We’re raising our price target on Honeywell and adding another stock to the Bullpen
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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. Banks drive rally: The S & P 500 is on track to close out the week at a record high and is pacing for its fifth straight weekly gain. The market is hitting this level without much help from tech stocks and the Magnificent 7 as the rally broadens out to the financials in response to strong third-quarter earnings from Wells Fargo , JPMorgan , and BlackRock . Price target update: There are a bunch of stocks in the portfolio currently brushing up against our price targets. One stock, Meta Platforms , is currently exceeding our price target. We’ve been waiting for the next catalyst to update these targets. A catalyst could be a quarterly earnings report, an investor event, a business update, or M & A activity. For example, over the past few days we’ve talked about the merits of Honeywell ‘s planned spinoff of its Advanced Materials business. We believe it is a value-creating event because the new Honeywell has an improved growth and free cash flow generation profile. The AM business should benefit from becoming a more focused company. Honeywell’s latest portfolio optimization move is a catalyst for why the stock should trade higher, and as a result, we are increasing our price target to $235 from $225. As for the others, we’ll likely hold off from updating price targets since we are so close to earnings. We’ll let the company results and commentary from the conference call be our guides to where these stocks will trade next. Bullpen adds: Earlier Friday we added Blackrock to the Bullpen . The stock hit another new record high Friday after reporting its third-quarter earnings. The results were strong, with revenue up 15% year over year and adjusted earnings per share increasing 5% to $11.46, beating consensus estimates of $10.40. The investment management and financial services company saw a surge of net inflows in the quarter totaling $221 billion. That was nearly double the $127 billion expected. And Blackrock’s adjusted operating margins are best in class at about 46%. The stock has had a fantastic run this year, up about 21%, but the gains can continue as lower interest rates push money out of cash and into fee-generating products. We are also adding the endpoint cybersecurity leader CrowdStrike to the Bullpen. Previously we’ve struggled with the idea of owning both Palo Alto Networks and CrowdStrike at the same time in a 30-something stock portfolio for diversification reasons. But both are best in breed and we’ve taken profits in our Palo Alto Networks position to the point where we’d like more exposure to cybersecurity. Plus, Palo Alto Networks is trading back to its all-time highs set in early February, and yet CrowdStrike is about $70 below its pre-IT outage high of $392. CrowdStrike can work back to those levels over time since very little business and customer trust were lost from that unfortunate event in July. Next week: Over the weekend we’ll keep our eyes on news out of China because it’s largely expected that the country’s finance minister will announce a $283 billion stimulus plan. Then our attention turns to earnings with 39 companies in the S & P 500 scheduled to report next week. Abbott Laboratories and Morgan Stanley both report Wednesday before the opening bell. Later that day is our October monthly meeting, scheduled for noon. (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.
CrowdStrike Holdings signage on the floor of the New York Stock Exchange on July 22, 2024.
Michael Nagle | Bloomberg | Getty Images
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.
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