We had a busy week of trades in an oversold market. Here’s the day-by-day breakdown
Elevated bond yields and geopolitical uncertainty continued to be negative for stocks this week as the overall market moved into oversold territory. However, that set us up to put cash to work and make four small buys as our discipline mandates. We also upgraded one of our tech giants after it reported a stellar quarter but saw its stock punished. The 10-year Treasury yield went back above 5% this week after crossing that threshold for the first time since July 2007 on Oct. 19. While settling Friday slightly below 5%, bond yield volatility and concerns about the war in the Mideast have proven to be more powerful stock market movers lately than the solid earnings prints we’ve seen from several mega-cap tech companies. The closely followed S & P 500 Short Range Oscillator first flashed oversold Monday and went deeper and deeper into oversold territory as the week went along. Jim Cramer has used the Oscillator for decades to gauge sentiment swings in the market. It’s our practice to look for places to make small buys in oversold markets. (We conversely took at making trims during overbought markets). This week, we purchased shares in companies that had promising earnings but negative stock reactions or demonstrated positive catalysts on the horizon. Here is a day-by-day breakdown of the moves we made in our portfolio. Monday On Monday, we bought 75 more shares of Oracle (ORCL), which was up about 1% at the time. We were taking advantage of the unwarranted 6% drop in the stock on Oct. 20 following the company’s AI Executive Forum event. Investors were encouraged by the enterprise software company’s positive comments on artificial intelligence spending. ORCL YTD mountain Oracle YTD However, shares fell on worries that cash flows from AI workloads would be further out in the future. The lack of immediate revenue upside from AI also caused Oracle shares to drop 13.5% on Sept.12, the day after it reported earnings. Given the company’s fundamentals are intact and there’s strong sustained demand for its AI services, we saw the pullback as a buying opportunity. Tuesday We used Tuesday’s post-earnings sell-off in Danaher (DHR) shares to add 30 more shares to our position. While the life sciences giant beat on the top and bottom lines, the stock faltered due to uncertainty around the recovery in its key bioprocessing business. DHR YTD mountain Danaher YTD Still, we felt confident buying more DHR because stocks tend to bottom before their industry cycle does, and Danaher is almost there in working through the excess supply that is limiting new order demand. Danaher’s inflection point is coming. It may be a quarter or two away, which is why we think buying the stock lower now is a good opportunity. We see substantial growth ahead in the biologics market and see a better setup for the sock in 2024. Wednesday On Wednesday, we made a small purchase of 20 more shares of Constellation Brands (STZ), buying the recent dip on higher interest rates and concerns that GLP-1 weight loss drugs like Wegovy might make people want to drink less alcohol. Any GLP-1 impact is far down the road and anything but certain. So, we’re continuing to concentrate on the beer maker’s improving fundamentals, which were highlighted in the company’s quarterly beat and raise earlier this month . STZ YTD mountain Constellation Brands YTD We’re hoping that during the company’s Investor Day on Nov. 2, management will announce a strategic review of the company and consider selling its lagging Wine & Spirits part of the business. We would also like to see a commitment to growing the dividend and repurchasing stock. We think this event will be a catalyst for STZ stock, which is why we bought ahead of it. Thursday With the Oscillator at its worst oversold levels of the week, we were compelled to increase our position in one of our energy stocks and upgrade shares of one of our mega-cap tech giants. CTRA YTD mountain Coterra Energy YTD We bought 200 more shares of Coterra Energy (CTRA). When decided to take our profits and exit Pioneer Natural Resources (PXD) last week following Exxon Mobil (XOM) acquisition announcement, it was our plan to purchase more Coterra on a pullback. We waited. It happened and, we made the trade. Coterra is about 50/50 oil and natural gas — so price moves in these commodities are always going to influence shares. However, we can’t help but also think Coterra could benefit from the consolation in the sector. META YTD mountain Meta Platforms YTD We also on Thursday decided to upgrade Meta Platforms (META) to our buy-equivalent 1 rating as the stock riding a two-day losing streak. The social media giant reported solid third-quarter results Wednesday evening. However, shares sank after management delivered conservative revenue guidance, citing volatility in advertising spending at the start of the fourth quarter due to the Israeli-Hamas war. (Jim Cramer’s Charitable Trust is long ORCL, DHR, STZ, CTRA, META. 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.
Jim Cramer on Squawk on the Street, June 30, 2022.
Virginia Sherwood | CNBC
Elevated bond yields and geopolitical uncertainty continued to be negative for stocks this week as the overall market moved into oversold territory. However, that set us up to put cash to work and make four small buys as our discipline mandates. We also upgraded one of our tech giants after it reported a stellar quarter but saw its stock punished.
