Cramer says Palo Alto is a buy, plus what we want from Disney and Wynn earnings
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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. We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible. Here’s Wednesday’s edition. Market moves: Wednesday was shaping up to be a strong day for the market, with the S & P 500 on the doorstep of 5,000 and the Nasdaq leading the way up roughly 1%. Wall Street faced a big test this afternoon when $42 billion worth of 10-year Treasury notes went up for auction. It passed with flying colors with a lower-than-expected yield. That means demand was strong. Earnings rewind: Six companies in the portfolio have already reported this week. So, let’s go back over a few of them. Starting with Eli Lilly : shares of this drugmaker were making a strong move higher Wednesday after curiously falling in reaction to earnings Tuesday. Jim Cramer said he sees two reasons for the turnaround: “First off, the positive results from its NASH study are bigger than we think. Yet, it was ignored by the sellers yesterday. Here’s what’s important: 15 million people in the U.S. suffer from NASH and there are no approved treatments.” NASH is shorthand for a disease that affects the liver. “Second, the disappointment with Amgen on Wednesday is because its obesity treatments won’t come close to hurting Lilly.” What about Linde ? The industrial gas giant continues to widen its lead against its U.S. rival Air Products from both an operational and share performance perspective. Linde is one of 12 members in the S & P 500 to outperform the index on a total shareholder return basis each year over the past five consecutive years. We’ve always thought of Linde as a great way to play the rise of decarbonization projects in the U.S., mainly through the supply of green hydrogen. However, we learned Tuesday that the economics may be too tough for green hydrogen. Instead, blue hydrogen is where the better opportunities are. “This revelation may pull the plug on Plug Power because green is too expensive,” Cramer said. Plug Power provides hydrogen fuel cell solutions. The action in DuPont over the past two days was encouraging that the worst may be over . Part of it may be due to the new $1 billion buyback it announced. But the other key part is the influx of orders DuPont said it had in January. That has us feeling better that this most recent (and severe) cut could be the last cut. One we’re still on the fence about is Estee Lauder . The price action has been telling. The stock shot up almost 19% at the open Monday but closed toward its low of the session. That’s disconcerting. We think the worst is over for the hard-hit prestige beauty company. But it’s hard to get too excited about it until we see more tangible signs of progress. Cybersecurity still hot: Information Tech was the second-best group Wednesday and some of the strongest action was in cybersecurity after a trio of inconsistent laggards — Fortinet , Tenable , and Check Point Software , reported good quarters Tuesday. “If the worst cybersecurity stock does well, what does it say about the best? Buy Palo Alto Networks ,” Cramer said. Upcoming earnings: Disney and Wynn Resorts are out after the bell Wednesday. Disney is the big one, and we’ll be looking for more clarity around the sports joint venture with Fox and Warner Bros. Discovery that it announced Tuesday. With direct-to-consumer expected to reach its first profitable quarter later this year, we’d like to get a better idea of where management sees margins going in the next few years. Closing the streaming margin gap with Netflix is crucial. As for Wynn Resorts, last quarter the stock got blasted because one of its properties in Macao was behind schedule in its post-Covid pandemic profit recovery. We’ll be looking for signs of a turnaround there. In Vegas, we expect good things because of the Formula 1 Grand Prix event in November. Some other earnings of interest are PayPal and Arm Holdings. (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.
A liquid hydrogen tanker truck taking a fuel delivery at the Linde hydrogen plant in Leuna, Germany, on Tuesday, July 14, 2020.
Rolf Schulten | 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. We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible. Here’s Wednesday’s edition.
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