We’re increasing price targets on our bank stocks after their strong runs
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch, an actionable afternoon update just in time for the final hour of trading on Wall Street. Market moves: The S&P 500 made a comeback on Thursday after four straight sessions of declines. The technology has rebounded from recent losses after Micron signaled continued strong demand for AI memory chips. Micron shares are up more than 12%. But AI trading wasn’t carrying the market on Thursday. What actually worked best was consumer discretion. Yes, tech companies Amazon and Tesla are entering the consumer bracket and their stocks are rising. Many restaurant, retail, travel and entertainment stocks also posted big gains. The group appears encouraged by signs that inflationary pressures are easing after a much cooler-than-expected consumer price index reading. Club name Texas Roadhouse is on the rise for the second day in a row. We purchased additional shares at lower levels on Monday morning. Bank stocks: Our financial positions have been some of the strongest performers in the portfolio this month, prompting us to raise our price targets. We are raising our Goldman Sachs price target to $925 from $850 and our Wells Fargo price target to $96 from $90. We are also increasing our Capital One price target from $250 to $270, but lowering our rating to 2. We also plan to correct the position as early as Friday, once the lockdown is lifted. This will be our first sale since we initiated the position in early March. The stock has had a strong year and has been down since New York Fed President John Williams said on November 21 that a rate cut was possible at the December FOMC meeting (the Fed cut rates last week). Capital One shares have only fallen for two days since Williams’ comment, rising about 20% in that period, outperforming the S&P 500’s return of about 4%. We remain bullish on Capital One next year as we expect greater Discover-related synergies and share buybacks to increase. However, we are careful not to get too greedy about entering a big position after a big run. Next up: Club name Nike, FedEx and KB Home report after the closing bell. We’ll see earnings from Conagra, Lamb Weston, Paychex and Carnival Corp before Friday’s open. On the data side, we will see the University of Michigan’s consumer sentiment index and one-year inflation expectations. (See here for a complete list of stocks in Jim Cramer’s Charitable Trust.) When you subscribe 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 trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.
