Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Tuesday’s key moments. 1. The S & P Short Range Oscillator signaled a very overbought market even as the S & P 500 tracked modestly lower. We’ll see at the close whether the index’s eight-session winning streak will be broken. This is not a time to buy, Jim Cramer said. “You can only sell.” We trimmed Morgan Stanley after a nice run . On Monday, we exited Estee Lauder . After its recent rally and ahead of a baby formula trial, Jim suggested Abbott Laboratories could be trimmed. That gives us “optionality to buy Abbott if it goes down,” he added. Following solid earnings and a subsequent 8% stock rise, Jim said that trimming Palo Alto Networks might not be a bad idea, given its run higher. 2. Advanced Micro Devices rose another 1% on Tuesday, one day after announcing a deal to buy hyperscaler ZT Systems. The purpose of the deal is to expand its portfolio of AI chips and hardware to compete with fellow Club name Nvidia . “ZT makes it so they’re competitive. It’s a very important deal,” Jim explained. Investors are calling this acquisition an “acqui-hire” since AMD said plans to sell ZT’s manufacturing unit but retain 1,000 of its engineers. “They don’t have good training, meaning they need more data,” Jim added. “They need these engineers really badly.” 3. JPMorgan retail analyst Matthew Boss raised his price target on TJX Companies on Tuesday to $126 per share from $125. But he estimated that the end of TJX’s most recent quarter may not be that great. Jim agrees with Boss’ assessment. “You know I think it’s terrific,” Jim said, referring to TJX stock. But he added, “I would probably let some go if we weren’t restricted.” Shares of TJX, the off-price retailer behind T.J. Maxx, Marshalls, and HomeGoods, are up 20% year-to-date. (Jim Cramer’s Charitable Trust is long MS, ABT, AMD, 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.
It’s been another great run for stocks since the Club’s last monthly meeting in June. The likelihood the Federal Reserve will lower interest rates sooner than later after recent upbeat inflation data pushed stocks to new highs over the past few weeks. Traders now see the odds of a rate cut by September at 100% , according to the CME FedWatch tool . The Dow Jones Industrial Average reached an all-time intraday high on Tuesday, while the S & P 500 did the same Monday. On July 11, the Nasdaq Composite hit new a new high as well. Taking advantage of the overbought market, we’ve executed a series of trades. The Club offloaded shares of TJX Companies on Friday in order to raise some additional cash. Before that, we made sales of Meta Platforms and Palo Alto Networks on July 8, locking in massive gains of 150% and 94%, respectively, since we first purchased both. On the flip side, we’ve looked for opportunities during the tech pullback. We started by initiating a small position in Advanced Micro Devices , a stock we most recently owned in the summer of 2023, and bought more on Tuesday. Through all the portfolio action, a key theme has emerged in the stock market, especially over the past week. Investors are jumping on the chance to get in on sectors outside of Big Tech. The Russell 2000 , which measures the performance of small-cap U.S. stocks, jumped nearly 11% in the past five sessions. Meanwhile, the tech-heavy Nasdaq edged 0.18% lower over the period. Case in point: Some of our biggest winners in 2024, mega-cap stocks like Amazon , Alphabet, Meta and Microsoft posted losses since our last meeting. Amazon is still up 27% for the year, while Alphabet and Meta jumped 31% and 38%, respectively. Other losers included our stocks with heavy ties to China: Wynn Resorts , Starbucks and Estee Lauder . All said, 12 of the portfolio’s 34 stocks were in the red. We see the market rotation playing out in our top-five performing names as well. From the June 27 close through Tuesday, only one company is in mega-cap tech. Here’s our top five and what’s driving the gains for each: 1. Ford Motor: 17.7% There wasn’t a single catalyst for Ford Motor’s outperformance. Investor sentiment, however, looks to have improved on signs that sales are picking up. Shares of the automaker rose on July 3 after the company said hybrid vehicle sales surged 56% in the second quarter, which set a new quarterly sales record for the segment. On July 11, the stock jumped again after June’s consumer price index (CPI) print indicated easing inflation and strengthened the Fed’s case to lower rates — an environment that could lead to more consumers buying Ford’s vehicles. The stock reached a 52-week high of $14.43 apiece on Monday. 2. Morgan Stanley: 10.9% Would a second presidency for Donald Trump benefit big U.S. banks? Investors in Morgan Stanley seem to think so. Shares advanced after President Joe Biden and Trump squared off during the June 27 presidential debate , which many viewed as a big win for the former president. Morgan Stanley’s momentum continued into July and hit an all-time high of $109.11 on Tuesday after the bank posted a largely better-than-expected second quarter report . We raised our price target to $120 from $98 apiece after results. 3. Stanley Black & Decker: 10.5% Stanley Black & Decker shares surged on recent signs of forthcoming monetary policy easing, which could spur housing market activity because of lower borrowing costs. More homeowners means more demand for the DeWalt parent’s offerings as buyers look for tools needed to fix things around the house. This, along with investors looking for pockets outside of Big Tech, have sent the stock higher since July 1. Shares of the company climbed 3.5% on Tuesday, and the Club capitalized of the stock’s advance, trimming our position in the afternoon. To be sure, we still see long-term gains ahead once the Fed starts to cut. 4. Apple: 9.7% Apple hit a record high of $237.23 apiece on Monday after Morgan Stanley listed the stock as a top industry pick. The Wall Street analysts said that the company’s artificial intelligence efforts will cause a much-needed upgrade cycle for the company’s flagship iPhone. Morgan Stanley also hiked Apple’s price target to $273 apiece from $213, a more than 16% upside from Tuesday’s close. It’s not like the stock was stalled: Shares have been climbing for months on excitement about Apple’s AI plans, which were recently unveiled at the company’s worldwide developers conference on June 10. 5. Dover: 7.3% Dover began its ascent higher on July 9 as capital rotated into sectors that benefit more from interest rate cuts. Dover is an industrial name, producing thermal connectors that are used in one of the fastest-growing end markets: data centers. This makes Dover a great under-the-radar AI play. “Dover is going to be a big name for me,” Jim said recently. Shares hit an all-time high Tuesday of $190.54 each, and closed the day nearly 3% higher. (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.
A trader works, as a screen broadcasts a news conference by U.S. Federal Reserve Chair Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange in New York City, U.S., June 12, 2024.
Brendan Mcdermid | Reuters
It’s been another great run for stocks since the Club’s last monthly meeting in June.
Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Monday’s key moments. The Dow Jones Industrial Average and S & P 500 reached record highs Monday as investors awaited more quarterly earnings and considered the impact of an attempted assassination of former President Donald Trump. Morgan Stanley posts financial results Tuesday, while fellow portfolio name Abbott Laboratories reports Thursday. Monday’s gains brings the market further into overbought territory, which led us to trim some TJX Companies on Friday afternoon to book profits and raise some extra cash. Wells Fargo stock climbed 2.5% Monday, clawing back from last week’s big post-earnings drop. Shares tumbled 6% Friday after net interest income (NII), an important measure of profitability for the firm’s lending activities, missed analysts’ expectations. Jim Cramer said Wells is a portfolio stock that will rise once the Federal Reserve lowers rates, leading to a rebound in the bank’s interest-based revenues. This, along with management’s push into fee-based businesses like investment banking, continue to make Wells attractive. In his Sunday column , Jim said Best Buy and Costco Wholesale are buys. Sales for the electronics retailers will surge as customers upgrade their PCs for newer models with artificial intelligence integration. Costco shares also dipped 5% last week, a pullback that had nothing to do with company’s fundamentals. In fact, the big box retailer last week announced its long-awaited membership fee increase — that will go into effect on Sept. 1 in the U.S. and Canada and should be a catalyst for the stock. (Jim Cramer’s Charitable Trust is long WFC, MS, ABT, TJX, BBY, COST. 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.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Market moves : Stocks were mixed Monday as money continued to shift out of high price-to-earnings multiple technology stocks that have outperformed this year and moved into cyclical areas of the market like energy, the financials, and industrials. It’s no wonder why the Dow Jones Industrial Average was higher Monday and the S & P 500 and Nasdaq were lower. For example, Club name Nvidia , the company at the center of the rally in artificial intelligence-related stocks, has quickly lost about 12% since hitting a closing high of $135.58 last Tuesday. It is worth noting that Nvidia has historically been prone to volatility at times. Conversely, the energy and utilities sectors — two of the worst-performing groups in June — charged higher. The oil rally was certainly helping our lone energy stock, Coterra Energy, which was nearly 4% higher on Monday. Next for tech : These rotations, which saw the Nasdaq recently lead and the Dow lag, have a habit of lasting a handful of sessions, making it hard to predict when and where those beloved tech stocks will stabilize. But what could turn the tide is a positive data point on industry spending later this week when Micron reports earnings. “People are picking apart the part of tech that’s been working and the Mag7 members except Apple. I think that this move will be hard to stop until we hear from Micron on Wednesday, which could tell us about actual demand and supply. I think that demand will stay strong,” Jim Cramer said Monday. Don’t chase : Still, the quick pullbacks in some of these AI names that were monster gainers over the past month is another reminder of why investors should be hesitant about chasing parabolic moves. This discipline is part of the reason why we trimmed Broadcom last week after it shot up after earnings. We ended up putting about half of the cash from that sale into Dover , an industrial company that can benefit as a second-order AI stock. Dover makes things that go into data centers, which are being upgraded and constructed at a fast clip to handle AI workloads. Record runs : As money rotated into other areas of the market, non-tech stocks like consumer products giant Procter & Gamble and off-price retailer TJX Companies reached all-time highs Monday. Industrial conglomerate Honeywell reached its highest levels back to late 2022. “Procter & Gamble might have the best consumer packaged goods profile and is barely up versus the rest of the group. I think it still has room to run,” Cramer said. Up Next: No earnings are out after the bell Monday. Cruise line Carnival reports before the opening bell Tuesday — and later in the morning, the Conference Board’s consumer confidence survey is released. (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.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.
(This is CNBC Pro’s live coverage of Tuesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest post.) The consumer was in focus on Tuesday’s early batch of analyst calls. Evercore ISI initiated a slew of retail names, including Nike, with outperform ratings. The firm noted these stocks can do well despite a challenging macro outlook. Meanwhile, RBC Capital Markets sees headwinds ahead for Home Depot and Lowe’s. The firm started coverage of both home improvement companies with sector perform ratings and price targets that imply little-to-no upside going forward. Check out the latest calls and chatter below. 6 a.m. ET: TotalEnergies is a ‘strong long-term compounder’ and a top pick, says Morgan Stanley Morgan Stanley named France-based oil and gas company TotalEnergies a “top pick” and assigned an overweight rating to the stock. According to analyst Martijn Rats, TotalEnergies offers an “unusual combination” of qualities: The company has both a deep oil and gas resource base with a sizable project pipeline, as well as “arguably the most extensive” new energies business among its peers, which could boost the company’s growth and earnings over time. Rats gave a €71.0, or $75.84, price target on the stock, implying shares could jump 14%. “When combined with high return on capital, low quarterly earnings volatility and a strong track record of delivery, we suspect this will make TotalEnergies a strong long-term compounder,” Rats wrote in a Nov. 6 note. Despite broader macroeconomic uncertainty, Rats said the energy sector still offers long-term attractions, such as strong free cash flow levels and strong buybacks, to investors. — Pia Singh 5:46 a.m. ET: RBC Capital Markets initiates Home Depot and Lowe’s, but doesn’t see much upside for either RBC Capital Markets initiated a couple of home improvement names but thinks neither stock can run too far as the trajectory of home prices could further depress consumer spending in the sector. Analyst Steven Shemesh initiated coverage of Home Depot and Lowe’s with a sector perform rating and price targets of $303 and $194, respectively. Those numbers indicate just 2.9% potential upside for Home Depot and 0.1% decrease for Lowe’s from their closing prices on Monday. Home Depot: Although the analyst likes Home Depot for the long term, he maintained a conservative outlook on the stock underpinned by two of RBC’s expectations: That the widening spread between home prices and home sales will create uncertainty in the market, which could lower home improvement spending. (Year-to-date home prices are roughly flat, while home sales are trending down by about 21%, which Shemesh said is the widest spread since 2007.) That Home Depot’s share of total PCE to revert towards pre-pandemic levels as consumer spending shifts back towards services “The LT structural tailwinds for the home improvement industry are clear. There’s a chronic undersupply of homes, the housing stock is rapidly aging, and the average size of homes is on the rise,” Shemesh said. “In addition to these industry tailwinds, HD’s recent supply chain investments and structurally advantaged real estate position it well to gain share over time.” Lowe’s: Shemesh said that while Lowe’s is currently trading at an attractive valuation, it is likely to underperform its peers in the near-term as consumers pull back on spending, assuming that higher-for-longer rates persist. The company has meaningful share gain and margin opportunity over the long term, he said. “We recognize that LOW sales have historically correlated to home prices (which are being buoyed by low inventory) more closely than home sales, but it’s highly unusual to see such a wide disparity between home prices and sales trends,” the analyst wrote. — Pia Singh 5:46 a.m. ET: Evercore ISI initiates Nike, TJX and Ralph Lauren as outperform Evercore ISI highlighted several retailers that can do well going forward despite a tough macro backdrop. “Given our cautious near-term stance, we prioritize stocks with strong defensive characteristics, a clear track record of execution outperformance, structural/scale advantages and visible sources of self-help to drive P & L upside until the macro path is clearer,” wrote analyst Michael Binetti. Binetti initiated Nike , TJX and Ralph Lauren — among others — with outperform ratings. Take a look where the analyst sees each of these names going from here: Nike (price target: $124, implying upside of 16%): “Stocks with high exposure to megatrends like Athletic and Healthy Lifestyle should see more upside and less downside in a volatile macro,” the analyst said. He also noted that recent comments from the apparel giant “suggest the fall period has been better than expected.” TJX (price target: $105, implying a gain of 15%): Binetti said TJX has the best “offprice execution, multiple paths to share gains (trade down, industry consolidation, price increases), under-earning segments (HomeGoods, Internat’l), store remodeling tailwinds and SG & A pressure easing.” Ralph Lauren (price target: $130, pointing to 13% upside): The analyst noted Ralph Lauren’s “consistent execution” should allow the stock to hold its premium valuation relative to peers. He also said the company’s “customer evolution and best-in-class balance sheet should let it invest through sector weakness.” — Fred Imbert
A customer pushes a shopping cart full of groceries outside a Wal-Mart in Rogers, Arkansas, left, and a pedestrian passes a Target store in the Tenleytown neighborhood of Washington, D.C.
Getty Images
Target and Walmart are both catering to thriftier shoppers, but the two big-box retailers have seen very different outcomes when it comes towinning their dollars.
Walmart, the nation’s largest grocer, makes more than half of its annual revenue from selling groceries — a category that shoppers buy even when times are tight. Target draws only about 20% of its yearly revenue from grocery, making it rely more on sales of items such as clothing, earrings and throw pillows that customers may skip when feeling frugal.
Wall Street added to the confusion with its own counterintuitive moves. After earnings reports, it snapped up Target’s stock on Wednesday and sold off Walmart’s shares on Thursday. The potentially surprising moves could reflect the companies’ recent stock performance, since shares of Walmart are up about 10% this year compared with Target shares’ decline of about 13% during the same period.
Despite the differences, the companies showed they still have much in common. Target and Walmart leaders offered similar descriptions of American consumers who now think twice before spending money on nonessential items while paying more for food.
“As we look at the consumer landscape today, we recognize the consumer is still challenged by the levels of inflation that they’re seeing in food and beverage and household essentials,” Target CEO Brian Cornell said on a call with reporters. “So that’s absorbing a much bigger portion of their budget.”
Walmart Chief Financial Officer John David Rainey echoed similar sentiments, describing consumers as “choiceful or discerning” on a call with CNBC.
Yet both executives added that shoppers can be persuaded to spend, with a good deal or when getting ready to celebrate holidays or seasonal events.
Here’s a closer look at three key ways that Target’s and Walmart’s most recent quarterly results diverged:
As shoppers head out into the world again, some retailers have seen double-digit declines in online spending.
Target followed that pattern in the second quarter. Its digital sales dropped by 10.5% year over year.
Walmart bucked the trend. E-commerce sales rose 24% for Walmart U.S. in the second quarter.
Both retailers pointed to curbside pickup as a major driver of online sales — a key differentiator from competitor Amazon.
Walmart chalked up online sales gains to store pickup and delivery, as well as more advertising revenue. It also credited its third-party marketplace, which is Walmart’s take on Amazon’s online business model. The online marketplace is made up of vendors who list items on Walmart’s website, which helps to expand the merchandise assortment and comes with a higher profit margin than selling online items directly.
Customers are also visiting Walmart’s website and app more often, Rainey said. The number of weekly active digital users grew more than 20%, he said on the company’s earnings call. The number of customers buying items on Walmart’s marketplace increased 14% in the second quarter, with double-digit growth across home, apparel and hard lines, a category that includes sports equipment and appliances.
Target has lagged behind in online sales. But it is making moves to try to turn around trends.
The retailer will roll out a remodel of its digital experience in the next three months, Target Chief Growth Officer Christina Hennington said on an earnings call Wednesday. She said the website will “include different landing experiences, more personalized content, enhanced search functionality, ease of navigation and other updates to bring more joy and convenience to our digital guests.”
Walmart, for its part, refreshed the look of its website and app in the spring.
For more than a year, Americans have generally shown reluctance to spring for new outfits, gadgets or other items that they can live without.
That’s made life harder for retailers, which rely on big-ticket and impulse-driven purchases to buoy sales. The merchandise tends to drive higher profits than selling the basics such as milk, bread and paper towels.
Rainey, Walmart’s CFO, pointed to signs that may be changing. He said there was “modest improvement” in discretionary goods in the second quarter, even though general merchandise sales still dropped by low double digits year over year. He said sales of blenders, hand mixers and other kitchen tools popped, as some consumers cook more at home.
Target didn’t see the same relief. Sales of frequency categories, such as food and beauty items, weren’t enough to offset weaker discretionary sales at the retailer.
Target’s Hennington said trends in discretionary categories “remain soft overall.” She pointed out some exceptions, including the popularity of a Taylor Swift vinyl and colorful Stanley tumblers designed with Chip and Joanna Gaines.
Both retailers, however, said they’re stocking up on essential items and placing more modest orders for discretionary stuff. Target, for instance, said at the end of the second quarter, its overall inventory levels fell year over year — but it intentionally reduced discretionary inventory even more.
Retailers have plenty to worry about as food prices remain high, interest rates rise and student loan payments return.
But Walmart and Target struck contrasting tones when speaking about the months ahead.
Target CEO Cornell said sales trends improved in July, but not enough to keep the company from cutting its outlook for the year. When asked about back-to-school shopping, Cornell and Chief Financial Officer Michael Fiddelke stressed it was very early in the season.
Walmart hit a more confident note. On the earnings call, CEO Doug McMillon said general merchandise sales outperformed the company’s expectations. He said the popularity of GLP-1 drugs, medications such as Ozempic that are used for diabetes and weight loss, could also drive foot traffic and revenue going forward.
And, he added, “the trends we see in general merchandise sales make us feel more optimistic about those categories in the back half of the year.”
McMillon said back-to-school has gotten off to a better start than the company predicted. He said that spending tends to correlate with consumer spending later in the year — which could be a positive sign for the critical holiday season.
“Typically when back-to-school is strong, it bodes well with what happens with Halloween and Christmas and GM [general merchandise] in the back half,” he said.
Target shared similar hopes that customers will open up their wallets and reverse the retailer’s sales slump as the season of pumpkin spice and gift-giving approaches. It saw traffic and sales trends improve in July, which it credited in part to spending for the Fourth of July holiday.
“We know our guests want to celebrate culturally and seasonally relevant moments and will be leaning into those moments in a big way in the third quarter and the upcoming holiday season,” Hennington said.
The Club’s 10 things to watch Friday, August 18 1. Stocks are poised to open lower Friday, putting the S & P 500 on track for its third-straight week of losses. This is certainly a moment for investors to exercise patience, as we noted during the Investing Club’s Monthly Meeting on Thursday. Meanwhile, the market is finally in oversold territory, per the S & P 500 Short Range Oscillator. 2. Club name Estee Lauder (EL) on Friday posts a small quarterly profit, compared with market expectations of a loss. But the prestige beauty firm’s guidance for adjusted earnings-per-share (EPS) for its fiscal year 2024 was in a range of $3.50 to $3.75, well below analysts’ forecasts for $4.88 a share, as travel retail in Asia remains challenged. Still, Estee Lauder expects to return to organic sales growth in fiscal 2024 and deliver sequentially improving margins throughout the year. Shares plummeted nearly 6% in premarket trading, to around $152 apiece. 3. Shares of Applied Materials (AMAT) are rising in premarket trading after the semiconductor-equipment maker topped expectations in its third quarter and provided an upbeat view of the fourth quarter. JPMorgan on Friday raises its price target on the stock to $165 a share, from $145, while maintaining a a buy-equivalent rating. 4. Strong earnings from off-price retailers continues, with Ross Stores (ROST) posting second-quarter EPS of $1.32, ahead of market estimates of $1.16 a share. Even so, the best operator in the space remains Club name TJX Companies (TJX), which delivered a strong quarterly beat and raise on Wednesday. 5. Oppenheimer lowers its price targets on a slate of big banks, including Goldman Sachs (to $461 a share, from $483), Citigroup (to $85 from $88) and Bank of America (to $49 from $52), but maintains a buy-equivalent rating on all three. Oppenheimer notes that the KBW Bank Index (KBX) fell about 30 percentage points relative to the market in the weeks after the collapse of Silicon Valley Bank in March, and the group has yet to recover this underperformance despite stable fundamentals. 6. Will there be fireworks tonight after the closing bell when Club name Palo Alto Networks (PANW) reports its earnings and provides an update on its medium-term targets? There’s universal caution here, even with the stock down more than 18% this month, but the market will have a full weekend to digest whatever the cybersecurity leader has to say. 7. Deere & Co. (DE) posts a big EPS beat of $10.20, compared with analysts’ forecasts for $8.19 a share, while raising its full-year outlook. 8. Club name Amazon (AMZN) is reportedly adding a new 2% fee on third-party sellers who use the ecommerce giant’s Seller Fulfilled Prime program, according to Bloomberg. That’s another step that would incrementally help its retail margins. 9. B. Riley on Friday upgrades Marvell Technology (MRVL) to a buy rating, from neutral, thanks to an “expected wave of AI-led growth.” The firm also raised its price target on Marvell to $75 a share, from $60. The chipmaker is scheduled to report quarterly results on Thursday. 10. Evercore ISI previews Club holding Apple ‘s (AAPL) upcoming iPhone 15 launch, set for September. The firm expects the new iPhone will be more evolutionary than revolutionary, but should still drive a so-called device refresh and higher average-selling prices. Historically, Apple tends to outperform the market into its launch events, but that hasn’t been the case so far this year. Sign up for Jim Cramer’s Top 10 Morning Thoughts on the Market email newsletter for free . (See here for a full list of the stocks at 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.
1. Stocks are poised to open lower Friday, putting the S&P 500 on track for its third-straight week of losses. This is certainly a moment for investors to exercise patience, as we noted during the Investing Club’s Monthly Meeting on Thursday. Meanwhile, the market is finally in oversold territory, per the S&P 500 Short Range Oscillator.
2. Club name Estee Lauder (EL) on Friday posts a small quarterly profit, compared with market expectations of a loss. But the prestige beauty firm’s guidance for adjusted earnings-per-share (EPS) for its fiscal year 2024 was in a range of $3.50 to $3.75, well below analysts’ forecasts for $4.88 a share, as travel retail in Asia remains challenged. Still, Estee Lauder expects to return to organic sales growth in fiscal 2024 and deliver sequentially improving margins throughout the year. Shares plummeted nearly 6% in premarket trading, to around $152 apiece.
3. Shares of Applied Materials (AMAT) are rising in premarket trading after the semiconductor-equipment maker topped expectations in its third quarter and provided an upbeat view of the fourth quarter. JPMorgan on Friday raises its price target on the stock to $165 a share, from $145, while maintaining a a buy-equivalent rating.
4. Strong earnings from off-price retailers continues, with Ross Stores (ROST) posting second-quarter EPS of $1.32, ahead of market estimates of $1.16 a share. Even so, the best operator in the space remains Club name TJX Companies (TJX), which delivered a strong quarterly beat and raise on Wednesday.
5. Oppenheimer lowers its price targets on a slate of big banks, including Goldman Sachs (to $461 a share, from $483), Citigroup (to $85 from $88) and Bank of America (to $49 from $52), but maintains a buy-equivalent rating on all three. Oppenheimer notes that the KBW Bank Index (KBX) fell about 30 percentage points relative to the market in the weeks after the collapse of Silicon Valley Bank in March, and the group has yet to recover this underperformance despite stable fundamentals.
6. Will there be fireworks tonight after the closing bell when Club name Palo Alto Networks (PANW) reports its earnings and provides an update on its medium-term targets? There’s universal caution here, even with the stock down more than 18% this month, but the market will have a full weekend to digest whatever the cybersecurity leader has to say.
7. Deere & Co. (DE) posts a big EPS beat of $10.20, compared with analysts’ forecasts for $8.19 a share, while raising its full-year outlook.
8. Club nameAmazon (AMZN) is reportedly adding a new 2% fee on third-party sellers who use the ecommerce giant’s Seller Fulfilled Prime program, according to Bloomberg. That’s another step that would incrementally help its retail margins.
9. B. Riley on Friday upgradesMarvell Technology (MRVL) to a buy rating, from neutral, thanks to an “expected wave of AI-led growth.” The firm also raised its price target on Marvell to $75 a share, from $60. The chipmaker is scheduled to report quarterly results on Thursday.
10. Evercore ISI previews Club holding Apple‘s (AAPL) upcoming iPhone 15 launch, set for September. The firm expects the new iPhone will be more evolutionary than revolutionary, but should still drive a so-called device refresh and higher average-selling prices. Historically, Apple tends to outperform the market into its launch events, but that hasn’t been the case so far this year.
(See here for a full list of the stocks at 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.
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.
When Bed Bath & Beyond shuts its doors for good, certain retailers should benefit from both the real estate and inventory opportunities, Bank of America wrote in a note Tuesday. Bed Bath & Beyond will close its remaining 360 namesake and 120 Buy Buy Baby locations by June 30 after filing for Chapter 11 bankruptcy protection last week. Since the storefronts are largely in high-traffic suburban areas, the locations are attractive to retailers as shoppers return to stores after Covid. “Stores average 30k square feet and are located in ideal off mall or strip center spots,” said analyst Lorraine Hutchinson. In addition, its assortment of home decor and baby products could flow through to off-price retailers at significant discounts, she noted. Bed Bath & Beyond vendors will also likely redirect products to off-price retailers as a way to diversify the business without seeing a drop in sales, she added. “While one bankruptcy is not thesis-changing, competitors going out of business is one of the tenets of the off-price market share story that has been missing over the past few years. We expect off-price to be ready to take advantage of this and any others,” Hutchinson wrote. Burlington and TJX are among the biggest beneficiaries, she said. Vacant Bed Bath & Beyond stores should be “great” for Burlington, which plans to grow its store count by 8% this year. Only 35% of Bed Bath & Beyond stores already have a Burlington location within a one-mile radius and 50% within two miles, Hutchinson pointed out. Burlington, which is trying to increase its penetration in home goods, could also see a 3% sales lift from taking 5% of Bed Bath & Beyond’s sales, she said. Hutchinson has a buy rating on the stock and $250 price target, which implies nearly 34% upside from Monday’s close. Meanwhile, TJX’s HomeGoods could also gain from snatching up vacancies. Only 38% of Bed Bath & Beyond stores have a HomeGoods store within a one-mile radius and 52% within two miles, Hutchinson pointed out. TJX plans to grow its HomeGoods store count by 5% this year and its T.J. Maxx and Marshalls store count by 2%. The company should also snag deals on the beleaguered retailer’s inventory. “We expect TJX will be a key beneficiary of the closeout product given it is the largest (making it the top choice for vendors) and the HomeGoods assortment is aligned with that of BBBY,” Hutchinson said. She estimated TJX could see a 1% sales lift if it can capture 5% to 10% of Bed Bath & Beyond’s sales. Hutchinson has a buy rating and $94 price target on the stock, which suggests 20% upside. — CNBC’s Michael Bloom contributed reporting.
Craig Jelinek, chief executive officer of Club holding Costco (COST), said Monday he sees a more-vigilant consumer this holiday shopping season and potentially beyond. However, he also said inflation is generally trending in the right direction, a development that’s good for the U.S. economy over the long term. “Overall, it’s probably not one of the most exciting Christmases I’ve ever dealt with, and I think that has a lot to do with the consumer being careful going into next year,” Jelinek said in a CNBC interview. We tend to look to Costco as a barometer for the economy since it sells such a wide variety of goods and services to its nearly 121 million cardholders. Bottom line Jelinek painted a mixed picture Monday, sounding more cautious on the consumer than some may have expected — especially when it comes to purchasing bigger-ticket items like furniture, high-end TVs and jewelry. At the same time, the retail CEO had mostly favorable things to say on inflation easing and sales in some categories including its private-label Kirkland Signature brand. We left the interview believing our cautious stance on retail stocks remains justified. Costco is one of just two in our portfolio along with TJX Companies (TJX), an off-price retailer that benefits from the industry’s inventory glut and bargain-seeking shoppers. TJX is the company behind the T.J. Maxx, Marshalls and HomeGoods stores. Costco similarly benefits as more consumers want a reprieve from an inflationary environment, so they turn to a company with a proven value-oriented ethos. “We’re the price police,” Jelinek told CNBC, saying Costco is “absolutely” trying to negotiate with its suppliers to roll back increases that were implemented during the pandemic. “You pay to shop with us. Our job is to lower prices,” he said. Costco members believe it makes good on that promise — U.S. and Canada membership renewal rates were 92.5% at the end of its fiscal first quarter, and worldwide renewal rates stood at 90.4%. While these numbers support our investment in Costco long-term, we do not ignore the economic realities and potential for a slowdown in comparable sales growth, an important metric in the retail industry. This is why we booked some profits in the name earlier this month , before Costco released mixed fiscal Q1 numbers. What Jelinek said Monday also reinforces that belief. Down the road, the potential for a special dividend and membership-fee hike remains on the horizon, representing positive catalysts that would boost the stock. But in the near term, a more measured outlook on COST shares is in order. Consumer behavior Jelinek highlighted a number of stronger areas for Costco, including its Kirkland-branded products across a number of categories. “Kirkland Signature continues to grow market share on everything that we sell. … We put it on everything from alcohol to luggage, and it continues to take market share as we continue to figure out how to lower prices in that brand,” the CEO said. “Our food [and] sundry business, our fresh business, our travel business, continues to be strong,” Jelinek added. This is notable because together food and sundries was Costco’s largest merchandise category by sales in fiscal 2022, accounting for 38.4% of the company’s $222.73 billion in overall revenue. It includes freezer, deli, liquor and dry grocery items. Fresh foods was about 13% of total sales. In electronics, Jelinek said sales of video game consoles like Sony’s PlayStation are “relatively strong” during the holiday season. “Apple is still strong, although there can be some issues getting product at the moment, particularly phones,” Jelinek added, backing up prior reporting on the iPhone maker’s Covid-related supply challenges in China. Apple (AAPL) is also a Club holding. Sales of TVs are actually up on a unit basis, he said, but not in dollar terms, which may lend credence to the view that consumers are being more cautious. “Some of the real higher-end TVs we don’t see selling at this point,” he said. Furniture is another formerly strong area where sales have moderated to be “relatively flat,” Jelinek said. Looking ahead to next year, Jelinek said Costco is taking stock of the economic uncertainty and factoring that into its merchandising plans. “I think we’re being very careful in terms of what we buy in jewelry, televisions and probably furniture — and maybe relatively careful next year on what’s going to happen in apparel.” Inflation Jelinek offered up a detailed look at how price pressures are trending on key items — some easing, some worsening. But overall, “I think you’ll balance it out,” he said. “I see, in my opinion, particularly of just supply and demand, you’re going to start to see prices start to slowly start to come down after the first of the year.” For example, Jelinek said a considerable decline in the cost of shipping containers should provide deflationary pressures for goods made in Asia and exported elsewhere. This includes furniture, he said. On a more granular level, he said egg prices are up due to a bird flu outbreak in the U.S. — and for other reasons, chemicals that go into detergents “seem to be going up a little bit.” He added, “Some of the paper goods are starting to go up because of the cost of paper.” Jelinek mentioned a number of places where inflation is trending downward — lumber, certain products made with resin, and “even meat prices.” Labor costs may remain a bit more sticky, though, he added. (Jim Cramer’s Charitable Trust is long COST, AAPL 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.
A shopper wearing a protective mask looks at a television for sale inside a Costco store in San Francisco, California, on Wednesday, March 3, 2021.
David Paul Morris | Bloomberg | Getty Images
Craig Jelinek, chief executive officer of Club holding Costco (COST), said Monday he sees a more-vigilant consumer this holiday shopping season and potentially beyond. However, he also said inflation is generally trending in the right direction, a development that’s good for the U.S. economy over the long term.
Market Movers rounds up the best trade ideas from investors and analysts throughout the day. Virtus Investment Partners’ Joe Terranova talked TJX Companies , as the stock hit a new all-time high Friday . The experts also discussed Ross Stores as its stock popped nearly 10% after the retailer reported better-than-expected earnings and revenue for the latest quarter. Credit Suisse named the company its top pick in the off-price space . Odyssey Capital Advisors’ Jason Snipe said Palo Alto Networks , which beat quarterly results on top and bottom lines, is an expensive stock but is a leader in cybersecurity and a good long-term hold. Other names mentioned include Alphabet and Devon . Both of those stocks, along with TJX, are currently held in Jim Cramer ‘s Charitable Trust portfolio.
Ross Stores is one of the best ways investors can get in on the off-price retail trade, Wells Fargo said. Analyst Ike Boruchow upgraded the stock to overweight, saying in a note to clients Tuesday that he sees upside to Wall Street’s estimates ahead. “Enthusiasm with regard to the company’s margin management versus expectations, and comfort with top-line demand, yields enthusiasm,” he wrote, noting that he expects the company’s negative revision pattern to come to a close. Boruchow expects improving fundamentals across the off-price sector due in part to growing inventory availability as consumers trade down. He also sees freight to reemerge as a margin tailwind as spot rates normalize. The analyst reiterated the bank’s recent naming of Burlington Stores as a top pick, noting he’s refraining from upgrading TJX Companies despite stable margins and its decent stock performance (down 8.9% this year). “Simply put, we believe BURL and ROST are the best ways to play our bullish off-price thesis,” he wrote, calling both companies “better recovery stories.” Boruchow upped Wells Fargo’s price target on Ross Stores to $110 from $90 a share, suggesting the stock could rally 26% from Monday’s close. Shares are down about 24% this year. The stock gained roughly 2% in premarket trading. — CNBC’s Michael Bloom contributed reporting
