Every weekday, CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the final hour of trading on Wall Street. Market moves: The S&P 500 was on track for small gains after a solid rally last Friday. There’s still some market rotation, but this time it’s the opposite of the tech flight that has dominated the past few weeks. The so-called Magnificent Seven stocks — six of which we own: Apple, Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia — performed best on Monday. Small caps, as measured by the Russell 2000, are lagging. Month-to-date, the Russell is up nearly 9%, the Dow is up 3.5%, the S&P 500 is virtually flat and the Nasdaq is down nearly 2%. Trial Verdict: We’re encouraged by how well Abbott Laboratories, a company known as Club, shares have rallied from their morning lows despite being ordered to pay $495 million in its premature infant formula verdict. The slight pullback could be a sign that the bad news was already priced in, given the tens of billions in market cap already lost since March. Or it could be a sign that Wall Street recognizes the joke that this verdict was. Abbott CEO Robert Ford believes that pulling these products would cause a public health crisis. What other options does Abbott have to limit its litigation risk? If the stock is only down 1% on this bad news, we can’t help but wonder what the upside would be if they started winning cases or if there was a settlement. Abbott is still a long way from either, but this type of exercise helps frame our risk/reward going forward. IPO Discussion: Shares of Honeywell, a company known as Club, briefly spiked a few percent on Friday following a Bloomberg report that the company was considering an IPO of its Quantinuum quantum computing business as early as next year. The valuation was rumored to be around $10 billion. We see a move like this as a small positive and possible recognition that Honeywell plans to monetize the business at an increasing valuation. But we’re not surprised to see the stock quickly give up those gains. “Honeywell doesn’t get any credit for Quantinuum because the company didn’t deliver earnings last week. The market isn’t going to give them a free pass,” Jim Cramer said Monday afternoon. Honeywell reported strong revenue and better adjusted earnings per share in the second quarter, but disappointingly cut its full-year adjusted EPS outlook due to a slower recovery in its short-cycle businesses and acquisition-related costs. Coming up: Tuesday kicks off the Club’s second-quarter earnings season. Before the opening bell, we’ll get numbers from Procter & Gamble and Stanley Black & Decker. We took a couple of small sells in Stanley Black & Decker on gains we didn’t want to give back. Twelve other Club names reported earnings this week, including Advanced Micro Devices, Microsoft and Starbucks after Tuesday’s close. We bought more shares of Starbucks on Monday, not in anticipation of the quarterly results, but to follow through on what we said a week ago when we upgraded the stock to a 1 rating, equivalent to a buy, after news that activist firm Elliott Management had taken a stake in the coffee giant. (See here for a complete list of Jim Cramer’s Charitable Trust 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 portfolio. If Jim has discussed a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY LIABILITY EXISTS, OR IS CREATED, BY REASON OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
Every weekday, CNBC Investing Club with Jim Cramer releases the Homestretch—an actionable afternoon update, just in time for the final hour of trading on Wall Street.
cnbc
Rana AdamJuly 29, 2024 39 3 minutes read
