February was a great month for Wall Street. These were our 5 best-performing stocks

February was a great month for Wall Street. These were our 5 best-performing stocks

Post By Business Bausch Health Companies Inc, Breaking News: Business, Breaking News: Markets, Breaking News: Technology, business news, Dow Jones Industrial Average, Foot Locker Inc, GE HealthCare Technologies Inc, Investment strategy, Jim Cramer, Markets, Meta Platforms Inc, NASDAQ Composite, NVIDIA Corp, Palo Alto Networks Inc, pharmaceuticals, Retail industry, S&P 500 Index, stock takes, Technology, Wynn Resorts Ltd

February was a strong month for stocks and the Club’s portfolio. The advance came as investors parsed through fourth-quarter earnings results and fresh economic data, searching for clues about when the Federal Reserve will finally cut interest rates. The Nasdaq Composite led the march higher in February, gaining 6.1% and finishing the month at its first record close since November 2021. Meanwhile, the Dow Jones Industrial Average and S & P 500 both hit a series of all-time highs throughout the month, climbing 2.2% and 5.2%, respectively. The Club held its conviction on stocks with positive long-term fundamentals, buying Palo Alto Networks shares during the cybersecurity company’s overblown post-earnings selloff. We made a handful of other trades, too, such as adding to our Wynn Resorts position and booking profits in Wells Fargo. Although the majority of our 32-stock portfolio ended February in the green, five holdings separated from the pack. NVDA YTD mountain Nvidia (NVDA) year-to-date performance Nvidia was our top-performing stock for February. Shares surged 28.6% in the month on the back of stellar quarterly results and continued investor optimism in generative artificial intelligence. Despite briefly losing some steam ahead of its Feb. 21 earnings release, the stock resumed its winning ways once investors saw the actual numbers. It closed Thursday at a record high of $791.12 per share. After earnings, the Club lifted its Nvidia price target to $850 per share, from $750, because we see little reason for the chipmaker’s run to end as AI investments continue apace. Following a monstrous gain in 2023, Nvidia is up another 59.75% so far in 2024. META YTD mountain Meta Platforms (META) year-to-date performance Coming in at No. 2 is Meta Platforms , which advanced 25.6% over the period. Shares of the Facebook parent received a boost from its Feb. 1 earnings release , rocketing higher by 20.3% in the following session. Investors celebrated Meta’s robust first-quarter guidance and decision to institute a quarterly dividend – a positive sign for the company’s long-term health. During the Investing Club’s Annual Meeting on Saturday, Jim Cramer described Meta CEO Mark Zuckerberg as “a very competitive guy,” saying “he heard people wanted a dividend, so he gave them a dividend.” The Club also elevated Meta into our 12-stock group of core holdings . GEHC YTD mountain GE Healthcare (GEHC) year-to-date performance GE Healthcare shares jumped 24.4% during February, occupying the No. 3 spot. Like Nvidia and Meta, the company saw more upside after its quarterly results on Feb. 6. Expectations were low on concerns around China’s health-care industry crackdown, but management delivered with better-than-anticipated results and upbeat guidance. We nudged up our price target on the medical equipment maker’s stock to $92 per share from $91. Once a battleground stock, GE Healthcare generated praise from Wall Street analysts after the quarter, as well. Its former parent company, General Electric, also sold some of its remaining GEHC shares later in the month, helping chip away at a long-standing overhang for the Club stock. GE Healthcare also is a core holding. FL YTD mountain Foot Locker (FL) year-to-date performance Foot Locker was the portfolio’s fourth-best stock in the month. Shares rose 22.3% during February, though they are still firmly below their year-ago levels. It’s hard to pinpoint a singular factor driving Foot Locker’s stellar performance in February, but a positive update surrounding the retailer’s partnership with Nike was likely welcome news for investors. That’s because in recent years Nike has tried to build out its direct-to-consumer business, weighing on wholesale partners like Foot Locker. More signs of cross-collaboration is good news for the Club holding. Still, its earnings next week will be a test to see if the rally was justified, or if there was a setback in CEO Mary Dillon’s turnaround strategy. BHC YTD mountain Bausch Health (BHC) year-to-date performance Bausch Health stock jumped 19.6% in February, grabbing the final sport in the top five. Its best session of the month came on Feb. 22, when shares jumped 7.3% after the troubled Canadian pharmaceutical firm delivered a quarterly earnings beat . Nevertheless, the company’s ongoing legal battles remain a crucial overhang for the stock. Bausch’s most important drug, Xifaxan, which accounts for roughly 40% of its revenue, is ensnared in a patent fight that could dampen its commercial future. On Thursday, we decided to sell roughly one-fourth of our Bausch Health stake to hedge against potential downside from future court rulings. (Jim Cramer’s Charitable Trust is long PANW, WYNN, FL, BHC, GEHC, META, NVDA . 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.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 23, 2024.

Brendan McDermid | Reuters

February was a strong month for stocks and the Club’s portfolio.

The advance came as investors parsed through fourth-quarter earnings results and fresh economic data, searching for clues about when the Federal Reserve will finally cut interest rates. The Nasdaq Composite led the march higher in February, gaining 6.1% and finishing the month at its first record close since November 2021. Meanwhile, the Dow Jones Industrial Average and S&P 500 both hit a series of all-time highs throughout the month, climbing 2.2% and 5.2%, respectively.

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#February #great #month #Wall #Street #bestperforming #stocks

2 out of 5 industrial stocks are at record highs. Here’s our post-earnings outlook on all of them

Post By Business Aerospace and defense industry, Breaking News: Markets, business news, Dividends, Dupont De Nemours Inc, Earnings, Eaton Corporation PLC, Honeywell International Inc, Housing, Investment strategy, Jim Cramer, Linde PLC, Markets, Metals and minerals industry, Stanley Black & Decker Inc, stock takes

Earnings season was not perfect for our industrial-focused portfolio companies, but we’re feeling pretty good about their prospects for the rest of the year. Shares of two of the five names finished Friday at all-time highs, and we belive the others show promise for patient investors. 1. Eaton Electrical power management company Eaton posted a fourth-quarter beat on earnings and revenue. Management also delivered a strong outlook for 2024 as part of the Feb. 1 release. This sets Eaton apart from its industrial peers whose outlooks for the year were on the conservative side. Eaton also continues to build a strong backlog. Shares of Eaton hit a record during their post-earnings rally and haven’t looked back. They finished at another all-time high on Friday of $277.52. ETN YTD mountain Eaton (ETC) year-to-date performance On earnings day, we hiked our Club price target on Eaton to $290 per share from $255. Eaton stands to be among the biggest winners from the reindustrialization and electrification trend throughout the country. We think this wave will serve as a catalyst, boosting the stock in the long run. There is little to nitpick about Eaton right now, but we do hope for a pullback so that we can add to our position. We got into Eaton back in November at $226.79 per share. We were able to buy some more two weeks later at $225.26. However, we felt compelled to add more and violated our cost basis with a December buy. But good thing we did, the stock has gained nearly 18% since then. 2. Linde Linde on Feb. 6 reported double-digit earnings growth and stellar guidance. The industrial gas and engineering company delivered records for operating margin, earnings, and return on capital for all of 2023. Linde shares jumped 3.7% on earnings day and went on to finish Friday at another all-time high. LIN YTD mountain Linde (LIN) year-to-date performance It was an all-around strong quarter for Linde and we think the momentum will continue. The firm’s exposure to clean energy and decarbonization trends, along with its pricing power, leaves us even more upbeat for the rest of the year. 3. Stanley Black & Decker Stanley Black & Decker posted mixed quarterly results on Feb. 1. Revenue fell short of estimates but adjusted EPS topped expectations. Strong free cash flow generation and adjusted gross margins at 29.8% for the quarter highlight better-than-expected progress in Stanley Black & Decker’s turnaround plan. The stock dipped 4% on the release and has traded a bit sideways ever since. Turnaround progress is great to hear because it’s a big part of our investment thesis for Stanley Black & Decker. The company’s solid annual dividend yield of 3.7% pays us for patience. Looking forward, we think a potentially lower interest rate environment in 2024 will help boost demand for Stanley Black & Decker. We bought more shares Wednesday . SWK YTD mountain Stanley Black & Decker (SWK) year-to-date performance When rates go down, housing sector activity should improve. Homebuilders and do-it-yourself consumers will increasingly turn to the company’s offerings. We’re considering buying more shares if there’s another overdone pullback. “I would take action on Stanley Black & Decker,” Jim Cramer said following the results. “We don’t have a lot of stocks that are levered to the Fed ultimately cutting. Those of you who want a play on the Fed cutting rates, this would be the No. 1.” Since then, the path to Federal Reserve rate cuts has become a bit murkier, with two key inflation reports this week coming in hotter-than-expected and disrupting a run of moderating prices. Jim has been saying for weeks that the Fed should not cut rates any time soon because of the risk of the strong economy re-igniting inflation. One month of inflation data does not make a trend. We’ll be watching the next batch of price pressure indicators in the coming weeks. Right now, market odds on the first Fed rate cut moved out to June. 4. DuPont DuPont posted a quarterly earnings beat on Feb. 6 after lowering expectations weeks ahead of results. The stock surged 7.7% that day. Adjusted earnings-per-share (EPS) fell 2% year over year to 87 cents. China weakness and inventory destocking, however, did weigh on results. But while fourth-quarter revenue dropped 6.6% to $2.99 billion and fell short of lowered estimates, investors that day and since then have continued to bid up the stock. In the past nine trading sessions, DuPont has only dropped one day. But still, shares were not yet back to the levels before management’s pre-announcement on Jan. 24, which sent DuPont stock 14% lower in the biggest one-day sell-off in 15 years. DD YTD mountain DuPont de Nemours (DD) year-to-date performance DuPont set a low bar for results and then jumped right over them. We liked that the quarter came with a $2 billion share repurchase announcement and a 6% dividend increase. Management’s commentary about robust order growth was reassuring, too. To be sure, we did cut our Club price target on DuPont to $78 per share from $85 on the day of the preannouncement. But we said then that we’re sticking with the stock. Weeks later, on Wednesday, we bought 70 more shares of DuPont because we see things looking up for the company. 5. Honeywell Honeywell posted a mixed quarter on Feb. 1. Earnings, profit margins, and cash flow slightly exceeded expectations. But, revenue missed the mark. Segment sales were largely underwhelming but profit exceeded estimates in Aerospace, the company’s biggest division. We bought more shares on earnings-day weakness even though the quarter wasn’t great. HON YTD mountain Honeywell International (HON) year-to-date performance We think the stock can improve from here due to Honeywell’s solid cash flow generation and its mostly better-than-expected segment margins. Management’s call for a rebound in the company’s short-cycle businesses is crucial because that part of the portfolio tends to have higher profit margins. The stock has been flat since its earnings day decline. (Jim Cramer’s Charitable Trust is long LIN, DD, HON, SWK, ETN. 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.

Eaton Corporation signage at the NYSE

Source: NYSE

Earnings season was not perfect for our industrial-focused portfolio companies, but we’re feeling pretty good about their prospects for the rest of the year.

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#industrial #stocks #record #highs #Heres #postearnings #outlook

Falling oil prices is hurting energy names. But plenty of others stocks stand to gain

Post By Oil and Gas Amazon.com Inc, Breaking News: Markets, business news, Coterra Energy Inc, Energy, Investment strategy, Jim Cramer, Markets, Natural Gas (Mar'23), Oil and Gas, Prices, S&P 500 Energy Sector, S&P 500 Index, stock takes, United States, WTI Crude (Mar'23)

U.S. crude prices continued to fall Wednesday, settling below $70 per barrel for the first time since early July and at their lowest levels since June. That’s good news for the Federal Reserve in its battle against inflation. While the impact on oil and natural gas stocks has not been as cheery, companies across many other industries stand to gain. At session lows, West Texas Intermediate crude dropped more than 4% Wednesday afternoon to just over $69 a barrel. The U.S. oil benchmark has been drifting lower since late September when WTI settled at its highest levels of the year — at nearly $94 per barrel. Energy , meanwhile, has been the only sector in the S & P 500 in the red since the fourth quarter began Oct. 1 — down about 10.7% compared with the broad market index’s 6% advance. Our only remaining oil and nat gas holding, Coterra Energy (CTRA), has also struggled — losing more than 8% quarter to date, including Wednesday’s more than 2% drop. However, more than two-thirds of our stock portfolio has been higher so far in the fourth quarter. “Oil is the key to this market. If it doesn’t hold $70, I don’t know where the thing goes,” Jim Cramer said earlier Wednesday. “But, boy, is it going the way of the Fed.” In its effort to cool inflation, the central bank has been tightening monetary policy since late 2021 and began aggressively raising interest rates in March 2022. Since then, the fed funds overnight bank lending rate has risen from near-zero to the current range between 5.25% and 5.5%. In early 2023, lower year-over-year oil prices helped slow the rate of consumer inflation, which reached its Covid-era peak at 9.1% in June 2022 . But, as oil climbed higher in the summer and into late September, concerns mounted that crude was once again becoming a thorn in the Fed’s side. With recent data pointing to cooling inflation, including falling energy prices, the market is trying to decide if the Fed’s rate-hiking cycle is done. The odds favor a rate cut as early as the Fed’s policy meeting in March, according to the CME FedWatch tool . @CL.1 YTD mountain The year-to-date performance of West Texas Intermediate crude futures. Oil impacts inflation data in more than just the gasoline prices paid by consumers at the pump. It also figures into corporate transportation and freight costs. If those input costs stay consistently higher, companies may choose to raise prices on the goods they’re making and shipping to protect profit margins. That will eventually show up in inflation readings — and, in theory, require the Fed to keep making policy decisions designed to slow the U.S. economy. The other side of the coin is that lower oil prices can be a boon to both consumers and companies, including those in Jim’s Charitable Trust, the portfolio we use for the Club. The less money people need to spend to fill up their gas tanks, the more cash they have available to spend on other goods and services — a positive for the economy. Similarly, lower fuel costs can help cushion companies’ profit margins — a positive for their investors and the stock market, more broadly. To be sure, falling crude prices can be worrisome if the decline is tied to a dramatic slowdown in economic activity. In a recession, demand would weaken for not just oil, but many other products sold by companies, too. The current picture on this point is not exactly black and white. For starters, oil production in the U.S. has been hovering around record levels , leading to a robust supply landscape even after oil cartel OPEC+’s latest production-reduction effort in an attempt to shore up prices. There are some fears about demand in China, the world’s second-largest economy. Economic activity in the U.S. also is slowing, but so far not in a manner that is troubling or suggests a severe recession is around the corner. To date, consumer spending and employment data have remained relatively resilient, while inflation is gradually cooling and oil prices are retreating. It’s possible upcoming economic reports could begin to scramble this picture — starting with Friday’s November jobs report — and eventually prompt us to read the oil market differently. At this point, the weakness in crude prices is a win for the Fed and large swaths of the Club’s portfolio, particularly a company like Amazon (AMZN) that benefits when consumers have more money to spend on its online marketplace and when its costs to deliver those products come down. It’s also led investors to sell Coterra Energy’s stock. Lower oil prices will hinder Coterra’s free cash flow , which the company returns to shareholders through stock buybacks and dividend payouts. Those are key reasons investors, including us, own the stock. We’re hardly panicking, though. In fact, we used Wednesday’s declines to add to our position in Coterra , which now holds a roughly 2% weighting in our portfolio. The fact that Coterra has fallen out of favor is precisely why we want to buy. Coterra, which has significant oil and natural gas exposure, can make plenty of money at current commodity prices. Plus, the company has done a commendable job managing its expenses this year — and encouragingly, expects to see service cost deflation in 2024. In other words, Coterra is controlling what it can. The price of oil is not one of those things. (Jim Cramer’s Charitable Trust is long CTRA and AMZN. 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.

An oil rig in front of a sunset

Andrey Rudakov | Bloomberg | Getty Images

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#Falling #oil #prices #hurting #energy #names #plenty #stocks #stand #gain

These 10 portfolio names outperformed the stock market amid the October decline

Post By Oil and Gas Amazon.com Inc, Breaking News: Markets, Breaking News: Technology, business news, Coterra Energy Inc, Earnings, Eli Lilly and Co, Foot Locker Inc, Humana Inc, Investment strategy, Jim Cramer, Linde PLC, Markets, Microsoft Corp, Nike Inc, Oil and Gas, Palo Alto Networks Inc, Procter & Gamble Co, S&P 500 Index, Stanley Black & Decker Inc, stock takes, Technology

Despite a downbeat month for stocks and mounting macroeconomic uncertainty, several Club names outperformed the market in October — and landed in the green. While the S & P 500 had its third consecutive down month — weighed down in part by soaring yields on government bonds and a mixed start to third-quarter earnings season — we held our conviction on certain names and put cash to work as our discipline mandates. Indeed, we made four small buys last week amid an oversold market. Meanwhile, the benchmark index lost 2.2% in October. Around 38% of companies listed on the index outperformed it, with just over 29% of listed companies in positive territory for the month of October. The S & P closed up 0.67% Tuesday. Notably, 19 of the Club’s 34 holdings — roughly 55% of the portfolio — outperformed the index for the month. And a total of 15 Club stocks beat the S & P 500 while ending the month in positive territory — the top 10 of which we unpack here. FL YTD mountain Foot Locker (FL) year-to-date performance Shares of Foot Locker (FL) surged 21% in October, bolstered by peer Nike (NKE) releasing strong quarterly earnings results on Sept. 28. The sneaker giant, which touted improving inventory levels, beat on profit and gross margins, sending its stock soaring. Still, we’re hesitant to chase Foot Locker’s rally. That’s because of Nike’s ongoing reset of its relationship with Foot Locker, as it focuses on expanding its direct-to-consumer business while de-emphasizing wholesale channels. Foot Locker reports quarterly results on Nov. 17. Shares of Foot Locker, down more than 44% year-to-date, closed up 2.14% Tuesday, at just under $21 a share. HUM YTD mountain Humana (HUM) year-to-date performance Humana (HUM) shot up 7.6% last month. The health insurance company has been catching up since June when shares experienced a 11% single-day drop on concerns about prolonged higher utilization rates. These woes failed to materialize after a brutal selloff, prompting a slight rebound for the firm in October. On Oct. 6, the Club sold 15 shares of Humana as a result, booking small profits after waiting out the stock’s slump. The company reports third-quarter results on Wednesday. Shares of Humana, which are up 2.2% year-to-date, edged 1% higher Tuesday, to close at $524 apiece. MSFT YTD mountain Microsoft (MSFT) year-to-date performance Microsoft (MSFT), whose shares rose 7.1% in October, has been on a tear since its fiscal first-quarter earnings release on Oct. 24. The Big Tech name recorded revenue beats across the board. Investors, however, cheered a surprise acceleration in revenue at Microsoft’s cloud computing business, Azure, showing that the software giant’s massive bet on artificial intelligence has been paying off. The Club believes Azure will be a key long-term growth driver for Microsoft as the world continues to shift to cloud computing. The software giant’s stock, up 41% since the start of 2023, ticked nearly 1% higher Tuesday, to close at $337.60 per share. AMZN YTD mountain Amazon (AMZN) year-to-date performance Shares of Amazon (AMZN) climbed 4.7% throughout October on the company’s better-than-expected third-quarter results . The ecommerce giant beat analysts’ estimates for earnings, boosted by improving profitability in its retail business, but fell short on concerns over the performance of the Amazon Web Services cloud unit. Once worries over AWS were dismissed by CEO Andy Jassy on the post-earnings conference call, shares pushed higher. Amazon, which jumped 58% year-to-date, traded slightly higher Tuesday, to close at $133 apiece. PANW YTD mountain Palo Alto Networks (PANW) year-to-date performance Shares of Palo Alto Networks (PANW) rose 3.7% last month. The stock has been lifted by strength in the cybersecurity sector, an industry thought to be a haven for investors amid macroeconomic uncertainty. Enterprises need protection regardless of the state of the economy. Palo Alto surged 1.7% during Tuesday trading at $242.7 apiece. The company is up 74% year-to-date. LLY YTD mountain Eli Lilly (LLY) year-to-date performance Eli Lilly (LLY) stock climbed 3.1% in October after a weak September performance. Still, there’s a lot of anticipation around Lilly’s GLP-1 drug Mounjaro , which should prove to be an ongoing tailwind for the pharmaceuticals firm. Eli Lilly reports third-quarter results on Thursday. The stock declined 2% during Tuesday, to close at $554 a share. Still, shares are up 54% year-to-date. PG YTD mountain Procter & Gamble (PG) year-to-date performance Procter & Gamble (PG) edged 2.9% higher in October. Shares of the company got a boost from fiscal first-quarter results that topped analysts’ expectations for earnings and revenue. P & G, down 1% year-to-date, edged slightly higher on Tuesday, to close at $150 a share. LIN YTD mountain Linde (LIN) year-to-date performance Shares of Linde (LIN) rebounded on the company’s stellar quarterly earnings release last week. The industrial gas giant reported double-digit earnings growth and solid operating-margin expansion, along wit an upbeat profit outlook. The stock, up 2.6% in October, has surged 17.2% year-to-date. Shares of Linde gained 0.87% Tuesday, to close at $382.16 each. SWK YTD mountain Stanley Black & Decker (SWK) performance year-to-date Stanley Black & Decker (SWK) increased 1.8% in October on better-than-expected earnings . On Oct. 27, the tool manufacturer’s quarter showed continued progress on its cost savings plans and inventory-reduction programs. The Club reiterated a 1 rating on Stanley Black & Decker on Tuesday. The stock, up 13.2% year to date, edged nearly 1% higher Tuesday, to close at roughly $85 a share. CTRA YTD mountain Coterra (CTRA) year-to-date performance Coterra Energy (CTRA) notched gains of 1.7% in October. The company has received a boost from continued strength in natural gas, along with crude oil gains on the back of the escalating conflict in the Middle East following Palestinian militant group Hamas’ attack on Israel earlier this month. While there is no major oil production in Israel and the Palestinian Territories, analysts have said a broader conflict in the Middle East could create risks for oil supplies. Shares of the company were steady during Tuesday trading, closing at $27.46 apiece. Coterra stock has risen 11.9% since the start of 2023. (Jim Cramer’s Charitable Trust is long FL, HUM, SWK, MSFT, LLY, CTRA, PANW, PG, AMZN, LIN . 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.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., October 26, 2023.

Brendan Mcdermid | Reuters

Despite a downbeat month for stocks and mounting macroeconomic uncertainty, several Club names outperformed the market in October — and landed in the green.

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#portfolio #names #outperformed #stock #market #October #decline

What tie-ups in the U.S. oil patch could mean for players like Coterra Energy

Post By Oil and Gas BP PLC, Breaking News: Markets, business news, Chevron Corp, Conocophillips, Coterra Energy Inc, Devon Energy Corp, Diamondback Energy Inc, Energy, Exxon Mobil Corp, Investment strategy, Jim Cramer, Marathon Oil Corp, Markets, Oil and Gas, Pioneer Natural Resources Co, stock takes

Exxon Mobil ‘s (XOM) planned deal to buy Pioneer Natural Resources (PXD) has sparked talk of more consolidation in the oil-and-gas industry. While we don’t own companies as mergers-and-acquisition plays, the potential for more tie-ups could have significant implications for our remaining oil name: Coterra Energy (CTRA). It’s unclear which shoe will drop next now that Pioneer — the largest independent producer in the Permian Basin, a key U.S. oil field in West Texas and New Mexico — is effectively off the market in an all-stock deal valuing the company at roughly $60 billion . But analysts expect the acquisition by Exxon, the most valuable U.S. oil-and-gas company at nearly $450 billion in market capitalization, to have ripple effects on producers of all sizes. “Consolidation is critical for the sector. It’s healthy. It’s needed, and I think you’ll see more of it,” said Gabriele Sorbara, an analyst at Siebert Williams Shank & Co. The consolidation could take multiple shapes, as companies seek scale and bolster the amount of quality land they own to drill on in the future. On the one hand, investors are looking at bigger U.S. players such as Chevron (CVX) and ConocoPhillips (COP), wondering whether they’ll follow Exxon’s lead and acquire smaller exploration-and-production (E & P) firms. Chevron’s market cap is around $324 billion, while ConocoPhillips is worth roughly $152 billion, based on Thursday’s stock prices. Another possibility could be that E & P companies further down the valuation ladder choose to pursue deals that make their own inventory positions more attractive to investors, according to Nitin Kumar, senior analyst at Mizuho Securities. Companies in this basket could include Coterra, Devon Energy (DVN) and Diamondback Energy (FANG). Coterra is valued at roughly $22.4 billion Thursday, while Devon and Diamondback are valued at $31.7 billion and $30.5 billion, respectively. “I’m not proposing there’s going to be a big wave of M & A, necessarily. But if scale is what matters, your options are limited,” Kumar said. He added: “You can choose to either go your own way…you can look at the small public guys and pick off a few assets there, or you could look at mergers of equals and say, ‘Hey look, let’s two of us get together and now we create a competitive position with 800,000, 900,000 acres into play.'” That would be roughly on par with Pioneer’s more-than-850,000 acres in the Permian Basin. “All those should be options that these guys should be thinking about strategically,” Kumar argued. Devon Energy is reportedly doing just that. In recent months, the Oklahoma City-based company has held preliminary talks with Marathon Oil (MRO) about a potential tie-up , Bloomberg reported after the close Wednesday , citing people familiar with the matter. Houston-based Marathon is valued at nearly $18 billion, as of Thursday. Devon has also eyed privately held CrownRock, which operates in the Permian, according to Bloomberg. In recent years, publicly traded E & P companies have adopted a more muted approach to production growth — bowing to investor pressure after spending heavily to pump more oil in the 2010s proved unkind to energy stocks as crude prices pulled back. Now, the priority is generating more sustainable cash flows that can be returned to investors through buyback programs and dividends. The shift has generally been positive for the stock prices of oil companies. Expense reduction is another way to satisfy investors, and is likely a major motivation behind any further consolidation that might occur in the sector, said Scotiabank analyst Paul Cheng. Smaller companies may not solve their inventory backlog problems by combining, Cheng said, “but that certainly could provide them additional room to reduce costs.” At the time the Exxon-Pioneer deal was announced, Jim Cramer’s Charitable Trust owned a position in Pioneer. We sold our entire stake Monday, and will consider redeploying some of the cash into Coterra on future pullbacks in its stock price. Our investment in Coterra has been rooted in its attractive fundamentals as an E & P play with sizable exposure to both oil and natural gas — not its viability as a takeover target, or even a buyer itself. Indeed, owning Coterra in the hopes that a larger company may swoop in and offer a big premium would not be a wise strategy. That’s because a substantial premium might never materialize — as we saw with Exxon’s valuation of Pioneer. The industry’s newfound restraint on production makes it harder to justify paying up for a company, analysts say, compared with the premiums paid in the early days of the U.S. shale boom a decade ago. “If you go back to 2014, 2016, in those deals it was asset acquisition driven by growth. Today, it’s asset acquisition driven by not volume growth, but cash flow sustainability and longevity. It’s a little bit of a different motivator,” Mizuho’s Kumar said. (Jim Cramer’s Charitable Trust is long CTRA. 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.

Permian Basin rigs in 2020, when U.S. crude oil production dropped by 3 million a day as Wall Street pressure forced cuts.

Paul Ratje | Afp | Getty Images

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#tieups #oil #patch #players #Coterra #Energy

Interest rates take center stage with banks set to report quarterly results

Post By Business Banks, Breaking News: Markets, business news, Earnings, Investment strategy, Jim Cramer, KBW Bank Index, Markets, Morgan Stanley, stock takes, Wells Fargo & Co

Bank stocks remain under pressure due to high interest rates as financial firms like Club holdings Wells Fargo (WFC) and Morgan Stanley (MS) get ready to kick off earnings season. Like other big banks, Wells Fargo and Morgan Stanley have been caught in the throes of the central bank’s interest-rate-hiking campaign over the past 18 months. Both have been pulling back on lending to be more conservative with their capital as credit conditions have tightened — with a potentially negative impact on revenue streams and overall profits when the firms report earnings in the coming days. “Increasingly, I think that the only thing that can change things with either bank is the end of the tightening cycle so people will be less worried about credit woes,” Jim Cramer said Wednesday . As part of its effort to battle persistent inflation, the Fed has raised its benchmark interest rate 11 times since March 2022, with rates at their highest levels in 22 years . On top of operating in a high-interest-rate environment, financial firms are still rebounding from the collapse of a string of regional lenders, starting with the shuttering of Silicon Valley Bank (SVB) in March. Wells Fargo and Morgan Stanley are down on the year amid the difficult backdrop, falling 4.3% and 8.6%, respectively. The KBW Bank Index , a benchmark stock index of the banking sector, has lost more than 24% year-to-date. Still, both Club banks have solid fundamentals and diverse revenue streams that leave us bullish in the long term. Wells Fargo is set to report third-quarter results before the opening bell on Friday, while Morgan Stanley is slated to post results next Wednesday. WFC YTD mountain Wells Fargo (WFC) year-to-date performance For the three months ended Sept. 30, analysts expect Well Fargo to report revenue of $20.1 billion, compared with $19.5 billion during the same period a year prior, according to Refinitiv. Earnings-per-share should come in at $1.24, up 45% year-over-year, Refinitiv estimates showed. Wells Fargo’s cost-cutting measures and its forecast for its real estate loans will be front and center Friday. Out of the major U.S. banks, Wells Fargo has the largest exposure to the ailing commercial real estate market, an industry troubled by higher rates and near-record office vacancy levels. Offices represent roughly 22% of Wells Fargo’s outstanding commercial property loans and 3% of its whole loan book. In the bank’s July earnings report, CEO Charlie Scharf said Wells Fargo sustained “higher losses in commercial real estate, primarily in the office portfolio,” adding that while there have been “significant losses in our office portfolio-to-date, we are reserving [capital] for the weakness that we expect to play out in that market over time.” Wells Fargo “remains focused on making the company more efficient and has been reducing headcount” since the third quarter of 2020, Barclays analysts wrote in a recent note. In September, Chief Financial Officer Mike Santomassimo said the bank could slash headcount further, on top of nearly 40,000 layoffs over the past three years. Meanwhile, Wells Fargo slowed its pace of stock buybacks significantly over the past few quarters, even though the stock is at a lower price point and the bank remains well-capitalized. “My hope is that this Friday [Scharf] changes his mind when the company reports and it can sop up the excess stock,” Jim said. Scharf “has bought back 300 million shares, almost a tenth of the share count, since he took over in 2019,” Jim added. MS YTD mountain Morgan Stanley (MS) year-to-date performance For the three months ended Sept. 30, analysts expect Morgan Stanley to report revenue of $13.2 billion, up from $12.9 billion during the same period last year, according to Refinitiv. Earnings-per-share should fall 16% year-over-year, to $1.28. For the past several quarters, Morgan Stanley’s investment banking business – once crucial to its bottom line – has been lagging on macroeconomic uncertainty. Companies have pulled back on mergers and acquisitions amid growing concerns that a recession is on the horizon. Indeed, the value of global M & A plunged 44% in the first five months of 2023, according to data analytics firm GlobalData . During a recent conference, Morgan Stanley executives said that capital markets will likely improve in 2024, potentially setting up its investment banking division for a stronger year. The bank said its “more confident now than any time this year about an improved outlook for 2024.” Morgan Stanley has adapted to the struggling M & A and initial-public-offering markets by leaning more into wealth management, a strategy we think highlights the bank’s ability to deftly navigate a range of headwinds . “Morgan Stanley is doing everything it can to be less of a bank and more of a financial advisor,” Jim said Wednesday. And, with Chief Executive Office James Gorman expected to retire early next year, we’ll be looking for any further guidance from the company on its succession plans. (Jim Cramer’s Charitable Trust is long WFC, 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.

A combination file photo shows Wells Fargo, Citibank, Morgan Stanley, JPMorgan Chase, Bank of America and Goldman Sachs.

Reuters

Bank stocks remain under pressure due to high interest rates as financial firms like Club holdings Wells Fargo (WFC) and Morgan Stanley (MS) get ready to kick off earnings season.

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#Interest #rates #center #stage #banks #set #report #quarterly #results

Oil and natural gas prices are on different paths. Here’s what has been driving the moves

Post By Oil and Gas Breaking News: Markets, business news, Coterra Energy Inc, Devon Energy Corp, Diamondback Energy Inc, Energy, Exxon Mobil Corp, ICE Brent Crude (Apr'23), Investment strategy, Jim Cramer, Markets, Natural Gas (Mar'23), Oil and Gas, Pioneer Natural Resources Co, S&P 500 Index, stock takes, United States, WTI Crude (Mar'23)

Oil and natural gas prices traveled divergent paths this week, resulting in a mixed picture for the Club stocks Coterra Energy (CTRA) and Pioneer Natural Resources (PXD). Fresh off robust third-quarter gains, crude has tumbled in recent days, sending the U.S. oil benchmark West Texas Intermediate and global oil standard Brent prices to their lowest levels since late August. Both WTI and Brent are on pace for their worst weeks since March on emergent concerns about demand for oil products. WTI dropped 2% on Thursday to settle at $82.31 a barrel. Brent also fell 2%, settling at $84.07 a barrel. On Friday, they bounced — coming off modest earlier declines after the government released much stronger-than-expected September job growth. WTI vs. nat gas this week @CL.1 @NG.1 mountain 2023-09-29 WTI and nat gas since Sept. 29 settle Meanwhile, the rally in natural gas has picked up steam, pushing the commodity to prices not seen since January, at over $3 per million British thermal units, or MMBtu. In Thursday’s session alone, natural gas prices jumped nearly 7%, as traders reacted to U.S. government data that showed a smaller-than-expected storage build. Traders also continue to monitor weather forecasts in search of clues about future demand heading into the winter months in the Northern Hemisphere. For the week, through Thursday’s settle, natural gas has climbed 8.1%, building on last week’s 11% advance. Natural gas on Friday morning jumped another 1.5%. In the oil market, a switch has seemingly been flipped. WTI and Brent rose more than 28% and 27%, respectively, in the third quarter, as major oil exporters Saudi Arabia and Russia cut production at a time when economic activity — and by extension demand for crude – proved more resilient than expected. Now, the market is grappling with the idea that demand might be waning. Those concerns were amplified by U.S. government data Wednesday that indicated gasoline inventories in the week ended Sept. 29 grew by 6.48 million barrels, a much higher increase than expected. WTI and Brent each plunged by 5.6% in Wednesday’s session. For the week, with one trading day to go, WTI and Brent sank more than 9% and nearly 12%, respectively. “The single biggest element of the global oil market is U.S. gasoline. We consume not far off 1 in 10 barrels just in U.S. cars,” veteran energy analyst Paul Sankey said Thursday on CNBC. “When it’s as weak as it came in [Wednesday] and it already been weak the week before, it becomes a major problem in the global oil market.” The magnitude of the sell-off, Sankey said, is linked to the traders who had been rushing into crude during its summertime ascent that continued into September , raising the specter of $100 per barrel oil . Brent traded as high as $97.69 a barrel on Sept. 28 while WTI reached $95.03 on the same day. Recent data has traders looking to reduce their risk, Sankey said. “The speculative interest before this run was very low,” he said. “Our view was that our shot at $100 was that speculators would pile in. The problem is … risk-off turned into [really} risk-off, and that became the speculators running for the exits again.” Some analysts see the oil swoon as temporary. In a note to clients Thursday, Goldman Sachs said the reasons for the declines — which in addition to gasoline demand concerns also include recession fears in 2024 and technical factors — “will prove to be transitory.” The firm said it still believes Brent crude can reach $100 a barrel by the spring. The recent decline in crude has hurt energy stocks including Pioneer and Coterra. Of the 11 sectors in the S & P 500 , energy has been by far the worst weekly performer through Thursday, falling nearly 6%. The broad S & P 500 index was down 0.7% over the past four sessions. Shares of Pioneer have retreated 6.4% over the same stretch, closing at $214.96 each Thursday. However, Pioneer’s weekly losses will be erased if the stock’s premarket surge of 10% holds. Friday’s spike higher came after The Wall Street Journal reported Exxon Mobil (XOM) was in advanced talks to acquire the Club holding. In April, the newspaper reported Exon held “informal” discussions on Pioneer. Pioneer vs. Coterra this week PXD CTRA mountain 2023-09-29 Pioneer vs. Coterra since Sept. 29 close Coterra held up better this week through Thursday, with the stock falling 3.5%, to $26.11 per share. The stock was little changed in Friday’s premarket. The relative outperformance in Coterra is likely tied to its significant natural gas exposure, compared with Pioneer and exploration-and-production (E & P) peers such as Diamondback Energy (FANG) and former Club holding Devon Energy (DVN). Coterra’s revenues are roughly a 50-50 split between oil and natural gas. On Monday, when we bought 200 more shares of Coterra, we argued its stock did not adequately reflect the appreciation in natural gas prices. Now, the stock has slipped a bit lower than where we bought while natural gas has climbed higher. (Jim Cramer’s Charitable Trust is long PXD and CTRA. 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.

Oil prices eased in Asian as concerns over slow demand from top crude importer China grew after bearish trade and inflation data, outweighing fears over tighter supply arising from output cuts by Saudi Arabia and Russia.

David Mcnew | Getty Images News | Getty Images

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#Oil #natural #gas #prices #paths #Heres #driving #moves

What a stressed commercial real estate market means for these exposed bank stocks

Post By Business Arm Holdings PLC, Banks, Breaking News: Markets, business news, Instacart (Maplebear Inc), Investment strategy, Jim Cramer, JPMORGAN DRN, Klaviyo Inc, Markets, Morgan Stanley, real estate, Rivian Automotive Inc, stock takes, Wells Fargo & Co

Banks are facing mounting uncertainty as the commercial real estate (CRE) sector continues to struggle. But, tailwinds in our financial names should help safeguard their bottom lines. Club names Wells Fargo (WFC) and Morgan Stanley (MS) have bright spots in their operations that can offset potential weakness from CRE exposure. We’re optimistic about green shoots in Morgan Stanley’s dealmaking and the continued maturing of its wealth management business , along with progress in Wells Fargo’s multiyear recovery plans to expand its balance sheet and put past misdeeds behind it . Commercial real estate landscape Higher interest rates, tightening credit conditions and elevated office vacancies are weighing down the estimated $21 trillion commercial real estate sector . Many banks have exposure to CRE through loans. Fluctuations in property values and market conditions can impact their loan portfolios and asset quality. Economic downturns can lead to higher default rates and loan losses, affecting a bank’s profitability and overall financial health as well. Banks provide financing to investors and developers in the sector, making them vulnerable to weaker market cycles too. A lagging commercial real estate market can strain a bank’s capital reserves while a stronger market can boost incomes from lending and fees. Tomasz Piskorski, a property market expert and professor at Columbia Business School, said the key overhang on the banking sector is the central bank’s monetary tightening, and trouble in CRE is the “icing on the cake.” The Federal Reserve has hiked borrowing costs 11 times since March 2022 — from near-zero on the fed funds overnight bank lending rate to the target range of 5.25% to 5.5% — all in a bid to combat sticky inflation. The midpoint of the current range is the highest level in more than 22 years. “U.S. banks are now in a very difficult position and the main factor driving this difficult position is high interest rates,” Piskorski told CNBC in an interview. “This is one of the main problems affecting commercial real estate because a lot of these buildings were written at a lower rate and now they have to refinance to higher rates.” While there’s reason for concern in the broader commercial real estate market, we see the most pronounced challenges unfolding in offices. Work-from-home trends and tech layoffs have led to increased vacancies, decreased demand, and drastic reductions in property values. Office vacancy rates reached 18.6% in the first quarter of 2023. That’s 5.5% higher than when the Covid pandemic began to hit the U.S. during the first quarter of 2020. Back in July, Jim Cramer said the doom and gloom around CRE is a real threat but exaggerated, describing it at the time as a “well-overdone crisis” Morgan Stanley’s exposure MS YTD mountain Morgan Stanley (MS) year-to-date performance In reporting its second-quarter financial results, Morgan Stanley said that “increases in provisions for credit losses were primarily driven by credit deteriorations in the commercial real estate sector as well as modest growth across the portfolio.” The bank’s provision for credit losses rose to $161 million in Q2 from $101 million in the second quarter of 2022. Tailwinds spurred by a resurgence in Morgan Stanley’s investment banking (IB) services, however, could offset CRE market weakness going forward. There have been signals of more mergers and acquisitions (M & A) and initial public offerings (IPOs), which could boost this dormant, and crucial, part of the bank’s business. Semiconductor designer Arm Holdings (ARM) had a blockbuster listing earlier this month, the largest IPO since electric vehicle maker Rivian Automotive (RIVN) in 2021. Grocery delivery service Instacart (CART) and marketing automation Klaviyo (KVYO) made Klaviyo mad their debuts shortly after Arm. IB has lagged in recent quarters amid macro uncertainty and recession concerns. The global M & A value declined by 44% in the first five months of 2023, per data analytics firm GlobalData , with firms pulling back on dealmaking in order to preserve capital in the face of an economic downturn. During the Barclays conference earlier this month, management at Morgan Stanley said that capital markets are set to improve next year. This could boost IB broadly because companies will feel less conservative about how they allocate funds. “I would say we are more confident now than any time this year about an improved outlook for 2024,” the team said. “I think it’s clear to us now that the first half of the second quarter was probably the low point in sentiment around capital markets and M & A.” Still, there’s a lot of uncertainty around the U.S. economy as it’s unclear when the Fed will stop hiking interest rates. Academics like Piskorski, however, contend that pressure on traditional investment banking will likely continue. “We’re in a very different environment than two years ago. I would expect much fewer IPOs,” he said. “Cost of capital is much higher. Investor appetite to invest in companies, especially companies that are not profitable, is very different.” Wells Fargo’s exposure WFC YTD mountain Wells Fargo (WFC) year-to-date performance Offices represent around 22% of Wells Fargo’s outstanding commercial property loans and 3% of its entire loan book. It has one of the largest portfolios when it comes to CRE in the country, with more than $154 billion in loans outstanding and $33 billion of that consists of office loans. According to its latest quarterly earnings release, Wells Fargo boosted allowances for losses connected to its commercial property loans, driven mostly by the firm’s exposure to offices, flagging a $949 million increase in their credit loss allowance. However, management said that significant losses have not been observed so far. For context, banks typically boost reserves for credit losses as a preventative measure to curb losses from borrowers who could default on their loans. This, in theory, gives Wells Fargo the extra capital to absorb credit losses during a market downturn or periods of extreme volatility. For context, JPMorgan Chase (JPM) also bulked up its reserves in anticipation of rising office property loan losses. Wells Fargo stands to benefit from its multiyear recovery plan once U.S. regulators decide to lift its asset cap, which would increase its balance sheets, along with its valuation that’s providing a cushion to any downward earnings estimates. Still, it remains unclear when regulators may lift these rules. “The losses are still quite small,” Chief Financial Officer Michael Santomassimo said in July. “We do expect that there will be more weakness in the market, and it’s going to take a while to play out.” CEO Charlie Scharf said the bank sustained “higher losses in commercial real estate, primarily in the office portfolio.” He added, “While we haven’t seen significant losses in our office portfolio-to-date, we are reserving for the weakness that we expect to play out in that market over time.” Still, revenue from Wells Fargo’s commercial real estate business rose to $1.33 billion in the second quarter, up 26% from 2022 and 2% higher from the last quarter. The banking giant attributed the gains to “higher interest rates and higher loan balances.” Wells Fargo may not stand to gain as much as Morgan Stanley from an uptick in investment banking, but the comments made by management during the Barclays conference indicate ongoing signs of recovery for the bank. “A lack of bad news turned out to be good news,” Jeff Marks, CNBC Investing Club’s Director of Portfolio Analysis, said during a Morning Meeting earlier this month. Wells Fargo execs emphasized the bank’s solid forward guidance while signaling an improved efficiency ratio as the Wall Street giant continues to cut costs via various restructuring plans like layoffs. Santomassimo said the macro picture is “much better than people would have expected at this point” as well. (Jim Cramer’s Charitable Trust is long WFC, 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.

Collin Madden, founding partner of GEM Real Estate Partners, walks through empty office space in a building they own that is up for sale in the South Lake Union neighborhood in Seattle, Washington, May 14, 2021.

Karen Ducey | Reuters

Banks are facing mounting uncertainty as the commercial real estate (CRE) sector continues to struggle. But, tailwinds in our financial names should help safeguard their bottom lines.

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#stressed #commercial #real #estate #market #means #exposed #bank #stocks

Oil prices are at 10-month highs. Here’s what Cramer thinks it means for two energy stocks

Post By Oil and Gas Breaking News: Markets, business news, Coterra Energy Inc, Eli Lilly and Co, Energy, Exxon Mobil Corp, Investment strategy, Jim Cramer, Markets, NVIDIA Corp, Oil and Gas, Pioneer Natural Resources Co, stock takes, WTI Crude (Mar'23)

Oil prices are hovering around 10-month highs, as a stout summer rally extends into the fall and delivers additional gains for the Club’s energy stocks, Pioneer Natural Resources (PXD) and Coterra Energy (CTRA). And Jim Cramer believes it’s not too late to buy either of them. West Texas Intermediate crude, the U.S. oil benchmark, has jumped 32% since its lows of the summer on June 12, to nearly $89 a barrel. Meanwhile, global oil standard Brent crude has climbed 28%, to around $92 a barrel. Both WTI and Brent on Tuesday settled at their highest levels since November. Over the same stretch since June 12, Pioneer stock has risen 17.1%, while Coterra gained 16.4%. That makes them the fifth and sixth best-performing Club stocks during that time — ahead of artificial intelligence winner Nvidia (NVDA), but behind pharmaceuticals giant Eli Lilly (LLY). Coterra on Tuesday closed at its highest level of the year, at $28.47 per share. Pioneer is about 3% off its 2023 peak of $243 per share, reached on Sept. 5. “I think that it is not too late to buy either of these,” Jim Cramer noted on Tuesday. The rise in oil prices largely boils down to a mismatch between supply and demand. Production cuts from major oil exporters such as Saudi Arabia and Russia have contributed to tighter supplies at a time when major economies have remained healthier than expected. Indeed, prices took a major leg higher last week after Saudi Arabia and Russia said they’d extend through year-end their voluntary output reductions of a combined 1.3 million barrels per day. This week’s move in crude was helped by a new report from the Organization for Petroleum Exporting Countries , which projected that oil demand will grow by 2.25 million barrels per day in 2024, citing economic resiliency. Saudi Arabia is the de-facto leader of OPEC. Russia is the oil cartel’s largest partner producer in an expanded group known as OPEC+ . The current backdrop may keep oil prices supported through the fall, according to the U.S. Energy Information Administration’s short-term outlook published Tuesday . Citing Saudi Arabia’s production-cut extension and an expected further drawdown of global oil inventories, the government statistics agency forecasted Brent crude will average around $93 a barrel in the fourth quarter, less than 1% above where it settled Tuesday. If higher oil prices – and by extension fuel prices – are sustained in the coming months, the investment implications may be somewhat mixed. On one hand, Pioneer and Coterra would likely generate more free cash flow than in the first half of 2023 , which could lead to increased share repurchases and higher dividend payouts — key reasons investors like us are in the stocks. On the other hand, it may complicate the Federal Reserve’s efforts to squash inflation through higher interest rates. For much of this year, the downward trend in oil prices contributed to lower year-over-year inflation readings . Now, “oil is the wildcard” that might prompt the U.S. central bank to rethink policy and raise interest rates more aggressively than previously thought necessary, according to Jim. In the Labor Department’s monthly consumer price index report for August, released Wednesday, higher gasoline prices were responsible for more than half of the headline 0.6% month-over-month increase. Currently, the Fed is expected leave interest rates unchanged between 5.25% and 5.5% at its meeting next week, according to the CME Group’s FedWatch tool . The Fed had paused raising interest rates in June, before instituting another quarter-percentage-point increase in July — the central bank’s 11th rate hike in 17 months. There was no policy decision in August. Put another way, our energy exposure’s role as an inflation hedge – on display throughout 2022 following the crude-price surge tied to Russia’s invasion of Ukraine in February of that year – may become more apparent. And it adds to the attractiveness of owning Pioneer and Coterra here. Jim sees additional upside for both. Pioneer’s stock is less than 2% higher than where it traded back in April, in the days following a “bogus” report that Exxon Mobil (XOM) held talks to acquire the Club holding, Jim pointed out. Shares of Pioneer “should be much higher,” he said, noting the potential for more robust capital returns due to higher oil prices. Plus, he said, Pioneer’s natural-gas offerings are another potential plus for the stock. “I hadn’t figured it would matter that much, but any increase in nat-gas prices could be an added benefit,” he said. Coterra offers a quality mix between crude and natural-gas exposure. While natural gas prices are dramatically lower than a year go, the commodity has gained in recent months. And it’s currently riding a four-day winning streak, settling Tuesday at $2.743 per million British thermal units. That has helped Coterra shares. But Jim said the stock has still yet to break out in a meaningful way. “There’s more room to run,” he said. “I could see the stock busting through the $30 level.” (Jim Cramer’s Charitable Trust is long PXD and CTRA . 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.

An oil pump jack in Great Plains, southeastern Wyoming.

Marli Miller | Universal Images Group | Getty Images

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Oil prices are finally rallying. Here’s what it means for three key energy stocks

Post By Oil and Gas Breaking News: Markets, business news, Coterra Energy Inc, Energy, Halliburton Co, Investment strategy, Jim Cramer, Markets, Oil and Gas, Pioneer Natural Resources Co, stock takes

A long-awaited rally in crude oil prices has helped the Club’s three oil-and-gas companies become some of our top-performing stocks over the past month. And with new signs the commodity could continue to rally this year, we’re sitting tight on our energy holdings. Brent crude, the global oil benchmark, and West Texas Intermediate crude, the U.S. oil standard, have both climbed by more than 10% since late June. Brent was up roughly 1% Thursday, at nearly $80 a barrel. WTI was trading up 0.72%, at more than $83 a barrel. Energy stocks linked to crude — including Club names Halliburton (HAL), Coterra Energy (CTRA) and Pioneer Natural Resources (PXD) — have risen on oil’s fortunes. Shares of Halliburton have climbed roughly 18%, while Coterra and Pioneer have advanced about 12% and 10%, respectively, since crude’s most-recent bottom in late June. Troubled pharmaceutical firm Bausch Health (BHC) has been the top-performing Club stock during that same stretch, advancing nearly 28%. “This was a move that many have expected to occur all year,” TD Cowen energy analyst Jason Gabelman said of crude’s recent rise. “A lot of investors, I think, have been … somewhat disappointed on oil being rangebound for the past few months in the low-to-mid $70s,” Gabelman told CNBC. Among the biggest drivers of the momentum has been signs that previously pledged production cuts from Saudi Arabia and Russia are finally taking hold, analysts widely said, helping address concerns investors had about excessive supply in the market. Russian production, in particular, has exceeded expectations throughout the year. But last week, nationwide crude shipments in Russia stood at 2.73 million barrels a day, down 1.48 million barrels per day from their late-April peak, according to data compiled by Bloomberg . Economic data also suggests oil demand is proving more resilient than investors initially expected, said Truist’s Neal Dingmann. “Not to say we’re certainly out of the woods on inflation or a recession,” Dingmann told CNBC, “but the picture is much better for some type of growth, even very minimal.” Mizuho analyst Nitin Kumar – who covers Coterra and Pioneer and has a buy rating on both stocks – said he believes the setup for crude prices remains solid throughout the second half of 2023. While the potential for a demand-destroying recession remains a big wildcard, Kumar said there’s a lot to be encouraged by on the supply side. The Organization of Petroleum Exporting Countries and its oil-producing allies, collectively known as OPEC+, has shown discipline on production and been willing to take action designed to shore up prices , Kumar said, even if the market has, at times, shrugged off such decisions . Saudi Arabia is the de-facto head of the OPEC cartel and Russia is the group’s largest partner producer. Saudi Arabia, Russia and the U.S. are the world’s three-largest oil producers. U.S. producers also have shown restraint, Kumar told CNBC, with domestic crude production hovering around 12.3 million barrels per day all year . Moreover, a year-over-year drop in U.S. rig counts points to “a bit of a decline in oil production” down the road, Kumar said. As of July 21, the number of active U.S. oil rigs stood at 530, according to Baker Hughes, down 11.5% from the same period in 2022. Taken together, Kumar said, “globally, except for a recession, you should be in an undersupplied scenario for the second half.” Others on Wall Street, including analysts at Goldman Sachs , also expect demand to outpace supply in the third and fourth quarters, supporting higher prices. In theory, when commodity prices are higher, our energy holdings can generate more free cash flow. And that money can be used to pay dividends and repurchase stock, a key reason we’re invested in the sector. That dynamic was on display last week, when Halliburton – our largest oil-and-gas holding, carrying a 2.1% weighting in the portfolio, as of Wednesday – reported better-than-expected free cash flow in the second quarter. While we locked in a small profit on Halliburton in mid-July , the company’s execution in the second quarter certainly pleased us. As an oilfield-services firm, Halliburton is a play on drilling activity. Pioneer and Coterra are set to report their second-quarter results on Aug. 1 and Aug. 7, respectively. On metrics such as revenue, earnings and cash flow, exploration-and-production (E & P) companies face difficult year-over-year comparisons. For most of the second quarter in 2022, crude prices were north of $100 per barrel amid shocks from geopolitical risks like Russia’s invasion of Ukraine — and subsequent Western sanctions on Russia oil sales — in February of that year. Against this backdrop, energy investors will be closely watching how companies’ well productivity stacks up versus last year, according to Truist’s Dingmann, who maintains hold ratings on Pioneer and Coterra. Management commentary on service-cost inflation is another area of focus, Dingmann said. If those costs continue to moderate, E & P firms should eventually see relief on their capital expenditures, assuming production plans are held constant. The Club’s take Our investment thesis in Pioneer has been rooted in its low production costs and high-quality acreage in the Permian Basin in western Texas and southeastern New Mexico. For Coterra, we continue to like its mix of oil-and-natural gas revenues — split roughly 50-50. Coterra’s exposure to natural gas bodes well long term, despite prices being down sharply from their 2022 peaks, because the U.S. is adding export capacity for liquified natural gas. Coterra is well-positioned to benefit as additional LNG facilities come online in 2024 and beyond . The bottom line is the oil rally may just be getting started — and, if that’s the case, our stocks linked to the commodity could see additional gains ahead. (Jim Cramer’s Charitable Trust is long CTRA, HAL and PXD. 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.

Oil rig and pump of H&P Rig 488 in Stanton, Texas, on June 8, 2023.

Suzanne Cordeiro | AFP | Getty Images

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