Here are four new bullish calls on stocks in the portfolio — and our thoughts on each. PANW YTD mountain Palo Alto Networks (PANW) year-to-date performance Morgan Stanley named Palo Alto (PANW) its “top pick” ahead of the cybersecurity name’s first-quarter earnings release on Wednesday. Analysts expect the company to beat earnings and sales estimates and to raise its forward guidance. “We expect [Palo Alto] to pull further away from the pack and sustain durable high-teens billings growth,” Morgan Stanley analysts, led by Hamza Fodderwala, wrote in a Friday note. “Our latest checks largely support a positive view, with partners citing durable demand as customers consolidate on the broader [Palo Alto] platform.” Meanwhile, analysts at Cantor Fitzgerald raised their price target for Palo Alto to $280 from $250, a 9.8% upside from the stock’s Monday trading level of $255. The firm cited continued strength in annual recurring revenue and reiterated its buy rating. Club take: The checks are in line with what we’ve seen all year: Palo Alto is taking market share as customers consolidate their security budgets with one provider that can handle all of their needs. We don’t see any reason for this dynamic to have changed since last quarter — a belief further strengthened by this new research that indicates strong demand. ORCL YTD mountain Oracle (ORCL) year-to-date performance Edward Jones upgraded Oracle (ORCL) shares to a buy from a hold, citing the company’s potential for expansion in the cloud market to accelerate sales growth. Analysts at the firm said the market hasn’t priced in these growth prospects either. “While Oracle has historically traded at a discount to peers, we think shares do not adequately reflect our improved sales growth outlook,” they wrote in a Monday note. Club take: This upgrade is in line with the Club’s view that shares — at 21 times 2024 earnings estimates —do not reflect the company’s improved outlook as management sharpens its focus on cloud computing. Last week, we learned that Oracle’s focus on building out an Nvidia-focused cloud infrastructure resulted in Microsoft tapping Oracle for additional capacity to fulfill demand for its AI offerings. Once Oracle’s multi-billion dollar acquisition of electronic medical records company Cerner is fully integrated, we should see also see some cost savings and improved profitability. STZ YTD mountain Constellation Brands (STZ) year-to-date performance Analysts at Jefferies on Sunday initiated coverage of Constellation Brands (STZ) with a buy, citing management’s improved capital allocations and accelerating brand momentum. “Constellation has grown nicely and laid out a rational pathway to keep going. The beer brands are hot, innovations are working and distribution should increase further,” analysts wrote. “Management has made a commitment to prudence with capital, which they have the freedom to control under the new share structure.” Club take: Our thesis has been about management executing on its promise to increase operational efficiency and strengthen the portfolio. That means focusing on best-in-class beer brands and ditching the lower-performing wines and spirit brands. PG YTD mountain Procter & Gamble (PG) year-to-date performance Jefferies initiated coverage of Procter & Gamble (PG) with a buy rating on shares, citing the company’s solid fundamentals and durable earnings stream. Analysts also described the firm as a top- and bottom-line growth leader that has performed through economic uncertainty, the pandemic and supply chain headwinds. “Every one of our companies tries to activate the flywheel effect,” the analysts wrote, describing the impact of small wins for a business over time, which can create compounding returns. “Few get there. When they do, it’s powerful.” Analysts added: “We think [Procter & Gamble] will continue to drive peer-leading top and bottom-line growth over the next four years..” Club take: The update supports our view that as inflation cools, Procter & Gamble has the product innovation and technology investments to expand the company’s gross margin back to more normalized levels (51%) over time. It is trending in the right direction. Moreover, Procter & Gamble sells the kinds of staples consumers will buy even when budgets are stretched as their are few alternatives. Everyone needs cleaning and hygiene products, regardless of the economic backdrop. This provides an element of safety against an uncertain macroeconomic and geopolitical backdrop as profit margins expand. The 2.5% dividend yield doesn’t hurt either. (Jim Cramer’s Charitable Trust is long PANW, ORCL, 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.
A trader works on the floor of the New York Stock Exchange.
NYSE
Here are four new bullish calls on stocks in the portfolio — and our thoughts on each.
