Cramer gives the portfolio’s core holdings a makeover — 4 are booted, 6 are added including a trio of tech giants
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The Club’s portfolio is chock full of high-quality companies. But some of them — a group we designate our core holdings — are a cut above the rest. At the Investing Club’s recent Annual Meeting , Jim Cramer and Director of Portfolio Analysis Jeff Marks unveiled a reshuffled list of core holdings, which we generally define as industry-leading companies with great management teams and strong track records of creating shareholder value. Amazon , Eaton, GE Healthcare , Meta Platforms , TJX and Microsoft joined the all-star list, which swelled to 12 stocks from 10. Meanwhile, we removed two former Club holdings, Johnson & Johnson and Pioneer Natural Resources , while current investments Morgan Stanley and Starbucks were supplanted as their management teams work through obstacles to growth. Here’s our updated breakdown of each top core holding, going in alphabetical order by stock ticker. AAPL 5Y mountain Apple’s stock over the past five years. Apple remains an “own it, don’t trade it” stock, despite Wall Street’s recent cautious calls around its new Vision Pro headset and softening iPhone demand in China. Yes, China presents a risk to Apple on tepid consumer spending and Beijing’s reported crackdown on the use of iPhones at government agencies. But Jim said analysts need to look at the big picture for the company. Apple’s Services segment — home to sales from the App Store, Apple Music, iCloud and more — continues to grow as new users join its ecosystem. Potential headwinds in other parts of Apple’s business are partially offset by the strength of the Services business. However, Jim cautioned that more bearish commentary on Apple from the Street may be forthcoming. “You’re gonna have to strap yourself to the mast,” he said. “It’s going to be a painful stock, then it’s going to be great again.” AMZN 5Y mountain Amazon’s stock price over the past five years. Amazon delivered terrific fourth-quarter results earlier this month, exceeding analysts’ estimates on the top-and-bottom lines. Crucially, growth at its profitable cloud-computing unit, Amazon Web Services, finally reaccelerated. The tech giant’s regionalization strategy — intended to make fulfilling e-commerce orders more efficient while keeping costs down — is paying off. Plus, Amazon’s fast-growing, high-margin advertising segment should get a boost in upcoming quarters due to the introduction of ads on Prime Video . Overall, these improvements to an already-great company make us wish we could buy more shares, which have soared more than 80% over the past 12 months. “It’d be a gift if Amazon [stock] went down,” Jim added. COST 5Y mountain Costco’s stock performance over the past five years. Costco remains the best-run retailer in the world. It’s important to remember the wholesaler is not a margin company. Costco’s focus is on selling a lot of volume at attractive prices, leaning heavily on subscription revenues for its profits. The good news: Membership renewal rates are currently at record highs, a sign Costco’s value proposition is resonating with shoppers. After Costco’s long-awaited special dividend finally arrived, a bump in membership fees may be on the horizon. Costco now finds itself in an interesting spot: a new CEO who took over in January and a longtime CFO set to retire in March. “That’s going to be difficult,” Jim acknowledged, but the company is capable of handling it. “I think the culture is that strong,” he said. DHR 5Y mountain Danaher’s stock performance over the past five years. Light at the end of the tunnel has emerged for Danaher. Weak bioprocessing revenues plagued the life-sciences firm for most of last year as customers worked through excess inventory. But, on its fourth-quarter earnings cal l, management indicated some customers have returned to normal order patterns. More broadly, the already well-run Danaher has taken steps to improve itself by spinning off its water quality and packaging units into a separate company, known as Veralto , and replacing those revenues with faster-growing, higher-margin streams from antibody maker Abcam . Shares of Danaher are trading near 52-week highs. ETN 5Y mountain Eaton Corp.’s stock performance over the past five years. Eaton shares have been like a rocket recently, notching several record highs throughout February. Investors, like us, see big potential for its data-center business as AI adoption grows. The reason is data centers tailored for AI tasks contain more electrical component content than traditional computing facilities, creating more demand for Eaton’s products. This isn’t the company’s only tailwind, though. The electrical equipment giant has wisely positioned itself at the sweet spot of many megatrends such as the green energy transition, reindustrialization and increased infrastructure spending. Eaton joined our portfolio in November. “The megatrends are real serious, and [Eaton] is a real serious company,” Jim said. GEHC ALL mountain GE Healthcare’s stock performance since becoming a publicly traded company in January 2023. GE Healthcare is coming off a strong quarter, causing the formerly stuck-in-the-mud stock to reach fresh record highs. But the stock remains underappreciated on the Street, specifically its margin expansion story. Management remains confident the company can achieve adjusted operating profit margins in the high-teens to 20% over the medium term. For comparison, they stood at 15.1% in 2023. We got into the stock because new Alzheimer’s treatments represented a tailwind for the medical equipment maker, but these have taken longer to commercialize than anticipated. Instead, we’re seeing GE Healthcare’s AI integration into their offerings as an increasingly attractive growth prospect. Down the line, this could allow the firm to sell advanced products at a higher price point and boost sales. “Stay long GE Healthcare,” Jim said. LIN 5Y mountain Linde’s stock performance over the past five years. Linde rarely disappoints. The industrial gas provider has posted 20 consecutive earnings beats, making it one of the most consistent stocks likely unknown to many non-Club members. Linde — a long-term winner for the portfolio — is one of 12 stocks in the S & P 500 to beat the index on a total shareholder return basis every year since 2019. Linde continues to see demand for its offerings because of its huge exposure to a variety of industries, including semiconductor manufacturing, hospitals, beverage makers and many more. The firm continues to be an earnings compounder, thanks to its strong pricing and productivity gains, as well. LLY 5Y mountain Eli Lilly’s stock performance over the past five years. Eli Lilly stock is having another killer year, up nearly 30% since the start of 2024. We’ve longed touted the company’s pipeline as the best in the industry, and now we are finally seeing the commercialization of key assets like Zepbound. The weight-loss drug — along with type-2 diabetes treatment Mounjaro, which shares the same active ingredient tirzepatide — is off to a historic start since its U.S. approval in the fall. Jim predicted Zepbound will become more popular than its main obesity competitor, Novo Nordisk’s Wegovy, which has been on the market for more than two years. “The insurance companies are going to favor Eli Lilly over Novo Nordisk, so I think when people realize that it’s going to go much higher,” he said. He also said he agreed with Morgan Stanley analysts who projected Eli Lilly to be the first drugmaker to notch a $1 trillion market cap. META 5Y mountain Meta Platforms’ stock performance over the past five years. Meta Platforms embraced much-needed efficiency initiatives over the past year. Management conducted layoffs and shrunk its real estate footprint – crucial after CEO Mark Zuckerberg’s massive metaverse bets concerned Wall Street two years ago. Although expenses could rise with further generative AI investments , we remain upbeat on the social media behemoth’s ability to monetize that spending through the success of TikTok competitor Reels and improved ad targeting. Its recent decision to institute a quarterly dividend is a positive long-term sign, too. CEO Mark Zuckerberg is “a very competitive guy,” Jim said. “He heard people wanted a dividend, so he gave them a dividend.” MSFT 5Y mountain Microsoft’s stock performance over the past five years. Meanwhile, Microsoft continues to be a “total juggernaut,” Jim said, and the stock will “just keep going higher,” The tech giant has made sizable bets on generative AI — headlined by its significant partnership with ChatGPT creator OpenAI — that are paying off in their early days. For example, more users are coming to cloud-computing Azure due to its AI prowess. Plus, Microsoft’s AI assistant, Copilot, should bring in another revenue stream with its monthly subscription fee. Overall, management’s done a solid job aggressively investing in Microsoft’s future while also balancing profitability. NVDA 5Y mountain Nvidia’s stock performance over the past five years. Nvidia posted a fantastic quarter last week , beating analysts’ sky-high expectations. The “own it, don’t trade it” thesis remains intact as demand for the leading AI chipmaker’s offerings doesn’t seem to be waning. Jim said Nvidia has wisely sped up its product development timeline to avoid the boom-and-bust cycles that semiconductor companies have traditionally been prone to experience. Additionally, its software-and-services business is small, but fast-growing with promise for the future. “I’m very excited about the next five years for Nvidia,” Jim said. TJX 5Y mountain TJX Companies’ stock performance over the past five years. Off-price retailer TJX Companies has been gaining market share, leaning on its flexible business model to respond to ever-changing consumer tastes and trends. The owner of TJ Maxx, Marshalls and HomeGoods is perfectly positioned for the current economic environment, in which shoppers are looking for deals without sacrificing on quality. We’ve also seen upbeat signs around the Club name on social media, as younger customers have turned to TikTok to show off their so-called “TJ Maxx hauls,” a sign the retailer is gaining popularity among Gen Zers and millennials. In the days since the Annual Meeting, TJX reported strong fiscal fourth-quarter results. Although its full-year guidance came in short of Wall Street expectations, management is known to offer conservative outlooks the company is capable of exceeding. Notably, TJX said the amount of high-quality merchandise available to buy from other retailers looking to offload it remains “outstanding.” (Jim Cramer’s Charitable Trust is long LLY, AAPL, COST, GEHC, MSFT, NVDA, TJX, LIN, META, ETN, DHR. 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. 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Microsoft Chief Executive Officer (CEO) Satya Narayana Nadella speaks at a live Microsoft event in the Manhattan borough of New York City, October 26, 2016.
Lucas Jackson | Reuters
The Club’s portfolio is chock full of high-quality companies. But some of them — a group we designate our core holdings — are a cut above the rest.
At the Investing Club’s recent Annual Meeting, Jim Cramer and Director of Portfolio Analysis Jeff Marks unveiled a reshuffled list of core holdings, which we generally define as industry-leading companies with great management teams and strong track records of creating shareholder value.
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