Here’s an update on our consumer discretionary and consumer staples stocks in Jim Cramer’s Charitable Trust, the 35 holdings that make up the CNBC Investing Club’s portfolio. Jim discussed each holding during our first-ever Annual Meeting, which was held Saturday in New York City. ( Watch the video replay of the event). The following is a look at our nine consumer-related stocks. Amazon (AMZN): Amazon’s advertising business is durable and its revenue stream from Prime is reliable. The company’s market-leading cloud computing platform, Amazon Web Services (AWS), has slowed, but there’s more room for growth as companies migrate to the cloud. What Amazon must do better is manage costs. The e-commerce and cloud giant is trying to determine how to right-size its business after it over-hired and over-expanded warehouses during the Covid pandemic. The company announced 18,000 job cuts in January . But that doesn’t go far enough. Jim thinks another 200,000 is necessary. Amazon is concerned that reducing its workforce could impact fast delivery. Once management figures out what needs to be cut and realigns its cost structure, the stock will go much higher, which is why we’re sticking with it. Ford Motor (F): The legacy automaker’s transition to electric vehicles has been met with many hurdles. The latest setback has been the production halt on its F-150 Lightning pickup truck due to battery issues. A battery problem is a major headwind given Ford is betting its future on EVs but can’t make vehicles fast enough to meet demand. Execution issues were a major issue in the company’s latest messy fourth-quarter earnings . We need to see better execution from CEO Jim Farley. Ford’s 5% annual dividend yield pays us to wait. But Jim Cramer says the Club may have to boot the stock if the company can’t turn things around by next quarter. Starbucks (SBUX): We’re impressed to see the coffee powerhouse is staying innovative by reinvesting in stores to accommodate the consumer shift from hot to cold drinks and announcing its new olive oil-infused coffee, Oleato, in hopes of attracting more customers. We were also impressed to hear that demand for the company’s beverages remains strong despite higher prices and an uncertain economy. That was the word from interim CEO Howard Schultz in an interview with Jim last week. We’re bullish on the company’s investments in China — Starbucks’ second-largest market by revenue after the U.S. — as it opens a new store there every nine hours. Lastly, we expect great things from Laxman Narasimhan who officially takes the CEO reins from Schultz in April. Narasimhan is a consumer goods veteran. TJX Companies (TJX): TJX is a winner in a slower economy as shoppers love the treasure-hunting experience for cost-saving deals. The stock has had a good run lately, but it pulled back when it reported a problem with theft in stores as part of its fourth-quarter results last week. We continue to own off-price retailer TJX, which operates T.J. Maxx, Marshalls and HomeGoods, for the high-quality inventory it buys and sells for a discount, along with its planned dividend increase and repurchase program. Target (TGT) reports earnings this week. If their stores have excess inventory, that could serve as a catalyst for TJX stock to go higher. Wynn Resorts (WYNN): We stuck with the casino company for the inevitable post-Covid reopening in Macao, which is slowly materializing as people travel and spend on experiences. Wynn had been a tough stock to own as we’re waiting for China to fully recover but fundamentals have gotten better. Shares have been a huge outperformer since October lows. We continue to believe that a recovery in and around China will be a catalyst for growth in Wynn’s Macao operations. In other areas, the casino operator’s Las Vegas and Boston operations remain strong. The company also is building a new property in the United Arab Emirates (UAE), which could be the first legal gaming venue in the Arabian Peninsula. Costco (COST): The wholesale retailer has proved time and time again that it’s the best-run retailer — recently in deftly handling inventory to avoid the kinds of gluts seen at Walmar t (WMT) and Target experienced last year. Costco is in the volume business and that’s the edge, plus a stream of revenue for membership fees. As consumers are pressured by elevated inflation, Costco offers a value proposition to its members, making it an attractive retailer for cost-saving deals. It’s also a great defensive play in a slower economy. The retailer reports earnings its fiscal 2023 second-quarter earnings after the closing bell Thursday. We anticipate solid results since monthly sales figures have been holding up. There are multiple catalysts for stock including a potential special dividend announcement and a possible increase in its membership fees — not to mention the continued expansion of its stores globally. Estee Lauder (EL): The luxury skincare, makeup and fragrance brand is one of our favorite ways to play China reopening. Consumer spending was great when Covid lockdowns ended in the U.S., and we anticipate the same will happen in China. There’s huge growth potential in China’s skincare market, a high-margin product for the company. Pent-up demand waiting to be unleashed in the region, particularly at duty-free shops in the airports of popular destinations like the island province of Hainan, often called the “Hawaii of China.” We expect shares to climb higher this year. Procter & Gamble (PG): We favor this high-quality household product company for its pricing power, which successfully played out last quarter. It offset some temporary volume declines. At a consumer conference last week, management said U.S. demand is resilient but shoppers in Europe and China are holding back. P & G’s solid dividend yield and stock buybacks are added incentives as the stock has not performed well this year. However, diversification is important and we like to have defensive names like P & G in our portfolio during volatile times in the market. Constellation Brands (STZ): Consumer demand for Constellation’s premium alcoholic beverages is strong even as inflation weighs on consumers since people continue to drink beer in an economic slowdown. The company is seeing exceptional growth in its Mexican beers, Modelo Especial, Pacifico and Corona. While Modelo saw volume growth decelerate last quarter, beer depletions accelerated in December and January. Constellation is gaining market share in a slow-growing category and doing much better than its competitors. Another opportunity is in the Victoria beer brand, which is popular in Mexico but hasn’t come to the U.S. yet. We aren’t bothered by the recent poor stock performance because the beer business is doing well, and we see more growth ahead. (Jim Cramer’s Charitable Trust is long AMZN, F, SBUX, WYNN, COST, TJX, EL, PG, STZ. 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.
Jim Cramer on Squawk on the Street, June 30, 2022.
Virginia Sherwood | CNBC
Here’s an update on our consumer discretionary and consumer staples stocks in Jim Cramer’s Charitable Trust, the 35 holdings that make up the CNBC Investing Club’s portfolio. Jim discussed each holding during our first-ever Annual Meeting, which was held Saturday in New York City. (Watch the video replay of the event). The following is a look at our nine consumer-related stocks.
