The Club on Friday is changing the rating and price target on one of our favorite semiconductor stocks, while updating the price targets on four other names in the portfolio to reflect recent earnings, new internal developments and broader economic forces. AVGO YTD mountain Broadcom year-to-date performance. We’re increasing our price target on Broadcom to $1,200 a share, up from $1,000 to reflect the strong quarter it reported last week. At the same time, we are bullish on the integration of recently acquired VMware , and appreciative of the semiconductor firm’s capital returns through a growing dividend and aggressive share-repurchase program. The stock has been one of the best performers in the S & P 500 this week, advancing roughly 20% compared to the index’s 2.5% gain. Given the run it’s had in such a short period of time, we are downgrading our rating to 2, meaning we would be buyers on a pullback. In addition, Broadcom’s surge this week has us feeling a little greedy on this big position. It’s not every week you see a company of its size go on a run like this — with the company’s market cap swelling to roughly $460 billion. We plan to trim a small number of shares out of discipline to lock in our huge gains when we are not restricted from trading. COST YTD mountain Costco Wholesale year-to-date performance. We are increasing our price target on Costco Wholesale to $680 a share, up from $630. The decision reflects the stronger-than-expected quarter the retailer reported Thursday, with earnings of $3.58 per share beating estimates of $3.42. We think more gains are ahead for Costco on appreciation of its $15-a-share special cash dividend and anticipation of a membership-fee increase that could come sometime in late 2024. HON YTD mountain Honeywell year-to-date performance. We are nudging up our price target on Honeywell to $230 a share, from $225. The market didn’t care at first for Honeywell’s $4.95 billion acquisition of Carrier ‘s security business, but we loved the deal for its high margin, recurring revenue characteristics at an attractive price of 13 times earnings. We also thought it was a smart play on the reindustrialization boom underway in the U.S. Honeywell was a laggard in 2023, with shares down roughly 5% year-to-date, but we think the setup for the next few years will be better as its aerospace business continues to thrive and the struggling parts of its business — like warehouse automation and building products — trough and finally turn a corner. PANW YTD mountain Palo Alto Networks year-to-date performance. We are increasing our price target on Palo Alto Networks to $320 a share, up from $300. The move comes after raising our price target earlier in the month to $300, from $280. That decision proved too conservative, as the market continued to favor cybersecurity leaders. We see no reason to change our bullish views on Palo Alto Networks because cybersecurity is one of the most important areas of investment in the IT space. It’s become a secular theme due to the rising threat from bad cyber actors. WFC YTD mountain Wells Fargo year-to-date performance. We’re raising our price target on Wells Fargo to $54 a share, up from $50. Wells Fargo made a new 52-week high Friday, with bank stocks significantly benefiting from the Federal Reserve’s dovish pivot Wednesday. What the market is betting on is that lower interest rates rejuvenate loan activity and ease pressure on commercial real estate, of which Wells Fargo has notable exposure. But even after the move, the stock still looks cheap at around 10 times earnings, along with a dividend yield of 2.8%. (Jim Cramer’s Charitable Trust is long AVGO, COST, HON, PANW, WFC. 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 Broadcom chip in an Apple iPhone.
Brent Lewin | Bloomberg | Getty Images
The Club on Friday is changing the rating and price target on one of our favorite semiconductor stocks, while updating the price targets on four other names in the portfolio to reflect recent earnings, new internal developments and broader economic forces.