Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Tuesday’s key moments. The market is in a position where stocks rise with better-than-expected earnings but drop sharply on mediocre results. This can be seen with Stanley Black & Decker versus Procter & Gamble Tuesday morning. Shares of SWK rallied 7.3% higher, hitting a two-year high on an earnings beat even though there was just a slight sequential improvement in gross margins. PG shares, on the other hand, were trading 5.7% lower even as management said 85% of the business is performing in line with expectations. It’s a company that tends to be consistent and deliver when it reports but “you don’t buy consistency at this point of the cycle,” Jim Cramer said Tuesday. “This is not a rational market when it comes to the valuation of individual stocks. It’s a rational market when it comes to where we are in the cycle,” Cramer added. Right now, the market wants companies that have underperformed, but are beating and raising guidance, while selling consistent performers. Investors are still favoring companies that do better in a lower interest rate environment as part of the market rotation, and selling those where rates don’t really matter, like the mega-cap tech companies. Jim said big tech could be down enough to create buying opportunities. Shares of Nvidia , for example, were trading 4% lower Tuesday, continuing a downward trend that puts shares of the chipmaker down 13% over the past month. Still, the stock is up 116% year to date, making it the second-best performer in the S & P 500. Nvidia’s earnings have soared due to high demand for its advanced chips from major tech firms like Meta , Alphabet , Amazon and Microsoft which are in the early phases of AI development and deployment. “What you’re having here is a collapse of the multiple,” Jim said of Nvidia stock. This is creating a favorable set up for investors who don’t own Nvidia yet to start a position. Starbucks will report its third-quarter results after the closing bell Tuesday. We have low expectations, but will key in on CEO Laxman Narasimhan’s comments about the quarter. Cramer said that “there’s a path forward for the stock” if Narasimhan shows progress in resolving the company’s boycott issues and finding a way to reduce ultra-high coffee prices. If he can do this “he’s got a good stock,” Cramer said. However, if there isn’t progress on these pain points, it is possible Elliot Management, the activist firm which recently took a large stake in Starbucks, might push for Narasimhan’s removal. (Jim Cramer’s Charitable Trust is long SWK, PG, NVDA, META, GOOGL, AMZN, MSFT, SBUX. 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.
Read the full article here
