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Wall Street upgraded the Club’s two underperforming stocks — Emerson Electric ( EMR ) and Danaher ( DHR ) — to an equivalent buy rating on Tuesday. Meanwhile, longtime core holding company Apple ( AAPL ) has taken another step forward in the key global smartphone market. EMR YTD mountain This year’s performance of Emerson Electric stock. News: Wolfe Research upgraded Emerson Electric ( EMR ) to Outperform or Buy from Hold equivalent on Tuesday, while raising its price target on the stock to $103 from $98 per share. That’s a 19% premium to EMR’s closing price on Monday. Emerson’s stock has been under pressure this year after the automation-focused industrial giant launched a hostile bid for National Instruments ( NATI ) in January. But since Emerson announced a deal last week to buy National Instruments for $60 a share — a disappointment compared to its original offer of $53 a share — its shares have climbed about 5%. The transaction should allow the “new EMR” to emerge “as a higher-growth, higher-quality company at a significant valuation discount,” Wolfe analysts said in a note. Club View: Over the past few years, Emerson Electric has restructured its portfolio, selling ancillary assets and using that cash to buy faster-growing, higher-margin businesses to increase shareholder value while becoming a pure-play automation company. The latest step in the company’s plan was the long-awaited purchase of National Instruments, a test and measurement company. While we have been vocal about our displeasure with the $60 per share purchase price, we understand the strategic and financial merits of a deal that should ultimately be very successful. Now that the business uncertainty is behind the company, management must realize its cost synergy goals and broader automation strategy. DHR YTD mountain of Danaher’s year-to-date stock returns. The news: Investors have turned too negative on Danaher ( DHR ) , creating a buying opportunity for shares of the life sciences company, Wells Fargo said in a note to clients on Tuesday. The company upgraded the stock to overweight or buy from the equivalent rating of hold. He also raised his price target to $285 per share from $275, an 11% increase from the stock’s closing price on Monday. Wells Fargo said its reasons for its previous caution on Danaher — excess inventory in the bioprocess industry — had not fully resolved, leading to below-trend growth in 2023. But Wells Fargo argued that at this point, inventory issues are already factored into the price. Danaher shares, which are down more than 3% year-to-date. Wells Fargo’s upgrade on Tuesday also came a day after Danaher reportedly ended a potential bid to buy contract manufacturer Catalent ( CTLT ), Bloomberg reported, citing people familiar with the matter. The news outlet first reported Danaher’s interest in Catalent in early February. Club View: Both the Wells Fargo upgrade and the apparent end of Danaher’s pursuit of Catalent should add to sentiment around DHR stock. Although inventory issues are known, we are pleased that the bank offers a relatively favorable outlook for demand for the company’s analytical instruments. It should also be noted that after double-digit growth in Danaher’s core instruments business in 2022, management has made it clear that it expects a slowdown in 2023. Danaher is also wise to abandon any plans it may have had to buy Catalent, which had some operational downtime recently. Rumors of Danaher’s interest have been riding high on stocks since early February. We took advantage of this weakness to strengthen our position at the end of February, and now we are pleased to see the cloud dissipate. AAPL YTD mountain Year-to-date performance of Apple stock. News: Apple opened its first brick-and-mortar store in India on Tuesday, reinforcing its commitment to growing its business in the country of more than 1.4 billion people. The first retail location, known as Apple BKC, is in the country’s financial hub, Mumbai. A second store in the capital, New Delhi, is expected to open on Thursday. Apple CEO Tim Cook, who was in Mumbai on Tuesday for the store opening, called India a “very exciting market” and a “major focus” for the iPhone maker. Historically, the iPhone’s high price has hindered its ability to gain significant market share in the Indian smartphone market. But progress has been made in recent years, with double-digit sales growth in the quarter ended Dec. 31. Club’s take: Apple’s Mumbai and New Delhi stores are a clear sign of India’s importance to the company’s long-term growth. plans. We believe Apple is gaining traction with Indian consumers, one of the reasons we continue to see Apple as a long-term investment. We’ve adopted an own, don’t trade mantra for Apple because we believe its growth potential is untapped. In recent years, Apple has expanded its supply chain beyond China, significantly increasing production in India. The company’s two-pronged strategy to increase manufacturing and consumer market share in India should prove fruitful in the coming years. (Jim Cramer’s charitable trust owes DHR, EMR, and AAPL. See here for a full list of stocks.) As a CNBC Investing Club with Jim Cramer subscriber, you’ll receive a trade alert before Jim closes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charity’s portfolio. If Jim talked about a stock on CNBC, he waits 72 hours after the trade alert is issued before he executes the trade. THE ABOVE INFORMATION IN THE INVESTING CLUB IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY SHALL EXIST OR BE CREATED BY YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO PARTICULAR RESULT OR PROFIT IS GUARANTEED.
Workers manufacture some specialized valves at an Emerson Electric Co. plant. in Marshalltown, Iowa on July 26, 2018.
Timothy Aeppel | Reuters
Wall Street lifted Club’s two underperforming stocks on Tuesday – Emerson Electric (EMR) and Danaher (DHR) — Equivalent to Purchase Ratings. Meanwhile, holding the core for many years Apple (AAPL) has taken another step forward in the key global smartphone market.
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MY NUMBER 1 RECOMMENDATION TO LOSE WEIGHT: CLICK HERE
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