We reviewed our Bullpen stocks during the Investing Club’s October “Monthly Meeting” on Thursday. The Bullpen is a collection of companies we actively monitor for their potential to be added in Jim Cramer’s Charitable Trust, which is the portfolio we use for the Club. Here’s a quick look the seven stocks and our latest thoughts on each. Barrick Gold (GOLD): Investors would think that with geopolitical tensions, inflation, and economic uncertainty, this is time for gold to shine. But the precious metal is being held back as interest rates go higher and as the dollar has strengthened. That’s why we prefer to leave Barrick on our watch list, if not remove it outright in the days and weeks ahead. Gold and interest rates have an inverse relationship: When rates rise, the price of gold tends to fall and vice versa. Gold, which is traditionally viewed as a safe-haven investment in tough times, also faces stiff competition from bonds yields. The 2-year Treasury currently yields around 4.5%. Emerson Electric (EMR): We see this technology and engineering company, which has exposure to industrial, commercial, and residential markets as a “problematic” stock as its end markets slow down. The company seems to be breaking apart as a way to unlock value. In March, Emerson entered into an agreement to sell its subsidiary, Therm-O-Disc , a climate technology company. In August, EMR sold food disposal manufacturer, InSinkErator to Whirlpool, another Bullpen name. We’re waiting for Club holding Honeywell International (HON) to benefit from an industrial tailwind — so, until then, we prefer to keep EMR on the sidelines. PepsiCo (PEP): This beverage and snacks giant is a timeless safety-stock due to the quality of its beverage and snacks portfolio. That’s certainly a recession-resistant trait we like in a slowing economy. If we were to initiate a position Wednesday would have been a good place to start, before the company reported fiscal third quarter earnings beating Wall Street expectations and increased its forecast for the year. PEP shares surged 4% on the news Wednesday and another 3% in Thursday’s strong market. We’re keeping PepsiCo in mind, especially as its stands to benefit from prices of cans, bottles and plastic in general coming down. Whirlpool (WHR): We added the stock to the Bullpen as we saw potential in the strategic review of its EMEA (Europe, the Middle East and Africa) business, its roughly 4.9% annual dividend yield and its stock buyback program. However, Jim Cramer calls it a “casualty” of the housing market, which has been suffering from rising rates. Whirlpool may get hit by slower demand in a weakening economy. In its second quarter , Whirlpool’s net sales in fell by 4.3% to $5.09 billion from the same period the year prior. The company is due to report Q3 earnings a week from Thursday. Palo Alto Networks (PANW): Jim has said before that cybersecurity is one of the last bull markets . “We need to get rid of something and buy Palo Alto,” Jim said Thursday, though as of now the Club has not decided whether to make the move yet or even at all. The software company is favored because data security is in high demand from enterprise customers, and Palo Alto Networks is an industry leader. Airbnb (ABNB): While we’ve been focused on the defensive names, we think this peer-to-peer home rental platform is a disruptive tech play that will keep benefitting from growing demand for travel after years of tighter Covid restrictions. We are particularly impressed with Airbnb for its cash flow. We also like how consumers see Airbnb as an alternative, cheaper option to hotels, a positive in a weaker economy. But if there’s a recession, consumers may pull back on travel spending; so we prefer to continue monitoring the company. Sempra Energy (SRE): We’re interested in this diversified utilities and infrastructure company. In an economic downturn, investors tend to move to utilities for safety. We like the stock for its solid annual dividend yield of 3.12%. Shares of SRE have dropped roughly 16% month over month, possibly from its exposure to natural gas. But the stock has still gained about 8% a year when the S & P 500 has dropped nearly 23%. (Jim Cramer’s Charitable Trust is long HON. 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.
Here is an update on our 7 Bullpen stocks
Traders work on the floor of the New York Stock Exchange (NYSE) on June 27, 2022 in New York City.
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