It was a fantastic week for stocks. The S & P 500 and the Dow Jones Industrial Average hit record highs as investors digested earnings and prepared for more. In turn, Wall Street analysts made a slew of bullish calls on five of our portfolio names — all of which report earnings next week SBUX YTD mountain Starbucks (SBUX) year-to-date performance Wall Street’s call: Wells Fargo forecasted an improved backdrop for Starbucks. The analysts said in a note Tuesday that sentiment was likely “too weak” ahead of earnings. Quarterly results are set for release before the opening bell Tuesday. Wells Fargo reiterated a buy rating on the stock. “A SBUX miss seems priced in & we like the ’24 setup from here,” analysts wrote. “It didn’t take long for the tide to turn post-last quarter’s rally, as shares quickly faded on softer Q1 checks, rising China concerns & negative union/labor headlines.” The Club’s take: We agree the headwinds seem priced it. Although the stock’s been a portfolio laggard, we’re bullish on management’s plans to progressively expand margins in the years to come. The firm also expects to unlock an additional $3 billion in savings programs and efficiencies in the next three years – another upside for the Club holding. MSFT YTD mountain Microsoft (MSFT) performance year-to-date Wall Street’s call: Morgan Stanley boosted Microsoft’s price target to $450 per share from $415, citing the company’s strength from generative artificial intelligence efforts. “Strong positioning across a broad GenAI portfolio looks to drive further share gains of the IT wallet and pushes our FY25 rev/eps 3% ahead of cons,” analysts wrote this week ahead of Tuesday’s after-the-bell earnings. Morgan Stanley said 68% of the CIOs it surveyed expect to “adopt Microsoft GenAI solutions over the next 12-months.” The Club’s take: Analysts are right to assume more upside on Microsoft’s AI efforts. The company’s been the clear leader among Big Tech in the nascent space, following a hefty $13 billion investment into leading AI startup, OpenAI. As a byproduct of this partnership, Microsoft unveiled a subscription program for its AI add-on, Copilot, last year. We think this service will add a nice recurring revenue stream for the firm. However, investors likely won’t see a material impact on the bottom line from Copilot for several quarters to come. AAPL YTD mountain Apple (AAPL) year-to-date performance Wall Street’s call: Apple was added to Bank of America’s top “US 1 list,” on Tuesday, a list of the firm’s self-described “best investment ideas” from its buy-rated stocks. On Wednesday, Goldman Sachs analysts then said the iPhone maker has a nice 2024 set-up for revenue acceleration in its Services segment. Apple reports earnings after the bell Thursday. “Services revenue should grow 11% yoy (including a ~7pp headwind from the year-ago extra week) to $23.1 bn in F1Q24E and should accelerate in F2Q24E driven by momentum in App Store spending and the benefits of price increases implemented in late 2023 for select services (e.g., Apple One, TV+, News+, Arcade).” The firm also expects “consolidated revenue growth accelerating in F2H24 on App Store momentum, services price increases, and iPad and Mac refreshes.” The Club’s take: We’re glad to see the Street change its cautious tone on Apple. Analysts issued a slew of downbeat calls at the start of 2024, causing the stock to sell off. We made a small sale of Apple shares, along with a handful of other 2023 tech winners, to right-size our portfolio on Jan. 2. Still, we have held our overall conviction. Similar to analysts, we see Apple’s Services segment – its most profitable business – as a solid high-margin revenue driver. AMZN YTD mountain Amazon (AMZN) year-to-date performance Wall Street call: Jefferies said Amazon stock has even more room to run after a great 2023. Analysts bumped the mega-cap name’s price target to $190 per share from $175 apiece, citing the e-commerce giant and cloud giant’s focus on cost-cutting. “Expect continued focus on ‘Harvest Mode’ to support all-time high margins and stock outperformance in 2024: AMZN remains committed to driving cost efficiency in 2024 with recent layoffs across Twitch (unprofitable) and the broader Amazon video team,” analysts argued in a Thursday research note — one week before earnings. Club take: Although job cuts are never easy, management’s efforts to reduce costs are crucial for Amazon to redirect capital towards growth areas. The firm cut hundreds of roles in its Prime Video and MGM Studios business, and Twitch also announced 500 more layoffs earlier this month. Management said they’re also increasing focus on content and product initiatives. META YTD mountain Meta Platforms (META) year-to-date performance Wall Street’s take: Bank of America analysts increased Meta’s price target to $425 per share from $405 this week, forecasting a Q4 revenue earnings beat ahead of Thursday’s after-the-bell release. “With a favorable macro backdrop for advertising, Reels contribution turning positive in 2024, a large messaging revenue ramp in progress, strong AI assets driving results, and still plenty of costs to cut if needed, we remain constructive on the stock,” analysts wrote. The Club’s take: Meta’s cost-cutting efforts, monetization in Reels and a better ad spend environment should boost shares in the long run. We look forward to seeing what management has to say about this momentum during earnings. (Jim Cramer’s Charitable Trust is long AAPL, SBUX, META, MSFT, AMZN, GOOGL . 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.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 23, 2024.
Brendan Mcdermid | Reuters
It was a fantastic week for stocks. The S&P 500 and the Dow Jones Industrial Average hit record highs as investors digested earnings and prepared for more.
In turn, Wall Street analysts made a slew of bullish calls on five of our portfolio names — all of which report earnings next week
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