We’re buying 100 shares of Best Buy at roughly $81 each; 25 shares of Danaher at roughly $239 each, and 60 shares of Stanley Black & Decker at roughly $78. Following Tuesday’s trades, Jim Cramer’s Charitable Trust will own 1,100 shares of BBY, increasing our weighting to 2.69% from 2.45%; 575 shares of DHR, increasing our weighting to 4.2% from 4%,; and 950 shares of SWK, increasing our weighting to 2.26% from 2.12%. We’re making a handful of small buys in stocks that have gotten beaten up over the past couple of weeks as the market narrowed around the mega-cap tech stocks. BBY YTD mountain Best Buy YTD Starting with Best Buy, shares have fallen straight down from 52-week highs of roughly $93 on June 18 to about $81 on Tuesday. That’s back at the level it immediately traded up to after first-quarter earnings . We view this selloff as a solid opportunity to add to our position ahead of what should be a multiple-year consumer electronic innovation-driven recovery. That should lead to a return to growth in same-store sales sometime around the third and fourth quarters — driven by a new artificial intelligence-fueled PC upgrade cycle. Best Buy should be a big beneficiary from the rollout of these new AI personal computers because it has about 40% of the latest models exclusively. Lastly, we view Best Buy’s annual dividend yield of about 4.6% as an attractive way to get paid while we wait for the same-store sales inflection to play out. DHR YTD mountain Danaher YTD We’re also making a small buy in Danaher, which has fallen about $28 per share 52-week highs on June 6. We’ve documented the decline the whole way, pointing to selloffs in peers Repligen and Sartorius on concerns about the recovery in the bioprocessing industry. Although Danaher operates in similar industries as those two companies, we don’t think it should be punished to the same degree. The books of businesses among companies aren’t always the same, with different customer bases between early-stage biotech and large-cap pharmaceuticals. Danaher is also a higher quality company with a strong management team who have kept guidance far more conservative and achievable than Sartorius. With Danaher now down 10% off its higher levels, we’ll step in and make a small purchase. SWK YTD mountain Stanley Black & Decker YTD We’ll also make a small buy in Stanley Black & Decker. The stock has been hit hard lately, falling alongside other housing-related and home improvement stocks on the recent spike in bond yields and an earnings warning from Pool Corp . Still, we are willing to be patient with this hand tools company that is working on its turnaround and slowly scale in on the stock’s way down. That’s because the company will be a huge beneficiary of Federal Reserve interest rate cuts when they happen. What the company is most tied to is housing turnover, and the existing home sales market should pick up as mortgage rates fall. While the timing of this thesis has taken much longer than expected as Fed rate cut expectations have significantly been pushed out since the start of the year, we don’t think the long-term story has changed, and the now 4% annual dividend yield pays us as we ever so patiently wait for the next big cycle. To follow up on Eli Lilly , we’re going to hold off from taking profits for now. Shares were lower Tuesday after President Joe Biden and Sen. Bernie Sanders in a USA Today op-ed called for price cuts on Eli Lilly and rival Novo Nordisk ‘s GLP-1 drugs. We mentioned during the Morning Meeting that we were debating trimming the position as a hedge in case Lilly becomes a political punching bag ahead of the November election, creating some headline risk. We also don’t want to find ourselves being greedy after the stock’s more than 50% gain since the beginning of the year. However, we aren’t going to lock in those gains just yet because short-term headline risk doesn’t change our favorable long-term view about the company and the supply-demand challenges that currently exist, which lower prices will not solve. (Shortly after this story was initially published, the FDA approved Eli Lilly’s Alzheimer’s drug, which cemented our decision not to take profits.) (Jim Cramer’s Charitable Trust is long BBY, DHR, SWK, LLY. 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.
We’re buying the dips in 3 stocks muscled out by the market’s mega-cap obsession
Jul 2, 2024
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