Good news is good news for the market. Palo Alto Networks may be a buy
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch—an actionable afternoon update just in time for the final hour of trading on Wall Street. (We’re no longer recording audio so we can get this new written feature to members as soon as possible.) Good News Is Good News: The Stock Market Correctly Treats Good Jobs Data as Good News—Whatever It Means First Fed Rate Cut time. Some may worry that the still-tight labor market will lead to too high inflation. But the reality is that strong job growth coupled with rising but slowing wage growth is a good prospect for the U.S. economy. If the market needs the Fed to cut interest rates for the first time since the tightening cycle so much, why has the rally barely stalled? The lack of news could also be good news: Friday’s market rally wasn’t just about the jobs data. With no new escalation in the situation in the Middle East, the situation is rebounding. Those concerns were the catalyst that sent oil prices surging late Thursday and stocks spiraling higher. We have to monitor Middle East and oil dynamics. But more importantly, Thursday afternoon’s reversal had nothing to do with the Fed. Our suggestion is to block out daily Fed remarks and only focus on what Fed Chairman Powell is saying. Powell said this week he would cut interest rates if necessary but said central bankers needed more time to address the issue. This is no different than what he has said before and is consistent with what Jim Cramer and I have been saying for some time. Ford shares rise: Morgan Stanley auto analyst Adam Jonas raised his price target on club name Ford to $17 a share from $16. The move comes in response to the automaker’s announcement on Thursday that it would delay production of new all-electric SUVs and pickup trucks to focus on its more profitable and in-demand hybrid products. Jonas believes that the slowdown in the popularity of electric vehicles is a good thing for traditional American automakers such as Ford. we agree. Ford’s evolving plan to reduce electric vehicle production means narrowing losses and reducing capital expenditures. This has a positive impact on profits, and we know stocks tend to move in a profitable direction. Ford’s strategic focus should also increase free cash flow, thereby increasing the likelihood of greater cash returns for shareholders. While Ford would prefer to return excess cash via a special dividend, we’d prefer to see more buybacks next time since the stock trades at just seven times forward earnings and already pays a hefty dividend. GM’s well-timed buyback last November did wonders for the stock price. Top Performing Stocks of the Week: The four best performing stocks in the portfolio this week are Meta Platforms, Eaton, Wynn Resorts and Amazon. Meta was also one of the S&P 500’s biggest gainers, driven by a raft of positive comments about how it could use generative artificial intelligence tools to gain share in the advertising market. Eaton Corp. rose as several analysts upgraded their ratings. Wynn Resorts surged on Monday on better-than-expected Macau gross gaming revenue data. Wynn stock outperformed Thursday’s sell-off, thanks to an initial buy rating and $131 per share price target from Mizuho Group. Amazon is bouncing back on some positivity — it hit a new 52-week high on Friday and is back to levels last seen in 2021. Weekly Worst Performers: The four worst performers in the portfolio are Foot Locker, Estee Lauder and Palo Alto Networks and TJX Corporation. It’s no coincidence that three retail stocks appear on this list. The retail ETF (XRT) had its worst week in more than a year amid poor earnings from PVH, a soft update from Ulta Beauty and gas prices hitting their highest level in six months. The problem with a big retail downturn like this is that it often has both good and bad consequences. Costco and TJX should perform better because they are both market share gainers and provide great value to customers. Both stocks represent opportunities for us. Palo Alto Networks is down despite no concrete news, and we’re considering whether to add to the position in response to recent weakness. (See here for a complete list of stocks in the Jim Cramer Charitable Trust.) As a subscriber to Jim Cramer’s CNBC Investing Club, you will receive trade alerts before Jim makes his trades. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation shall exist or arise upon your receipt of any information relating to the Investment Club. No specific results or profits are guaranteed.
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch—an actionable afternoon update just in time for the final hour of trading on Wall Street. (We are no longer recording audio so we can make this new written feature available to members as soon as possible.)
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