Summary : Honeywell makes the cut because the company is nimble with exposure to strong end markets like aerospace, which contributes roughly one-third of its revenue. While drugmakers are the right type of stock for this environment, J & J has something else going for it: the planned separation into two companies. It also has a robust buyback program in place, repurchasing $3.33 billion worth of stock in the first six months of the year. Even though sentiment toward financials is sour, MS shares carry a roughly 3.6% dividend yield, and management is buying back stock.
Here’s a rapid-fire update on every stock in the CNBC Investing Club portfolio. Jim Cramer ran through each one of them Thursday during the August edition of our “Monthly Meeting.” Apple (AAPL) — For Club members who haven’t found the “right” opportunity to start a position in Apple yet, we say now is the time. Start with a small purchase and be patient, as you can build it up over time. AbbVie (ABBV) — We’re on recession watch, which means owning defensive drug stocks is strategically important. While one of AbbVie’s key drugs, Humira, goes off-patent next year, we think the company has plenty else going for it including a roughly 4% dividend based on Thursday’s stock price. Advanced Micro Devices (AMD) — The quarter AMD reported Tuesday night wasn’t perfect thanks to an expected slowdown in PCs and gaming chips, but the company’s strategic shift toward lucrative enterprise markets under CEO Lisa Su continues to progress. We’re still long-term bulls. Amazon (AMZN) — After a strong quarter that demonstrated management’s commitment to fixing overexpansion issues, we look at Amazon here in a similar way to Apple if you’re not yet invested. Start a small position and then wait. Bausch Health Companies (BHC) — We are still incredibly frustrated and apologetic for how poorly our investment in Bausch Health has gone. It’s cost the Charitable Trust a ton of money. Costco Wholesale (COST) — Owning a lot of industrials or retailers when a recession could be on the near-term horizon is ill-advised. That said, we’re willing to stick with Costco because we think it’s the best-run retailer in the world. Its solid July comparable sales figures , released Wednesday night, backed up our belief. Salesforce (CRM) — While we sold 30 shares Wednesday, it was done out of discipline, not eroding confidence in the enterprise software firm’s long-term story. We’re glad to see the company’s big Dreamforce conference scheduled to take place next month after two years of Covid-related alterations. It’s historically been a valuable event for co-CEO Marc Benioff to conduct business. Cisco Systems (CSCO) — We trimmed our position Tuesday , bringing Cisco to a roughly 2% weighting in the portfolio. The reason for that sale is we’re worried persistent supply chain issues could cause the networking company to report weaker-than-expected earnings later this month. Coterra Energy (CTRA) — Our position in Coterra was started this year to help us hedge the portfolio against inflation, given skyrocketing energy prices were a main contributor. For Coterra, specifically, we continue to like it here because of its strong capital returns and sizable natural gas business. The latter is especially valuable if the U.S. keeps exporting liquified natural gas (LNG) at its current pace. Chevron (CVX) — Our purchase of 145 Chevron shares in December has proved to be wise, although we recognize the decline in oil prices may spook some investors. Danaher (DHR) — Discipline required us to trim some Danaher on Friday, even though we found its most recent quarterly results rather impressive. We would not be shocked to see shares of the high-quality life sciences firm march higher from here. Walt Disney (DIS) — The market has not shared our faith in Disney, but we’re not giving up on it and maintain our long-term view that the company’s iconic franchises and theme parks make it a cut above the rest. The stock has gained 20% from its 52-week low last month. But at around $108 per share, it would have to gain more than 70% to get back to its 52-week high. Devon Energy (DVN) — We trimmed some Devon last week and downgraded shares to a 2 rating , meaning we want to wait for a pullback before buying. As with CTRA, Devon’s cash returns via fixed-plus-variable dividend payouts and share buybacks are key reasons to own the stock. Its incredibly low breakeven also means the company can still generate a lot of cash even with oil prices at their current levels. Ford Motor (F) — The automaker’s great quarter last week included a boost to its dividend. A slowing economy is a risk to Ford, a fact we’ve acknowledged for months even as we like the company for the long term. When it comes to buying more shares, we remain price sensitive. After the stock’s monster move in the past month, we wouldn’t hate to see a pullback so we can add to our position. Alphabet (GOOGL) — Growth has been the focus at Google Cloud in an attempt to catch Amazon Web Services and Microsoft’s Azure, explaining why the unit lost $858 million on $6.3 billion in revenue in the quarter ended June 30. We’re being patient. But still, we hope that soon Google Cloud is boosting earnings, not acting as a drag on them. Halliburton (HAL) — So far, it looks like we initiated a position in the oilfield services firm at an inopportune time. That said, we think its stock is trading like oil prices will tumble to the $60 per barrel range and slow drilling activity as a result, a view we don’t share. U.S. crude prices have fallen below $90 per barrel. Honeywell International (HON) — Like we noted earlier, we’re being strategic with our industrial ownership due to the slowing economy. Honeywell makes the cut because the company is nimble with exposure to strong end markets like aerospace, which contributes roughly one-third of its revenue. Humana (HUM) — We liked the quarter Humana reported last week , and think the market’s reaction in the following days is a bit misguided. We believe management’s decision to invest in its improved 2023 Medicare Advantage offering will prove worthwhile in time. Johnson & Johnson (JNJ) — While drugmakers are the right type of stock for this environment, J & J has something else going for it: the planned separation into two companies. One will be focused on consumer products, with its faster growing pharmaceutical and medical device divisions making up the second entity. We think it’s definitely worth owning. Linde (LIN) — Linde is our other industrial. We think secular trends work in its favor, even if there’s near-term economic weakness. Its industrial gases, especially hydrogen, are in strong demand. It also has a robust buyback program in place, repurchasing $3.33 billion worth of stock in the first six months of the year. Eli Lilly (LLY) — Our long-term conviction in Eli Lilly is intact, even as its shares slid 3% Thursday following the company’s second-quarter results . After making some disciplined, well-timed sales in June and July, we welcome additional weakness in LLY shares The reason is it gives us an opportunity to buy back what we sold at higher levels. Meta Platforms (META) — Confidence in the Facebook and Instagram parent is waning. A full explanation on why that’s the case can be read here . Marvell Technology (MRVL) — Marvell is a buy here. It has the least consumer end market exposure of our semiconductor stocks, and the strength of AMD’s enterprise markets offers a positive read-through on Marvell. Morgan Stanley (MS) — We’re believers in Morgan Stanley’s revenue diversification strategy, which over time should prove more stable than old iterations of the firm. Even though sentiment toward financials is sour, MS shares carry a roughly 3.6% dividend yield, and management is buying back stock. We think the stock looks cheap here, but recognize the market can be deceiving at this point in the cycle. Microsoft (MSFT) — We trimmed a little Wednesday after a strong few weeks. The sale does not mean we’re any less bullish on the tech giant’s long-term prospects, particularly the secular growth trends behind its cloud business Azure. Rather, we’re just trying to maintain discipline in this tough investment environment. Nvidia ( NVDA) — We still see greener pastures ahead for Nvidia, aided by the long-term opportunity in data center and other enterprise markets. However, with a big move higher in the past month and quarterly results coming later in August, we think it’s prudent to sit tight with our position. Pioneer Natural Resources (PXD) — We think Pioneer had the finest quarter of our upstream energy names — and with its latest dividend increase , the stock carries an annualized yield between 15% and 16%. That is great for existing shareholders, but if you don’t own it yet, we say hold off on starting a position. If oil falls further to around $80 per barrel, that could be an attractive time to buy into PXD. Procter & Gamble (PG) — We don’t think trade-down risk is very high for P & G, even as inflation remains hot and the economy slows, given the quality of its consumer-products brands. We just bought additional shares Friday, when the stock sold off after earnings . Qualcomm (QCOM) — For investors with a two-to-three year time horizon, at least, we think Qualcomm is worth buying here. We expect to see additional progress on its revenue diversification efforts over that span, and the near-term slowdown in smartphones that’s hurt the stock this year will hopefully be in the rearview mirror. Constellation Brands (STZ) — One of the more intriguing stocks in our portfolio, we believe demand for its imported beers including Modelo Especial and Pacifico is incredibly strong. More generally, we look at Constellation as a recession-resilient stock . Rounding out its Mexican beers, STZ has Corona and Victoria. Wells Fargo (WFC) — The market hasn’t been kind to financials this year, as recession fears have outweighed the benefit higher interest rates can bring to banks like Wells Fargo. We’re not ignoring the growth of WFC’s net interest income , though, and believe its loan book is quality enough to withstand a downturn. Wynn Resorts ( WYNN) — We’ve kept just 200 shares of Wynn, making it our smallest holding by weight in the portfolio. We’re holding those in case the Chinese government adopts a more rational Covid policy that enables more travel to the gaming hub of Macao, where Wynn has two very important properties. Macao is a Chinese special administrative region. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust, which is the portfolio we use for the Club.) 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.
