annual Friends of Ireland luncheon on St. Patrick’s Day at the US Capitol in Washington, DC, on March 17, 2023.

Saul Loeb | AFP | Getty Images

What the heck really did happen on Friday, when the Dow jumped 700 points on a strong jobs reading? Why such a viscerally positive reaction to an employment number that was hotter than expected? Was it because wages didn’t spike? Was it all that perfect — a Goldilocks report?

Here’s my take on Friday’s rally. Going into the debt ceiling crisis, there was a belief that House Speaker Kevin McCarthy couldn’t control his own Republican party. Senate Majority Leader Charles Schumer wasn’t much better off with the Democrats. Both had lost control of their parties to the extremists. That meant the United States would default on its debt. It seemed pretty logical.

I truly believe the extremists never believed a default would mean more than a few weeks of setbacks and more brinkmanship. Who can blame them? President Joe Biden lamely floated that he could invoke the 14th Amendment to avoid this and any future debt limit fights; the amendment includes a clause that some legal scholars say overrides the statutory borrowing limit set by Congress.

No matter what, it was pretty clear that chaos was our destiny. But when McCarthy and Biden agreed to temporarily suspend the debt ceiling and cap some federal spending in order to prevent a default, we got a deal that was even less contentious than the 2011 bargain. (The coming together brought to mind the legendary coalition of President Ronald Reagan and House Speaker Tip O’Neil in the 1980s, memorialized in Chris Matthews’ “Tip and the Gipper: When Politics Worked.”)

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June 4, 2023

Caterpillar’s first-quarter profit rises on resilient demand and pricing

Caterpillar Inc. excavators are displayed for sale at the Whayne Supply Co. dealership in Louisville, Kentucky, U.S., on Monday, Jan. 27, 2020.

Luke Sharrett | Bloomberg | Getty Images

Heavy machinery maker Caterpillar on Thursday reported a rise in first-quarter profit as a boost in U.S. infrastructure spending kept its order books full and softened the hit from higher manufacturing costs.

The Biden administration’s infrastructure legislation encouraged spending in the construction sector, spurring demand for the machinery maker’s excavators, bulldozers and trucks.

Its energy customers, grappling with aging machines and tight production capacity, also placed more orders for parts and engines as drilling activities surged with higher oil and gas prices.

Healthy demand, coupled with strong pricing, helped Caterpillar navigate higher material and freight costs amid ongoing supply challenges.

Shares of the company rose 1.8% in premarket trade.

Caterpillar’s sales and revenue for the quarter through March 31 rose to $15.9 billion from $13.6 billion a year ago.

Adjusted profit rose to $4.91 per share from $2.88 a year earlier.

This story is developing. Please check back for updates.

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April 27, 2023

Analysts expect a big earnings drop this season. These 14 stocks are set to buck the trend

Wall Street expects a weak first-quarter earnings season, which kicks off next week with results from JPMorgan Chase (JPM) and other major U.S. banks. But more than a dozen Club holdings, including Amazon (AMZN) and Caterpillar (CAT), are projected to buck the trend and grow profits. First-quarter earnings per share for the S & P 500 are set to decline by 7% compared with the year-ago period, Goldman Sachs said in a note to clients Wednesday. That would be a “significant deterioration” from the 1% decline in the broad index’s fourth-quarter EPS , the firm said, and the largest year-over-year drop since the third quarter of 2020. Goldman sees margin compression as the main driver of the decline. The earnings picture will, of course, vary underneath the hood. That’s why we spend less time worrying what the S & P 500 will earn and focus more on how individual companies are performing . Some S & P 500 sectors, like consumer discretionary and energy, are poised to grow profits compared with 2022, according to Goldman. Materials and health care, meanwhile, are expected to see the biggest EPS contraction. The health-care part is interesting, because the industry is usually seen as stable earnings growers. But keep in mind many companies are lapping Covid-driven sales from last year. Within the Club’s portfolio, we found 14 companies that are set to report positive earnings growth this earnings season, according to FactSet estimates. We ranked them by projected percentage increase. Our list does not include Wynn Resorts (WYNN), because the casino operator is projected to remain unprofitable in the quarter. However, analysts expect its loss-per-share to shrink to 17 cents from $1.21 year ago as its Macau business recovers from China’s strict Covid controls. It’s still important to highlight Wynn, though, since improvement to the bottom line is encouraging. In fact, Wynn’s second-quarter ending in June is expected to be Wynn’s first period with positive EPS since September 2019, following more than three years of Covid disruptions to operations. What it means Earnings growth is what investors want to see over the short and long run. And considering the near-term prospects for the S & P 500, we’re pleased a solid chunk of our portfolio companies is expected to post earnings growth this coming season. At the same time, Wall Street is increasingly worried the economy is just beginning to show cracks and a material slowdown could be on the horizon. This means investors will pay especially close attention to companies’ forward guidance and commentary. How are management teams thinking about the economy and its impact on their respective businesses? Have they noticed any changes to customer behavior that began to bubble up after the reporting period concluded? Consider Wells Fargo (WFC), which reports next Friday, April 14. It is understood that its first-quarter 2023 earnings will benefit from favorable year-ago comparisons because interest rates were basically zero for most of the first quarter of 2022. For banks, in particular, what investors really want to know is what firms see going forward, after the U.S. banking sector — and economy overall — was upended by the collapse of three lending institutions in March. In a note to clients Wednesday, bank analysts at Morgan Stanley drove this point home in the very first line: “April earnings will be about the outlook, not the results.” To be clear, this does not mean that across the whole market quarterly numbers are irrelevant. For example, Halliburton ‘s (HAL) results will capture how oil-and-gas drilling activity held up this year through March despite a decline in crude prices. Microsoft ‘s (MSFT) numbers may shed light on the immediate financial impact from the artificial intelligence hype throughout the first quarter. Ford Motor ‘s (F) print will show how the automaker took steps to move past its very ugly fourth quarter. As always, we’ll analyze both our companies’ earnings reports and consider their guidance to ensure our investment rationale is still intact. (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.

An Amazon Prime truck is pictured as it crosses the George Washington Bridge on Interstate Route 95 during Amazon’s two-day “Prime Early Access Sale” shopping event for Amazon members in New York, October 11, 2022.

Mike Segar | Reuters

Wall Street expects a weak first-quarter earnings season, which kicks off next week with results from JPMorgan Chase (JPM) and other major U.S. banks. But more than a dozen Club holdings, including Amazon (AMZN) and Caterpillar (CAT), are projected to buck the trend and grow profits.

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April 7, 2023

These 10 fairly priced stocks are well off recent highs. Here’s where we stand on them

Wall Street can — and will — turn against stocks the Club holds in high regard. In some cases, our move is to run toward the wreckage, not away from it. “I want to be greedy on the downside. I want to be giving on the upside,” Jim Cramer said on Tuesday’s edition of the “Homestretch.” “When I see a stock getting tossed out that I love, that is fantastic.” Building on Jim’s philosophy, we analyzed the Club’s portfolio to identify beaten-down stocks that trade at reasonable valuations. The specific circumstances around each stock vary, and impact our ultimate view on whether now is the time to buy. But in general, stocks that meet the following criteria may be the kinds of opportunities to consider taking further action on: The stock trades at least 15% below its 52-week high, as of Tuesday’s closing price. We used the 15% cutoff because the market is in overbought territory, based on Jim’s trusted S & P 500 Short Range Oscillator . In those situations, we have a higher threshold for determining a stock is worth buying on weakness. The stock has a forward price-to-earnings multiple under 18, which puts its valuation below the S & P 500’s forward P/E, as of Tuesday’s close. We found 10 Club holdings that met both measures, including Caterpillar (CAT) and Halliburton (HAL). Here’s a breakdown of the full list — plus our thinking on which stocks look like buys Wednesday. BHC 1Y mountain Bausch Health’s 12-month stock chart. 52-week high date: April 5, 2022 Percent below 52-week high: 68.4% Forward P/E: 2.1 We continue to view troubled Bausch Health as a wait-and-see situation. Specifically, we’re awaiting fresh information on the pharmaceutical company’s legal fight over its patent for the drug Xifaxan. CTRA 1Y mountain Coterra’s stock performance over the past 12 months. 52-week high date: June 8, 2022 Percent below 52-week high: 31.35% Forward P/E: 9.2 We want to see another pullback in the energy sector before thinking about committing more cash to Coterra Energy (CTRA) and other holdings in the group, which had a nice little rally off mid-March lows. In fact, we used that recent strength to exit our Devon Energy (DVN) position Tuesday. We are content with staying patient in Coterra. Management’s decision earlier this year to make stock buybacks a higher priority means we should steadily own more of the company without needing to buy additional shares. PXD 1Y mountain Pioneer Natural Resources’ 12-month stock performance. 52-week high date: May 31, 2022 Percent below 52-week high: 26.94% Forward P/E: 9.5 Our view on Pioneer Natural Resources (PXD) is similar to Coterra. We made two purchases at lower levels in March, most recently on March 20 at around $185 per share. But now after back-to-back strong weeks for the stock, we see no reason to add to our position up here around $209 per share Wednesday. WFC 1Y mountain Wells Fargo’s stock performance over the past 12 months. 52-week high date: April 11, 2022 Percent below 52-week high: 26.66% Forward P/E: 7.6 For investors who believe the U.S. economy is not headed toward a steep recession, Wells Fargo (WFC) is a buy under $37 per share. Of course, bank stocks have fallen out of favor on Wall Street following the collapse of three U.S. lenders in March, and could remain a near-term headwind on WFC shares ahead of the firm’s April 14 earnings report. But the bank’s fundamental turnaround story is intact and will create value over time. That’s what makes the stock attractive here at less than 8 times earnings. HAL 1Y mountain Halliburton’s stock price over the past 12 months. 52-week high date: June 8, 2022 Percent below 52-week high: 24.46% Forward P/E: 10.4 Like our two other energy stocks, we want to see another pullback in Halliburton shares before we’d add to our position. The stock is still trading above our most recent purchase price, at roughly $30 per share, on March 17 when Wall Street was dumping the oils. Big picture, the oilfield services’ company is still poised to benefit from a multiyear upcycle in investment activity. F 1Y mountain Ford Motor’s 12-month stock performance. 52-week high date: August 16, 2022 Percent below 52-week high: 23.74% Forward P/E: 7.8 Many market participants are very negative on Ford Motor (F), due in part to fears the U.S. economy is entering a cyclical downturn that will crimp auto sales. However, the bears are too pessimistic. We see Ford as a buy here. On Tuesday, Ford said first-quarter vehicle sales rose roughly 10% compared with the year-ago period. Ford’s full first-quarter earnings report, set for May 2, should demonstrate the company’s earnings leverage as costs in its internal combustion division come down. QCOM 1Y mountain Qualcomm’s stock performance over the past 12 months. 52-week high date: July 22, 2022 Percent below 52-week high: 21.93% Forward P/E: 11.7 Our sour attitude on Qualcomm (QCOM) remains, and we don’t want to allocate any funds to the chipmaker here. As Jim mentioned during the Club’s March edition of the “Monthly Meeting,” , we may look to exit our position in Qualcomm if the stock gets back to the $130 levels. CAT 1Y mountain Caterpillar’s stock performance over the past 12 months. 52-week high date: Jan. 27, 2023 Percent below 52-week high: 18.26% Forward P/E: 13.4 Caterpillar is a beaten-down stock worth buying. We acted on that view Tuesday, buying 20 shares at roughly $217 apiece. The stock remains on sale Wednesday, down about 2% to $213 per share. Caterpillar’s slide comes as mounting recession fears prompt Wall Street to buy defensive sectors like health care and sell traditionally cyclical sectors. However, our belief that Washington’s infrastructure spending is a multiyear boon to Caterpillar allows us to view this weakness as a buying opportunity. MS 1Y mountain Morgan Stanley’s stock performance over the past 12 months. 52-week high date: Feb. 14, 2023 Percent below 52-week high: 16.01% Forward P/E: 11.6 Shares of Morgan Stanley (MS) have fallen on hard times amid the fallout from the U.S. banking crisis. But we’re sticking with the firm because of its pivot toward asset management. We value the stability that asset management’s fee-based revenues bring compared with Morgan Stanley’s traditional investment banking operations. The stock looks cheap now at less than 12 times earnings, and over time its transformation should support a premium valuation. JNJ 1Y mountain Johnson & Johnson’s stock performance over the past 12 months. 52-week high date: April 25, 2022 Percent below 52-week high: 15.11% Forward P/E: 14.9 Johnson & Johnson (JNJ) is a buy after the pharmaceutical giant agreed to pay $8.9 billion to settle allegations that the company’s talc products caused cancer. While the settlement with plaintiffs needs approval from a U.S. bankruptcy court judge, it is a great development for J & J shareholders . A series of unfavorable legal rulings this year have been a major overhang on the company’s stock price. Now there appears to be a resolution on the horizon, giving much-needed clarity to investors. Jim said Wednesday J & J has become his favorite Club stock. (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.

An employee assembles an excavator at the Caterpillar Inc. manufacturing facility in Victoria, Texas.

Callaghan O’Hare | Bloomberg | Getty Images

Wall Street can — and will — turn against stocks the Club holds in high regard. In some cases, our move is to run toward the wreckage, not away from it.

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April 5, 2023

EA Lays Off Almost 800 People Weeks After Posting Huge Profits

Image: EA

Publishing giant Electronic Arts announced today that approximately 6% of its global workforce, or between 700-800 people, will be laid off as the company drives “greater focus across our portfolio”.

This Mini Sega Arcade Cabinet Packed With Retro Games Would Make A Great Gift

In a post on EA’s website, CEO Andrew Wilson writes that the publisher has taken a look at its upcoming projects, restructured some teams and even reviewed their “real estate footprint”. In the wake of that, the decision was made to lay off “approximately six percent of our company’s workforce”.

As we drive greater focus across our portfolio, we are moving away from projects that do not contribute to our strategy, reviewing our real estate footprint, and restructuring some of our teams. These decisions are expected to impact approximately six percent of our company’s workforce. This is the most difficult part, and we are working through the process with the utmost care and respect. Where we can, we are providing opportunities for our colleagues to transition onto other projects. Where that’s not possible, we are providing severance pay and additional benefits such as health care and career transition services. Communicating these decisions began earlier this quarter and we expect them to continue through early next fiscal year.

Electronic Arts generated approximately $7 billion in net revenue last year, as reported on January 31, 2023, with gross profits of over $5 billion (an increase of 18% over the year before). In 2022 CEO Wilson, who described this move as “the most difficult part”, made approximately 172 times the median EA employee’s total compensation. Or 636 times what some customer service staff had been paid (before they were laid off, anyway).

This announcement comes just a month after 200 testers working on the company’s Apex Legends series were laid off via Zoom call (though given Wilson’s comments that “these decisions began earlier this quarter”, those may have been part of this overall count).

Luke Plunkett

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March 29, 2023

We’re looking for stocks to buy for the Club now that regulators saved SVB depositors

Phew, that was close. Too close. I think that there was so much fear engendered by the events of the last 72 hours since Silicon Valley Bank collapsed that there will be investors who want to sell no matter what. I think that posture is ill-advised. The fact is the Federal Reserve and other U.S. regulators did everything a rational bull could hope for, and a little more than that, to mitigate contagion from the SVB failure. I like cutting to the chase: What the Fed and Treasury did Sunday evening was take a huge chunk of risk — and losses — off the table by promising to make SVB depositors whole (and those of smaller Signature Bank in New York, which was shuttered Sunday). If the Fed had not acted the way it did, I am convinced we would have been in a recession by Friday. You can’t just wipe out a bank and about $170 billion in SVB deposits and expect to see business as normal in the country. Anyone, I mean anyone, who had more than $250,000 in an account with a bank would, Monday, have sent that money to JPMorgan , which has the best balance sheet. Period. So, while there were plenty of people I heard Sunday evening and will hear Monday who will talk about moral hazard, the unintended consequences of doing nothing is to throw a huge number of people out of work because of the errors of one bank. That’s just wrong. It is what the Fed was set up to stop. What it means for markets I want to go into the markets first before I go into what happened. The actions Sunday evening were, per se, bullish versus what was going on since last Tuesday when Fed Chairman Jerome Powell said things were still running too hot. I think after this weekend’s events he has to question that. If he’s prudent, Powell should say we have to wait and see and may not even do raise interest rates by 25 basis points at the Fed’s policy meeting later this month. If he feels the 25 was already a done deal, so be it. But it would be a little hasty not to wait and see who has been hurt already by what’s occurred. We had some real flight to quality on the long end of the bond market’s yield curve that is now being undone and rates on the short end are going down — all of which is in keeping with the events of Sunday evening. But let’s put it right out there: We just got a reprieve from a massive wipeout of deposits and companies. We are less likely to have a rate hike. We are very oversold in the stock market. There were many shorts in the market Friday betting against the policymakers. Bad bet. What investors should do So, one word comes to mind: buy. Now, we don’t like buying up and we’re restricted on many names in the Club portfolio. But, if you were concerned, say, about a big series of rate hikes so you sold the stock of Caterpillar on some weird downgrade to sell last week then you are getting your chance. I mention CAT because it had the most egregious decline in the whole portfolio If you sold the stock of Morgan Stanley you have to wonder why you did it. The bank is in great shape. If you sold shares of Wells Fargo , well, I don’t know what to say. Some say WFC’s numbers have to be cut because it will be in a bidding war for deposits. Oh please, it’s got more deposits than it needs. We will have a full list Monday — but I can tell you that I am eying anything that got hit since Tuesday as something that should be bought. I also think that you have to be more cyclical than we would otherwise be because the actions to save the SVB depositors are also going to make the Fed move slower, if at all. The Fed can’t move too quickly anymore because there are other banks and brokers that do indeed look a little like SVB when it comes to their bond portfolios, not their depositors, and they have to take some medicine. If the Fed moves too quickly, the medicine won’t have time to have an impact. Yes, the other banks that invested as stupidly on the curve as SVB did will live to play another day, like it or not. Fortunately, almost no one had the horrendous mismatch that SVB had — very few retail depositors and very many long bonds that they were under water on. They shouldn’t have been allowed to do that. Almost everyone in the media wants to dwell on moral hazard and blame, etc. There’s plenty of time for that. You don’t come to me for moralizing for heaven’s sake. With the biggest risk of a recession — bank failures — off the table, we can all find things to buy. I would let the early bird buyers take things up. Then let the bears who need the market lower try to take it down, and the sellers who want 5% on cash bolt, too. At that point, we can buy (unless something opens up down in the morning that we like). Debate: Bank bailout or not Was it a bailout? Depends on who you ask. If you are a shareholder of the bank or a holder of its corporate bonds and preferred, nope. You just lost everything. If you are a depositor, let’s just say you aren’t going to be so foolish as to concentrate your deposits going forward. Earn a little less. If you are a sightseer? You just missed a crash that would have engulfed you for certain. We live to play again. One more note The closing of Signature by New York authorities was surprising. The bank was only said to have about 15% of its assets in crypto. But it did have a very low retail share of deposits, like SVB, so perhaps that may have had something to do with it. Either way, what a warning if you don’t have a broader deposit base and you have a lot of crypto or borrowing against crypto. (Jim Cramer’s Charitable Trust is long CAT, MS, WFC. 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.

Sheldon Cooper | Lightrocket | Getty Images

Phew, that was close. Too close.

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March 12, 2023

These 5 dividend-paying Club stocks are expected to grow earnings double-digits this year

Wells Fargo (WFC) and Halliburton (HAL) headline a group of five dividend-paying Club stocks that are expected to post robust earnings growth this year. The bank and oilfield services firm jumped off the page in our latest screen of Jim Cramer’s Charitable Trust, the portfolio we use for the Club. We wanted to see which holdings are projected to boost per-share earnings this year well above the roughly 2% earnings growth estimated for the overall S & P 500 . We sought to ensure they’re paying dividends, too, an important part of capital return strategies along with share repurchases. (We highlighted the Club’s buyback royalty last week.) Investors should also pay attention to valuation, so we excluded stocks trading above the S & P 500’s multiple of 18 times forward earnings. (Calculating a forward price-to-earnings ratio, a common valuation metric used by investors to compare stocks, starts with a company’s stock price or an index level and then dividing it by the next 12 months earnings-per-share estimates.) The full list of stocks that passed this screening test: Wells Fargo, Halliburton, Cisco Systems (CSCO), Caterpillar (CAT) and Morgan Stanley (MS) Before we get into some commentary on each, here are the full parameters we used for this analysis as of the close after Tuesday’s Federal Reserve-driven selloff. Calendarized 2023 EPS growth of at least 10%. Current dividend yield above 1% Forward price-to-earnings ratio of 18 or below. Note: For this story, we used calendarized earnings and estimates – meaning, we compared what a company earned in calendar 2022 to what Wall Street expects it to earning in calendar 2023. Because companies follow different fiscal years – many end in December, but some end in June and others in January or September – this approach offer some standardization. This allowed for better comparison to Wall Street’s 2023 estimates for S & P 500 earnings. 1. Wells Fargo Estimated 2023 EPS growth: 50.7% Dividend yield: 2.7% Forward P/E: 9.4 WFC 1Y mountain Wells Fargo’s stock price over the past 12 months. Bank stocks came under pressure Tuesday. However, we like Wells Fargo over the long term, believing the bank’s turnaround efforts under CEO Charlie Scharf will continue to create value. More immediately, management’s expense discipline is poised to support earnings this year, on top of the benefit Wells Fargo receives from higher interest rates. Wells Fargo’s dividend rewards investors for their patience, plus its buyback was restarted this quarter. We have a buy-it-here 1 rating on Wells Fargo. The average price target from analysts covering the stock represents a 20% gain from Tuesday’s close of $44.45 per share. 2. Halliburton Estimated 2023 EPS growth: 41.02% Dividend yield: 1.7% Forward P/E: 12.43 HAL 1Y mountain Halliburton’s stock performance over the past 12 months. Demand for Halliburton’s services is robust following years of underinvestment in drilling capacity, which helps give the company tremendous pricing power to boost profitability. “Our completions calendar is fully booked and pricing continues to improve across all product service lines,” CEO Jeff Miller said on Halliburton’s most recent earnings call, in late January. We’re also fans of Halliburton’s new plan to return at least half of its annual free cash flow back to shareholders through dividends and buybacks. While that strategy is similar to those deployed by the Club’s three other energy stocks — Pioneer Natural Resources (PXD), Coterra Energy (CTRA) and Devon Energy (DVN) — Halliburton is a different kind of company. This makes its earnings relatively less dependent on the price of oil than those three exploration and production (E & P) firms. We have a 2 rating on HAL shares, meaning we’d wait for additional weakness before considering whether to add to our position. The average price target from analysts who cover Halliburton is roughly 31% above Tuesday’s close of $37.85. 3. Cisco Systems Estimated 2023 EPS growth: 14.88% Dividend yield: 3.2% Forward P/E: 12.38 CSCO 1Y mountain Cisco’s stock performance over the past 12 months. Cisco’s sales and profits have topped Wall Street expectations for three quarters in a row, including its most recent report, in mid-February , which was accompanied by a full-year guidance hike for revenue and earnings. However, questions still persist about whether Cisco is just feasting on the sizable backlog accumulated during the Covid pandemic and could run into challenges once it normalizes. With that skepticism about new order growth present, Cisco shares are up less than 1% since the company’s impressive results Feb. 15. We have a 2 rating on the stock. Meanwhile, the average price target from Cisco analysts on Wall Street is about 16% higher than where the stock closed Tuesday at $48.91 per share. 4. Caterpillar Estimated 2023 EPS growth: 14.71% Dividend yield: 2% Forward P/E: 15.5 CAT 1Y mountain Caterpillar’s stock performance over the past 12 months. Like Halliburton, Caterpillar sells into end markets that are prosperous and well-positioned to stay that way for the foreseeable future. Caterpillar, in particular, benefits from Washington’s infrastructure spending bill, which funds projects that need the company’s construction and mining equipment. This demand for Caterpillar’s products should allow the industrial powerhouse to raise prices when necessary, a dynamic that’s good for earnings and on display in its fourth-quarter results . We have a 1 rating on the stock. The average price target from analysts covering the stock implies a 4% gain from Tuesday’s close of $246.14 per share. 5. Morgan Stanley Estimated 2023 EPS growth: 13.84% Dividend yield: 3.2% Forward P/E: 13.3 MS 1Y mountain Morgan Stanley’s stock performance over the past 12 months. Morgan Stanley’s business transformation — from the boom-and-bust world of investment banking into the more stable realm of asset management — is core to our rationale for being shareholders. And, it’s continuing to play out according to plan. We see the bank as a stock to hold for the long term. In addition, Morgan Stanley pays a solid dividend, yielding over 3% annually at current levels, and buys back healthy amounts of stock. That rewards us for our patience. We have a 2 rating on Morgan Stanley shares. The average price target from analysts who cover Morgan Stanley is about 6% above the stock’s closing price of $96.06 on Tuesday. (Jim Cramer’s Charitable Trust is long WFC, HAL, CSCO, CAT and MS . 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.

Workers walk towards Halliburton Co. “sand castles” at an Anadarko Petroleum Corp. hydraulic fracturing (fracking) site north of Dacono, Colorado, U.S., on Tuesday, Aug. 12, 2014.

Jamie Schwaberow | Bloomberg | Getty Images

Wells Fargo (WFC) and Halliburton (HAL) headline a group of five dividend-paying Club stocks that are expected to post robust earnings growth this year.

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March 8, 2023

Cramer’s week ahead: Fed decision on Wednesday could let the bulls ‘party on’

CNBC’s Jim Cramer on Friday said that Wall Street’s recent gains could continue next week depending on the Federal Reserve’s actions.

“A decision not to raise rates at all might show too much weakness. A quarter-point with a statement that they’ll remain vigilant will allow the bulls to party on,” he said.

The central bank is set to conclude its first meeting of the year on Wednesday, which Wall Street largely expected to beget a quarter-percentage point interest rate hike.

Cramer said he’ll also have his eye on the January nonfarm payrolls report set to be released Friday. “If wage inflation’s very strong, the quarter-point move will be criticized. If it’s weaker, we’ll be hearing all about that hard landing,” he said.

All estimates for earnings, revenue and economic data are courtesy of FactSet.

Monday: Whirlpool

Q4 2022 earnings release at 4:05 p.m. ET; conference call on Tuesday at 8 a.m. ET
Projected EPS: $3.23
Projected revenue: $5.08 billion

He predicted that the company will report abating supply chain headwinds and a more frugal consumer on its conference call.

Tuesday: Caterpillar, Pfizer, Advanced Micro Devices

Caterpillar

Q4 2022 earnings release at 6:30 a.m. ET; conference call at 8:30 a.m. ET
Projected EPS: $4.02
Projected revenue; $15.82 billion

He said the company will likely report a solid quarter.

Pfizer

Q4 2022 earnings release at 6:45 a.m. ET; conference call at 10 a.m. ET
Projected EPS: $1.05
Projected revenue: $24.44 billion

There’s more to the company than unsustainable earnings from its Covid vaccine, despite what Wall Street believes, Cramer said.

Advanced Micro Devices

Q4 2022 earnings release at 4:15 p.m. ET; conference call at 5 p.m. ET
Projected EPS: 67 cents
Projected revenue: $5.51 billion

“AMD’s got a great portfolio now, and they keep taking market share,” he said.

Wednesday: Meta Platforms

Q4 2022 earnings release at 4:05 p.m. ET; conference call at 5 p.m. ET
Projected EPS: $2.26
Projected revenue: $31.54 billion

“All I know is the stock’s had a real run, and while we own it for the Charitable Trust, we’re not pounding the table on this one. Not here,” Cramer said.

Thursday: Ford Motor, Apple, Amazon, Alphabet

Ford

Q4 2022 earnings release at 4:05 p.m. ET; conference call at 5 p.m. ET
Projected EPS: 62 cents
Projected revenue: $41.39 billion

He said he isn’t worried that price cuts from Tesla will affect demand for Ford’s electric vehicles.

Apple

Q1 21023 earnings release at 4:30 p.m. ET; conference call at 5 p.m. ET
Projected EPS: $1.94
Projected revenue: $121.81 billion

Investors should hold onto their shares of the iPhone maker, according to Cramer.

Amazon

Q4 2022 earnings release at 4:01 p.m. ET; conference call at 5:30 p.m. ET
Projected EPS: 17 cents
Projected revenue: $145.64 billion

Amazon stock will soar if the company lays off 100,000 employees, he predicted.

Alphabet

Q4 2022 earnings release at 4 p.m. ET; conference call at 4:30 p.m. ET
Projected EPS: $1.18
Projected revenue: $76.17 billion

Cramer said that Alphabet also needs to downsize its workforce.

Friday: Regeneron Pharmaceuticals

Q4 2022 earnings release at 6:30 a.m. ET; conference call at 8:30 a.m. ET
Projected EPS: $10.1
Projected revenue: $3.14 billion

He said he likes the stock.

Disclaimer; Cramer’s Charitable Trust owns shares of Apple, Amazon, Advanced Micro Devices, Caterpillar, Ford and Meta.

Cramer's game plan for the trading week of Jan. 30

Jim Cramer’s Guide to Investing

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January 27, 2023

Take profits on Starbucks after its huge run, and check out these 3 other stocks

In Friday’s “Morning Meeting,” we dug into our inbox and found an excellent question raised by a member of the Investing Club. Starbucks – like Halliburton – has had a nice run lately. The Club trimmed some Halliburton on Thursday . Why not trim Starbucks too? I have a double-digit percent gain on shares accumulated over the past five months. It seems like I should take some off the table. I would appreciate your perspective on what I see as a similar situation, but two different stocks. -Clay In our video, we debated if it was time to take profits and pledged to come back with a definitive response. Our answer is yes, we would make a very small trim — 50 shares of our 750 share position in Starbucks (SBUX) — if we were not restricted from trading. We’ll also downgrade our rating to a 2, meaning we would wait for a pullback before buying. As Clay points out, Starbucks has had quite the run lately. The first leg was due to a bullish Investor Day event we centered our August investment thesis around . At the event, Starbucks management laid out an expansive reinvention plan to unlock efficiencies at its stores and an ambitious growth strategy. The second leg of the recent rally has been fueled by China loosening its once stringent Covid-related restrictions much faster than anyone expected six months ago. It was a complete 180 from the fears in October when SBUX tumbled on concerns that China would prolong its zero-Covid policy for longer after Chinese President Xi Jinping tightened his grip on power . This speculation hit the stock hard that day because China is a huge growth opportunity for the coffee retailer. Starbucks is targeting 3,000 new stores in China by its fiscal year 2025, implying a new store every nine hours over the next few years. While there was a lot of fear in the air about China, we kept our eye on the ball and added to our position into that weakness in the stock. Since that buy, Starbucks has rallied about 22% compared to a 1% gain in the S & P 500 . SBUX 1Y mountain Starbucks (SBUX) 1-year performance There is a lot to be bullish about in Starbucks’ future, but a lot of that good news is starting to get priced in. Shares are now trading at around 31 times its next twelve-month earnings. That’s a four-multiple turn from when we first started buying in August at around $85 per share. The higher multiple is justified by the improving margin outlook and China growth plan, but it also raises the stakes around execution. Out of prudence and general discipline after a big run, we’ll take some stock off the table the next time we are unrestricted. We’ll also increase our price target up to $120 as we still believe there is more upside here over the long term as China comes back and we see the benefits of the U.S. store investments. In addition, we believe it’s prudent to let a little stock go when the market is this overbought. Following Thursday’s positive session for stocks, the market pushed even deeper into overbought territory, according to the S & P Oscillator . The value on this technical indicator increased from plus 6.46% to plus 9.46%. As a reminder, any value north of 4% means the market is technically in overbought territory and potentially due for a pullback. It’s a sign that the buyers may have exhausted themselves and any piece of negative news could trigger some selling, kind of like what we saw Friday morning when the market freaked out over bank earnings that actually weren’t bad at all. It’s uncommon for the Oscillator to reach a value that high. The last time it happened was in November 2020. We went back and looked at how the market fared in the time it took to work off its then-overbought condition. The result was surprising. There was a pullback of about 2% five sessions later. But in the days it took for the overbought condition to completely work off, the Dow Jones Industrial Average actually moved slightly higher. The action was similar to the previous time before that in June 2020. Now, of course, the market back then was in a bull market fueled by a zero-interest rate policy by the Federal Reserve to support an economy on the ropes due to Covid shutdowns. Rates are much higher today, and it’s hard to figure out exactly where earnings will land in 2023, especially for tech. Ultimately, earnings are what drive stock prices. .DJI 5Y mountain Dow 5 years However, our interpretation of the S & P Oscillator and the recent stock market gains is that things could get choppy over the next few days, maybe weeks. But we don’t want to be too negative with the charts looking favorable , signs indicating that inflation is finally starting to come down, and the Fed no longer needing to be as aggressive as thought a few months ago. Bottom line Again, earnings will be the most important driver of stocks over the next few weeks and we will need to see them hold up. But with the Fed winning its battle against inflation, we’ll be looking for pullbacks and weakness to add to positions of profitable companies that trade at reasonable price-to-earnings multiple valuations. Some Bullpen names we are taking a hard look at are Deere (DE) and Caterpillar (CAT). We would love to see their prices come down. Another potential name is BlackRock (BLK), and we’ll follow up next week with a formal Bullpen post on the investment management company. BlackRock on Friday beat estimates with fourth-quarter earnings and revenue. (Jim Cramer’s Charitable Trust is long SBUX, HAL. 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.

A Starbucks store is seen inside the Tom Bradley terminal at LAX airport in Los Angeles, California.

Lucy Nicholson | Reuters

In Friday’s “Morning Meeting,” we dug into our inbox and found an excellent question raised by a member of the Investing Club.

Starbucks – like Halliburton – has had a nice run lately. The Club trimmed some Halliburton on Thursday. Why not trim Starbucks too? I have a double-digit percent gain on shares accumulated over the past five months. It seems like I should take some off the table. I would appreciate your perspective on what I see as a similar situation, but two different stocks.

-Clay

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January 13, 2023

The Dow industrials are on the verge of a ‘golden cross,’ even as BlackRock predicts recession like no other

Despite worries about inflation and an impending recession, there is at least one sign that some bullish market technical analysts might latch onto.

An upbeat golden cross appears to be forming in the Dow Jones Industrial Average
DJIA,
-0.90%,
more than nine months after a bearish death cross formed back in March, as the hawkish agenda of the Federal Reserve shattered bullishness on Wall Street.

A golden cross occurs when the 50-day moving average for an asset price trades above the 200-day MA, while a death cross, comparatively, is when the 50-day falls below the long-term average.

The 50-day moving average for the Dow stands at 32,200.32, at last check Friday afternoon, while the 200-day sits at 32,460.71, a roughly 260-point difference that could be traversed in the coming week or two, based on its current trajectory.

FactSet

A golden cross would mark the first for the Dow industrials since 2020 of August, according to Dow Jones Market Data.

The bullish chart formation also would appear at an odd time for investors, with an apparent uptrend materializing in the stock market, even as the threat of a recession in 2023 grows.

Read: Financial markets are flashing a warning that a recession is imminent: here’s what it means for stocks

See: Goldman Sachs CEO says recession is likely, with 35% chance of a soft landing

BlackRock, the world’s largest asset manager, is anticipating a unique recession unlike others that we’ve seen in U.S. history.

“The new macro regime is playing out. We think that requires a new, dynamic playbook based on views of market risk appetite and pricing of macro damage,” wrote BlackRock’s Investment Institute team led by Jean Boivin.

The BlackRock team said markets aren’t necessarily pricing in the recession that is being predicted.

“Central banks appear set on doing ‘whatever it takes’ to fight inflation, making recession foretold, in our view,” the team at BlackRock wrote.

As MarketWatch’s Tomi Kilgore notes, crosses, overall, aren’t necessarily good market-timing indicators.

Check out: MarketWatch’s live blog of the market

On top of that, MarketWatch columnist Mark Hulbert concludes that the U.S. stock market on average has performed no better in the wake of a golden crosses as it did at other times.

In many cases, a golden cross can help put an asset’s move into perspective, however, they tend to be well telegraphed.

Interestingly, the recession is also being widely predicted and some don’t think investors are getting the memo. As BlackRock notes, investors aren’t reflecting the damage that is to come, particularly as earnings expectations from American companies are right-sized.

So, it might be worth it for investors to take any golden crosses in assets with a grain of salt.

So far, the Dow industrials have outperformed over the past three months, up about 5%, compared with a decline of 2.5% for the S&P 500
SPX,
-0.73%
and an 8.2% drop for the Nasdaq Composite
COMP,
-0.70%.

Over the past three months, the Dow industrials have recent in aggregate on the back of gains in shares of Caterpillar
CAT,
-1.56%,
Boeing Co.
BA,
+0.20%
Merck & Co.
MRK,
-1.86%,
IBM
IBM,
-0.47%
and Travelers Cos.
TRV,
-1.10%.

For the year so far, the Dow is down 7%, while the S&P 500 is off 17% and the Nasdaq is down nearly 30%.

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December 9, 2022

Why the Dow is having a killer month as it heads for best October ever

The Dow Jones Industrial Average has been criticized by some market watchers for being a poor barometer of equity-market performance given its relatively small sample size of just 30 stocks.

But this quality, along with the paucity of megacap technology names, has helped shepherd the index toward what’s expected to be its biggest October gain in its 126-year history.

With a month-to-date gain of 14%, the Dow
DJIA,
+2.57%
is on track for its best monthly performance since January 1976, when it rose 14.4%, according to Dow Jones Market Data. To clinch its best October ever, it only needs to hang on to a month-to-date gain of 10.65% by the time the U.S. market closes on Monday.

The Dow is still in a bear market and remains down more than 10% for the year to date. That compares, however, with year-to-date losses of 18.6% for the S&P 500
SPX,
+2.40%
and 29.6% for the Nasdaq Composite
COMP,
+2.74%.

What exactly has made the Dow’s October performance so stellar?

The blue-chip gauge is packed with energy and industrials stocks, which have been among the best performing sectors for the stock market since the start of the year, noted Art Hogan, chief market strategist at B. Riley Wealth Management.

These stocks have performed particularly well since the start of the latest quarterly earnings season, while megacap technology names like Meta Platforms Inc.
META,
+1.14%,
Amazon.com Inc.
AMZN,
-7.41%
and Alphabet Inc.
GOOG,
+4.28%
have sputtered after delivering results and guidance that disappointed Wall Street this week.

“It’s very tech-light, and it’s very heavy in energy and industrials, and those have been the winners,” Hogan said. “The Dow just has more of the winners embedded in it and that has been the secret to its success.”

See: Live markets coverage

The Dow is on track to log its highest close in at least two months on Friday as it outperforms both the S&P 500
SPX,
+2.40%
and Nasdaq Composite
COMP,
+2.74%.
Furthermore, it’s on track to climb for a sixth straight session, what would be its longest winning streak since May 27, according to DJMD.

Adding to the list of notable factoids, the average is also on track to log a fourth straight weekly gain, which would cement its longest winning streak since Nov. 5, 2021, when the index rose for five straight weeks.

Caterpillar Inc.
CAT,
+3.22%,
Chevron Corp.
CVX,
+0.75%
And Amgen Inc.
AMGN,
+2.21%
are the top-performing Dow stocks so far this month, having gained 29.3%, 21.2% and 18.3%, respectively, as of Friday.

In recent trade, the blue-chip average was up around 700 points, or 2.2%, on track for its biggest daily point and percentage gain in exactly one week.

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October 28, 2022

What Cramer is watching Thursday — OPEC+ surprise, Corona beer maker beat, Costco’s sales

OPEC+'s 2 million barrels-per-day oil production cut to boost prices. U.S. delivers an angry rebuke.

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October 6, 2022

Tag: Caterpillar Inc

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