The CNBC Investing Club's Homestretch: Market Insights and Stock Updates
Nov 18, 2024 at 7:51 PM
Every weekday, the CNBC Investing Club with Jim Cramer presents a crucial afternoon update known as the Homestretch. This timely information is designed to assist investors during the final hour of trading on Wall Street. Markets are currently showing signs of a rebound at the start of the week, although they have slightly retreated from their morning highs. The S&P 500 is on track to end a two-session losing streak, during which the broad index declined by approximately 2%. Bonds are performing better compared to the morning, but yields remain a significant focus for investors. The yield on the benchmark 10-year Treasury note has slightly decreased during the session, currently standing at around 4.42%, after reaching a high of about 4.45% at the beginning of Monday's Morning Meeting. Over the past week or so, the 10-year yield has made several attempts to reach 4.5% only to quickly fall back. This could potentially indicate that 4.5% is a level that attracts buyers back into the market. Remember, yields and bond prices have an inverse relationship. Rising interest rates tend to pose a challenge to the stock market for several reasons. Firstly, they compress estimated equity valuations based on discounted cash flow analyses. In simple terms, higher interest rates reduce the present value of future earnings. Another important factor is that they increase borrowing costs for businesses, which can have a particularly negative impact on companies that rely heavily on financing.PT bump: During his interview with Jim Cramer on Friday night, Dover CEO Richard Tobin made a compelling case that the diversified industrial company still has a bright future ahead. It is definitely worth watching if you haven't already. After their conversation, we gained a newfound appreciation for the Club's investment in cryogenic components as it may potentially become a significant player in the data-center industry in the future. The company announced two acquisitions this summer related to the cryogenic gas market, which encompasses low-temperature materials. The first acquisition was of Marshall Excelsior Company in late July, followed by SPS Cryogenics on August 12. Dover already has a presence in data centers through its thermal connectors, which are used in the liquid cooling of fellow Club holding Nvidia's most advanced artificial intelligence servers. However, as the supercomputers and AI chips of the future become more powerful and generate more heat, the cooling technology requirements will become more complex. Tobin believes that cryogenics may be the next solution after liquid cooling, which is an improvement over the air-cooling method.Another aspect of the interview that caught our attention was when Tobin stated that he spends 90% of his time with Dover's board of directors analyzing the company using a sum-of-the-parts approach. An active approach to portfolio management has always been a characteristic trait of this Dover management team, and we highlighted it as a reason to be interested in the stock when we initiated our position in late May. However, Tobin's explanation has further strengthened our belief that Dover's recent acquisitions and divestitures, combined with approximately $3 billion in available funds at the end of the year, will enhance the company's earnings growth outlook. Despite this, the stock is currently trading at only 21 times forward earnings. We anticipate more gains as Dover increases its exposure to long-term growth drivers. Consequently, we are raising our price target for the stock from $200 to $215 per share.Up next: Before the opening bell on Tuesday, we will receive earnings reports from Walmart, Lowe's, Medtronic, and Viking Holdings. On the economic data front, October housing starts are scheduled to be released at 8:30 a.m. ET. Economists expect a slight month-over-month decline due to the continued high mortgage rates. (For a full list of the stocks in Jim Cramer's Charitable Trust, please refer here.) 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 discussed 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, AS WELL AS 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.
