Matthew Mitchell, center, chats with customers as Sierra Phillips adjusts to a denim display at the American Eagle/Aerie store in Easton Town Center in Columbus, Ohio on May 15, 2020.
Andrew Spear | Washington Post | beautiful pictures
(This article was first sent to members of the CNBC Investment Club with Jim Cramer. To get real-time updates in your inbox, Sign up here.)
After you receive this email, we will buy 250 shares of American Eagle Outfitters (AEO) for around $22.85. Following the transaction, the Charity Foundation will own 4,950 shares of American Eagle. This purchase will increase AEO’s share of the portfolio from about 2.63% to 2.77%.
Retail stocks are having a big impact on Wednesday due to the reaction to the weaker-than-expected November retail sales report. This bearish move confirms and reinforces the massive sell-off the group experienced during Monday’s trading session, possibly related to concerns that the rapidly spreading omicron variant will keep shoppers from leaving. shopping malls and shops during the rest of the holiday. Investors are taking a more defensive stance when it comes to retail, which explains why we’ve seen a massive rotation away from department store stocks and specialty retailers like American Eagle Outfitters and interested in buying companies like Walmart (WMT).
But consider this: Due to this week’s drop, AEO is now trading back at levels the company hasn’t seen since February. This round trip comes despite all the market share and new customers that Aerie has won, the increase in profits at AE thanks to the strength of casual and denim, and all the improvements made to supply chain / logistics through what should prove to be a smart acquisition pair. Obviously we started buying AEOs too soon, but we won’t let weakness in the stock keep us out of this position.
American Eagle Outfitters is doing well right now and reporting the best third quarter of its bunch. This isn’t a struggling retailer, though you wouldn’t know it if you only paid attention to stock prices and didn’t track the strength of categories as explained on the quarterly earnings call. Tuesday.
Ultimately, we want to stick with AEOs at these levels because investors get pretty solid dividends. And due to the recent drop in stock prices, the dividend yield has increased to around 3.17%. We think dividends of this size should at least partially support the stock’s already cheap price-earnings multiple.
Boeing on the watch list
Outside of AEO, we’re taking a close look Boeing (BA), yes, Boeing, as a potential purchase despite the company’s well-documented challenges. What’s intriguing about Boeing’s move back to $191 is that the stock has now washed off nearly all of its gains from the start of the month attributed to China’s issuance of an aeronautical reliability directive for the line of planes. 737 MAX. Again, this is an important milestone for the return of aircraft in the world’s second largest domestic aviation market. Plus, we like the momentum Boeing is showing with 737 MAX orders and deliveries.
In the end, we decided not to add to our Boeing location right here because we hesitated to breach our mid-cost, roughly $179 cost base in an established location. . However, we would like to point out what we believe to be opportunities, particularly if stock prices rise further due to concerns related to ongoing 787 delivery suspensions and the impact of increased deliveries. omicron case for international travel.
Update Eli Lilly and Nucor
In other news, Eli Lilly (ONLY) and Nucor (NUE) is hitting the headlines Wednesday after both companies provided updated guidance. Their stock is moving in the opposite direction, with Eli Lilly, which we’ve been buying steadily for our portfolio, leading the S&P 500 this morning ahead of an upgraded 2021 outlook and upbeat 2022 forecast. .
Meanwhile, Nucor, we sold some stock for about $120 at the end of november.
We’ll have some more thoughts on Nucor and Eli Lilly later today, but we wanted Invest Club members to know that we see weakness in NUE as an opportunity to buy back what we have. I sold higher. In fact, we would buy Nucor off this drop if we didn’t already own a position for the Charity. But from our own perspective, we are not picking any stocks on this drop because we are waiting for a level that would improve our average cost base of $101.46. la.
The CNBC Investment Club is now the official home of My Charity Foundation. It’s where you can see every move we make to our portfolio and get insight into my markets before anyone else. The charity and my articles are no longer affiliated with Action Alerts Plus in any way.
As a subscriber to the CNBC Investment Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Typically, Jim waits 45 minutes after sending out a trading alert before buying or selling a stock in his charity portfolio. If a trade alert is sent before the market, Jim waits 5 minutes after the market opens before taking the trade. If a trade alert is given less than 45 minutes during the trading day, Jim will execute the trade 5 minutes before the market closes. If Jim had talked about a stock on CNBC TV, he would have waited 72 hours after issuing a trading warning before taking a trade. See here for investment disclaimer.
(Jim Cramer’s Charitable Foundation long AEO, BA, LLY, NUE.)
