Wall Street made some big calls on Club stocks to kick off the first week of 2024. Here’s a summary of the commentary and where we agree and disagree with the analysts. Apple Wall Street’s take: The new year began with a bang in Big Tech and not in a good way. Apple stock received a rare downgrade from Barclays on Tuesday. Analysts slashed their rating to underweight from equal weight (sell from hold). The bank also trimmed the tech behemoth’s price target to $160 per share from $161. “IP15 has been lackluster and we believe IP16 should be the same,” analysts wrote in a Tuesday note, referring to current and future iPhone models. “Other hardware categories should remain weak, and we don’t see services growing more than 10%. We expect reversion after a year when most quarters were missed and the stock outperformed.” The Club’s take: Apple remains one the best companies in the world and a core position of our portfolio. We see three drivers: customer loyalty and a sticky ecosystem; high-margin Services; and cash flow. Barclays dismissing 10% growth in Services is ill-advised. It gets harder and harder to pull off big percentage gains when sales are so high. After all, the unit pulled in $22.3 billion in revenue in Apple’s latest quarter. However, we fully expect Services revenue growth to continue, especially with Apple making a concerted effort to enter new markets with massive potential, such as India), where new device sales will prompt new entrants into the ecosystem and further support Services growth. On Jan. 2, we trimmed Apple along with other big 2023 tech winners. We always say about Apple stock “own it, don’t trade it.” However, selling a few shares of your biggest position to take profits on huge gains never hurts you. Our discipline is to never be greedy and maintain a diversified portfolio. So, when a stock runs as Apple did in 2023 and exceeds a 5% weighting in the portfolio, we look to trim it as the mantra of “discipline trumps conviction” outweighs “own it, don’t trade it.” Nvidia Wall Street’s take: Nvidia was listed as Stifel’s new top idea for 2024 in a Monday note. “NVDA is our new ‘best idea’ for AI/Accelerated compute,” analysts at the firm said. “We believe NVDA’s valuation presents a compelling opportunity ahead of the next phase of the company’s AI cycle, software and services.” The Club’s take: Like Stifel, we’re upbeat on Nvidia’s artificial intelligence growth prospects. The company currently dominates market share for AI chips, and we see continued growth from its Data Center business. But, Nvidia stock jumped a whopping 238% last year. We anticipate shares stabilizing as investors look for other pockets of the market to allocate to. This is why the Club sold 15 shares of Nvidia earlier in the week. Honeywell Wall Street’s take: Mizuho Securities boosted Honeywell’s price target to $245 per share from $225 on Thursday. Analysts at the firm maintained their buy rating on shares and named Honeywell one of the firm’s top ideas for 2024. “HON shares remain attractively valued, trading at a modest discount to our group in aggregate,” analysts argued. “Its strong balance sheet provides some defensiveness in the event of a broader macro slowdown with the recent Global Access Solution’s access deal being nicely accretive in year 1 of ownership.” The Club’s take: We’re forecasting a strong 2024 for Honeywell, too. Last year’s laggards, like industrials, should gain a boost as investors rotate into other segments of the market. Honeywell should benefit from an improved M & A backdrop in 2024 as well because of its strong balance sheet. In December, the industrial conglomerate said it would acquire air conditioner maker Carrier’s security business in a nearly $5 billion deal. We think the purchase will not only broaden Honeywell’s customer base but also give the firm a new high-growth business. Costco Wholesale Deutsche Bank said Costco remained “best in class” after the firm’s recent survey checks. Analysts reiterated their buy rating on shares. “61% of our respondents with club memberships are members of COST. In addition, the retailer is often the second choice among members with more than one membership,” analysts wrote in a Friday note. The Club’s take: We reiterate our thesis that investors can’t go wrong owning Costco in the long run. The company has solid underlying fundamentals that make it best in class regardless of the macroeconomic environment. It offers great prices for cost-conscious consumers. It gets a nice revenue stream from membership fees, which we hope the company will raise soon. Last quarter, it announced a long-awaited special dividend. Microsoft, Salesforce Finally, Microsoft and Salesforce were listed as Bank of America’s top picks on Friday. “CRM – Enduring mid-teen revenue growth and margin expansion from sales productivity efforts. … MSFT – AI expected to drive incremental growth in core Azure and Office franchises, ongoing margin/FCF growth from scale. … NOW – Best-in-class growth likely to move higher with AI and ongoing consolidation of the large IT & custom apps markets,” analysts wrote. The Club’s take: Although we see serious long-term growth prospects for Microsoft and Salesforce – especially in terms of AI integrations – we think both names will cool after 2023’s euphoric highs. We trimmed our positions for both on Tuesday. Shares of Microsoft and Salesforce surged 56% and 103% last year, respectively, last year. Both are among the 30 stocks that make up the Dow Jones Industrial Average . Salesforce was No. 1 and Microsoft was No. 3 last year. (Apple was the fourth-best Dow stock performer in 2023) (Jim Cramer’s Charitable Trust is long AAPL, NVDA, HON, MSFT, CRM, COST. 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 of the New York Stock Exchange on the last day of trading for the year on Dec. 29, 2023.
Spencer Platt | Getty Images News | Getty Images
Wall Street made some big calls on Club stocks to kick off the first week of 2024. Here’s a summary of the commentary and where we agree and disagree with the analysts.