10 things to watch Thursday, Sept. 26
— Today’s newsletter was written by the Investing Club’s director of portfolio analysis, Jeff Marks.
1. Wall Street is looking at a higher open Thursday, led by surging tech stocks after memory chipmaker Micron delivered a better-than-expected quarter and upside guide. Micron shares jumped 18%. China stocks rallied again — this time on signs the Chinese government is prepared to add fiscal stimulus to this week’s central bank monetary stimulus. The commentary out of China supported global markets.
2. Micron said high bandwidth memory sold out for calendar year 2024 and 2025. Personal computers set to have a better second half of 2025 as artificial intelligence PCs gain momentum. Micron’s smartphone unit growth expected to continue in 2025. Jim Cramer said on X: “If you bought Micron off of our suggestion from our [Mad Money] Gameplan last Friday I would not sell it. That was some forecast for every business in 2025. It also affirms AMD and NVDA outlooks.” Nvidia and Advanced Micro Devices are Club stocks.
3. Starbucks was upgraded to an outperform buy rating at Bernstein. Even after the stock’s 27% move since Brian Niccol was named CEO, the analysts think the valuation of the Club stock “does not fully appreciate the earnings power that Starbucks could unlock.” Starbucks also was getting a bump on the fiscal stimulus commitment from the Chinese government.
4. GE Healthcare was downgraded to sell at UBS on concerns about rising competition from Chinese competitors. The analysts’ pessimism seems overblown. The company has a strong relationship in China and has been manufacturing there for 30 years. Health-care stimulus packages in China have been slow to roll out, and that’s weighed on the Club-owned maker of MRI machines. Here’s our screen on China exposure for all of our 32 portfolio stocks.
5. Bank of America raised its Meta Platforms to $630 per share from $563, representing 10% upside to Wednesday’s close. JPMorgan took its PT on Meta to $640. The fresh bullish commentary followed the wearable showcase at the company’s Connect 2024 product and developer conference. CEO Mark Zuckerberg brought out prototype AR glasses that received rave reviews, including a stamp of approval from Nvidia CEO Jensen Huang.
6. Southwest Airlines upped its third quarter forecast and announced a $2.5 billion share repurchase program and other changes at its investor day on Thursday. The carrier is making the moves as it battles activist investor group Elliott Management.
7. Truist started First Solar and power play GE Vernova with buy ratings. For the Club, our solar and renewable play is Nextracker, whose technology makes sure solar panels are always facing the sun. We also own Eaton as a way to benefit from the growing complexity of energy infrastructure in the age of AI.
8. Jefferies Financial dropped on a quarterly profit and revenue miss. The results provided an early look into investment banking and capital markets activity before the big banks, including Club names Wells Fargo and Morgan Stanley, report in a couple of weeks. Jefferies said IB was strong and capital markets were only down a bit compared to tough comps.
9. JPMorgan raised its DraftKings price target to $54 per share from $48 and kept its overweight buy rating. The analysts said positive comments at online betting and iGaming platform Flutter Entertainment‘s Capital Markets Day is good news for DraftKings. Flutter is FanDuel’s parent company.
10. Hershey was downgraded to an underperform sell by Jefferies research analysts on chocolate snacking concerns. The analysts said that “everyday chocolate is being bought less frequently, especially by low-income consumers,” because prices are so high.
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