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Here are the 5 price-target changes and 4 trades we made during this busy earnings week

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4 months ago

August 5, 2023

In a jam-packed week of earnings, the Club executed multiple trades and elevated price targets for some of our biggest stocks. Many of these moves stemmed from what we saw in quarterly numbers and heard on conference calls. Here’s a day-by-day look at the portfolio action. Monday The week began with our decision to exit our Johnson & Johnson (JNJ) position, as the legal road ahead for the pharmaceutical and medical device maker became too treacherous to navigate. After trying to resolve its talc liabilities through bankruptcy failed for a second time, we concluded that upside in the stock would be limited for the foreseeable future, and our money could be put to better use elsewhere. We realized a small profit on Monday’s sale of what had been our remaining 500 shares. Microsoft (MSFT) and GE Healthcare (GEHC) fit the bill as better places to put money to work, so Monday afternoon we bought 45 more shares of MSFT and 225 more shares of GEHC. Along with our Microsoft purchase, we upgraded our rating on the technology giant to a 1, our buy-it-here equivalent. Simply put, we felt the technology giant’s post-earnings decline was overdone and represented an opportunity to add exposure to one of the leading artificial intelligence players right now. Microsoft shares on Friday traded a bit below the roughly $334-per-share price we paid Monday. Similarly, the stock decline after GE Healthcare’s earnings beat and guidance raise on July 25 seemed unwarranted, so we gladly took advantage of it to boost our position in the major medical technology provider. Tuesday This was the busiest day of them all, with one trade — Honeywell International (HON) — and price-target hikes for Caterpillar (CAT), Stanley Black & Decker (SWK) and Advanced Micro Devices (AMD). Our decision to buy 25 shares of Honeywell followed an approximately 7% decline for the stock since the aerospace-focused industrial reported earnings on July 27. Sensing a theme with our purchases this week? Honeywell’s quarter wasn’t perfect, but we didn’t want to squander a chance to buy back some of the 60 HON shares we sold at higher levels earlier in July. After impressive second-quarter results , we took our Caterpillar price target to $300 per share, implying about 6% upside from where the stock opened Friday. Our prior PT was $285 per share. At the same time, given the stock has had a strong move, up over 13% over the past month, our discipline suggests locking in some profits in CAT is appropriate. Jim Cramer reminded Club members of that viewpoint during Thursday’s Homestretch . Our trading restrictions have prevented us from acting on that, but we may look to do so Monday. Turnaround play Stanley Black & Decker is increasingly likely to return to profitability later this year, motivating our price-target bump to $110 per share from $100. The toolmaker’s second-quarter print was solid, offering further evidence that its post-pandemic stumbles are being overcome. Stanley Black & Decker, which traded around $99 per share Friday, skyrocketed in the thick of Covid when everyone was fixing up their houses. The stock reached an all-time closing high of $220.69 in May 2021. Following AMD’s better-than-feared Q2 release late Tuesday, we raised our price target on the stock to $135 per share from $120. It was reached by applying a 32 multiple on 2024 earnings estimates. We kept our 2 rating. The day after earnings, AMD shares closed down 7%. But strong sessions Thursday and Friday pushed the stock up more than 4% over the past week to about $116 per share. Wednesday On this relatively calm day, we reiterated our 1 rating and $110 price target on shares of Emerson Electric (EMR). On Friday, Emerson was trading around $96 per share, implying about 14% upside to our target. The Missouri-based industrial firm, which fell from our graces earlier this year with its National Instruments bid, reported a strong quarter before the bell Wednesday. That gave us the confidence to double down on our outlook and rating for the stock. Emerson, like other Club industrials including Caterpillar and Honeywell, has come back to life after a suboptimal start to the year. Thursday A pair of our Big Tech holdings — Amazon (AMZN) and Apple (AAPL) — got price-target boosts Thursday after their quarterly results. Amazon shined bright as second-quarter revenue growth stabilized for its highly profitable cloud-computing division, and its companywide third-quarter guidance came in higher than Wall Street expectations. Against this bullish backdrop, we raised our price target on Amazon to $160 per share, up from $140. That represents about 13% upside from where the stock opened Friday’s session at $141 per share. Apple’s fiscal third-quarter results contained plenty to like , especially an all-time high $21.2 billion in high-margin Services sales. As we get closer to the start of Apple’s fiscal 2024, our new price target of $205 per share is based on a 31 multiple for 2024 earnings estimates. The iPhone maker’s stock was down more than 3% Friday to roughly $184 per share. Our previous price target was $185. Bottom line So far, earnings season has shaped up well for Club holdings, requiring us to update our price targets to better reflect the upside we expect for the stocks. At the same time, it’s also presented opportunities to take advantage of earnings-related weakness in a couple of stocks, such as Microsoft and Honeywell. The calendar calms down somewhat next week, with four Club names reporting: Coterra Energy (CTRA) after the closing bell Monday (with a Tuesday morning post-earnings call), Eli Lilly (LLY) before the bell Tuesday, and Walt Disney (DIS) and Wynn Resorts (WYNN) both after the bell Wednesday. We’ll continue to evaluate each report strategically, adjusting our ratings and targets as necessary. (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 chaAfter ritable 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.

CNBC Investing Club with Jim Cramer

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Here are the 5 price-target changes and 4 trades we made during this busy earnings week

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