Despite an uncertain macroeconomic backdrop, stocks have largely outperformed in 2023. The S & P 500 is up 13.99% year-to-date, while the tech-heavy Nasdaq Composite has surged 30.9% in the same period. In this context, we’ve taken on the bears of late — and been vindicated by a recent pullback in bond yields that had weighed on stocks. The yield on the closely-watched 10-year Treasury has come down to around 4.6%, from more than 4.8% last week, while the S & P has climbed roughly 3%. “Things just aren’t that nightmarish,” Jim Cramer said during the October Monthly Meeting on Wednesday, before zeroing in on the Club stocks that have been lagging, as well those that need no fixing. 3 stocks that need work — and why they’re buys Disney Shares of entertainment giant Walt Disney (DIS) have tumbled 4.77% year-to-date, brought down in part by industry headwinds. A struggling movie-theatre box office, cord-cutting, a lengthy writer’s strike, weaker theme-park attendance, and ongoing streaming woes have all weighed on the company’s financial performance. Still, Jim said “it’s time to buy Disney’s stock now.” “I think a partnership for sports programming from ESPN is in the offing, something that will propel this dog of a stock higher. I also think that Disney’s re-funded balance sheet will lead to a fair wrangling with Comcast (CMCSA) over the one-third of Hulu it doesn’t own,” Jim explained. Comcast is the parent company of NBCUniversal and CNBC. Lastly, Jim added: “I wish the board would welcome [activist investor] Nelson Peltz , not shun him.” Starbucks Coffee maker Starbucks ‘ (SBUX) stock has been dragging for months on investor concerns around its China business and is down more than 7% year-to-date — a reaction the Club thinks is overblown . Bears are taking note of Chinese competitors with lower drink prices, such as Luckin Coffee. But Starbucks has been investing heavily in China for future growth, making it the company’s second largest market after the U.S. “I think that [CEO] Laxman Narasimhan needs to show how it has so much growth left in both the U.S. and China and to demonstrate the affinity the Chinese and the Chinese government has for the company,” Jim said. Narasimhan “is quietly bringing back a level of growth that reminds me of the old days,” Jim added. “There’s still time to get in before the next acceleration, and I really want you to be there before people realize it’s happening.” Oracle Oracle (ORCL) stock has been sliding for some time, with shares down 14% over the past month, even as the stock has climbed more than 33% this year. In September, the software firm saw its steepest single-day drop in over two decades after issuing weaker-than-expected quarterly revenue guidance. Still, Oracle provided upbeat commentary around artificial-intelligence spending on its second-generation cloud offerings. At the same time, we’re concerned that Oracle paid too much for Cerner — an electronic medical-records company acquired for $28.3 billion in 2022 — but think the deal could still work if Oracle were to harness its AI potential. “That said, I believe Oracle is the lowest price to earnings multiple hyperscaler, which makes little sense given the intellectual firepower and the work [co-founder] Larry [Ellison] has done with AI already,” Jim said. He added that this is a great level at which to buy Oracle stock. 3 stocks that need no work — and set to soar Caterpillar Caterpillar (CAT) has weathered the market’s volatility well. Although it’s been edging lower over the past month, this is because Caterpillar – along with the industrials sector more broadly – are creatures of the bond market. The real catalyst for Caterpillar will be the continued influx of federal spending on construction from the government’s $1 trillion infrastructure legislation . And we’re not concerned about the stock price “because the U.S. is going to buy American to get that infrastructure [spending] going,” Jim said. TJX Companies This is TJX Companies ‘ (TJX) time to shine, as the off-price retailer has the best business model to capture the spending of a cash-strapped consumer. With the holiday season quickly approaching, the operator of stores like T.J. Maxx and Marshalls is in a prime position to capitalize on discounted brand names. The Club would be a buyer at TJX’s current trading level of around $89 a share, as of Wednesday’s close. “TJX fell five bucks during the period of maximum oversold exposure, a pittance compared to every other retailer,” Jim said. Eli Lilly Eli Lilly (LLY) is up 65% year-to-date, outperforming the three major Wall Street indices. Jim sees the pharmaceuticals giant as “about as good a franchise as you can get.” Demand for Lilly’s diabetes drug Mounjaro — expected to be approved by year-end to also treat obesity in the U.S. — is so high that the company has committed $4 billion to build more manufacturing plants. “I do not know how quickly they can get them all up, but one is in operation and might help alleviate the shortage quickly,” Jim said. “There is no doubt that it will all be used.” (Jim Cramer’s Charitable Trust is long CAT, SBUX, LLY, ORCL, DIS, TJX . 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. 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Traders work the floor of the New York Stock Exchange on July 25, 2023, in New York City.
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Despite an uncertain macroeconomic backdrop, stocks have largely outperformed in 2023. The S&P 500 is up 13.99% year-to-date, while the tech-heavy Nasdaq Composite has surged 30.9% in the same period.
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