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Here are all the portfolio moves the Club made in an oversold market
With the stock market deeply oversold this week, we put cash to work by picking stocks across a range of sectors including energy, technology and materials. We also added a former Club chipmaker to our Bullpen and upgraded a premium beer name to a buy rating. Finally, Friday’s market reversal helped us make good on a pledge to trim a once-downtrodden health-care stock. Here’s a day-by-day look at our portfolio moves in a choppy week of trading, undergirded by investor concerns over the state of the economy and rising bond yields. Monday Early into Monday’s session, we scooped up 200 shares of Coterra Energy (CTRA) – the first time in roughly two months that we added to our position in the oil-and-gas producer. With the market oversold, per the S & P 500 Short Range Oscillator , our investment discipline called for us to search for any dislocations within the portfolio. And Coterra fit the bill because its stock price did not appropriately reflect the recent rally in natural gas, one which has only gained steam throughout the week. On Friday, natural gas futures jumped 5%, to trade at roughly $3.33 per million British thermal units, or MMBtu. Tuesday The market entered Tuesday’s session at its most oversold since March, so we once again looked for places to strategically deploy some of our cash. That led us to coffee giant Starbucks (SBUX), which has been dogged by investor concerns over the health of its business in China. At the same time, we also added Advanced Micro Devices (AMD) to the Bullpen , our repository of stocks under consideration to join the portfolio. Later in Tuesday’s session, as market declines mounted, we nibbled on Broadcom (AVGO) stock. China’s slower-than-expected post-Covid economic recovery has been a thorn in the side of many U.S. stocks, including Starbucks. After closing at $114.46 per share on May 1, the stock began to drift lower for months, closing at its lowest level of the year Tuesday, at $89.48 per share. But the reason we stepped in to buy 50 shares Tuesday is because risks stemming from China – the coffee maker’s second-largest market, behind the U.S. – have mostly been factored into its stock price. We’re giving AMD a second look less than two months after exiting our position in the chipmaker — swapping in rival Broadcom in its place – because we’ve developed a better understanding of its role within the broader semiconductor space. To be sure, we haven’t taken further action on AMD stock, but in general we’re warming to it and closely watching the company’s standing in the artificial intelligence race. Tech stocks remained under pressure Tuesday afternoon, giving us an opportunity to buy 7 shares of Broadcom and lower our cost basis. The purchase also served to grow our position in Broadcom before its megadeal for data-center software maker VMWare (VMW) is completed. Management has said it expects to close the deal by Oct. 30. Thursday We sat on our hands Wednesday, as Wall Street rallied after payroll processing firm ADP reported private sector job gains in September well below expectations. But stocks returned to the red Thursday, and the market remained firmly in oversold territory. We made two separate buys against this backdrop, beginning with 65 shares of DuPont de Nemours (DD) and later returning to the beaten-down tech sector to purchase 75 more shares of Oracle (ORCL). And we upgraded beer maker Constellation Brands (STZ) to a 1 rating — denoting that we would be buyers at current levels — as its stock slid 3% despite releasing better-expected quarterly results and raising its full-year guidance. Thursday marked the first time since Aug. 18 that we added to our position in chemicals giant DuPont and just our third trade in the name overall. We initiated a position on Aug. 7 for its robust capital-return potential and its exposure to the semiconductor-and-electronics industry. Oracle’s stock remained trapped in its post-earnings malaise Thursday, amid a broader tech slump. But, as we argued in mid-September in the initial aftermath of the report, we remain confident in the ability of Oracle’s cloud business to benefit from growth in AI workloads. That belief undergirded our small purchase Thursday afternoon, just as it did Sept. 18 and Sept. 26 when we bought Oracle into weakness. Oracle still trades at an undemanding valuation relative to its tech peers. The strength of Constellation Brands’ beer business – led by Modelo and Corona – was on display in its fiscal 2024 second-quarter print Thursday. That didn’t stop its stock from declining for the past two trading sessions. But, as Jim stressed Friday, a major catalyst looms for Constellation: an investor day on Nov. 2, during which we hope to hear a strategy update influenced by activist investor Elliott Management. Friday A stronger-than-anticipated September jobs report from the U.S. Labor Department initially took stocks lower Friday, as bond yields popped on the news. However, the market reversed course in midday trading, with all three major U.S. stock benchmarks trading sharply higher. The strengthening market helped push shares of Humana (HUM) back above the $500 level – our cue to ring the register on 15 shares . We’d been eyeing the $500-per-share level for some time, as Humana’s stock began to recover from an 18% fall in early summer over fears about higher medical costs. Eventually, sentiment began to turn around, and Humana’s earnings report on Aug. 2 offered more assurances to investors that earnings would remain resilient. We remained aboard despite the turbulence and made one purchase into the June weakness. While the stock isn’t back to its May highs, it still made sense Friday to lock in hard-fought profits. We also downgraded the stock to a 2 rating, meaning we would wait for a pullback before buying up more shares. (Jim Cramer’s Charitable Trust is long CTRA, SBUX, AVGO, ORCL, DD, HUM and STZ . 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.
People walk by the New York Stock Exchange (NYSE) on February 14, 2023 in New York City.
Spencer Platt | Getty Images News | Getty Images
With the stock market deeply oversold this week, we put cash to work by picking stocks across a range of sectors including energy, technology and materials. We also added a former Club chipmaker to our Bullpen and upgraded a premium beer name to a buy rating. Finally, Friday’s market reversal helped us make good on a pledge to trim a once-downtrodden health-care stock.
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