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. (We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible.) AI trade: Market gains accelerated since the Morning Meeting, with both the Nasdaq Composite and S & P 500 rising to new all-time highs. The Nasdaq topped its November 2021 record close Thursday and its November 2021 all-time intraday high Friday. Credit the artificial intelligence ecosystem trade for the strength. The latest to show concrete benefits from AI was Dell Technologies , which delivered a strong quarter and forward guidance due to demand for AI servers. Dell shares surged nearly 30%. Semiconductor stocks and anything else tied to the buildout of so-called AI factories were also pulled higher. The Energy sector was strong in response to U.S. oil prices climbing back to $80 per barrel, levels not seen since last November. What worked : The top-performing sectors this week were Tech , Energy and Consumer Discretionary . In the portfolio, Salesforce earned top marks thanks to a great quarter from its Data Cloud and a strong margin forecast for the upcoming year. Palo Alto Networks was another big gainer this week, despite Friday’s pullback, as the cybersecurity name continued to claw back its recent losses. Broadcom , Bausch Health and GE Healthcare were a few other outperformers. What didn’t : The worst performing sectors this week were Utilities , Health Care and Consumer Staples – three of the more defensive areas in the market. Alphabet and Apple continued to lag their Magnificent Seven peers. Alphabet shares dropped on worries about its AI initiatives and whether its Search business will be disrupted by generative AI chatbots. Apple dipped due to ongoing concerns about its iPhone business in China. Wynn Resorts, Foot Locker and Starbucks were a few other underperforms. Casino stocks : Wynn shares and other Macao gaming stocks fell after the region’s Gaming Inspection and Coordination Bureau reported February gross gaming revenue (GGR). While rising 79% year over year, the number was actually below estimates. Stifel blamed the shortfall on expectations getting too bulled up following a strong Chinese New Year period and upbeat commentary from company management teams. “We don’t think it’s a demand issue here, that’s for sure,” analysts at Stifel wrote Friday. “We just think expectations got elevated too quickly, which is why February GGR results ‘missed.'” While a lot of attention tends to be placed on top-line GGR, Stifel argues that investors should be focused more on the higher profitability levels versus 2019. Wynn is a prime example. The company’s fourth-quarter margins were higher than in 2019, and management doesn’t think it’s a one-time thing. Rather, margins are structurally higher for Wynn because of the shift in visitor trends to premium. For this reason, Stifel thinks the Macao gaming companies can hit their elusive 2019 EBITDA (earnings before interest, taxes, depreciation, and amortization) despite only 70% to 75% of its top-line results. Our view is that we are disappointed to see GGR come in a little short, but one soft month against high expectations in a higher margin environment isn’t enough to change the thesis, especially when Wynn’s valuation is significantly discounted versus pre-Covid pandemic levels. (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. (We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible.)
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