Cramer's Investing Club: We're raising our rating on Wells Fargo, upping price target for Chevron

Published Tue, Feb 1 20222:53 PM ESTUpdated Tue, Feb 1 20223:34 PM EST

In our Morning Meeting video on Tuesday, we highlighted how analysts at Atlantic Equities upgraded their Wells Fargo rating to overweight. We liked the call and agreed that now was a good time to buy WFC, which is why on the video today we upgraded our own WFC to a 1 from a 2 . For more details, you can read our full analysis of Wells Fargo's fourth quarter . As a reminder, we rank every stock in the portfolio with a 1 through 3 rating. A stock rated "1" means we would buy it right now. A stock rated "2″ means we would wait for a pullback before buying it. We generally classify a pullback as a decline of about 5% from a recent high, but volatile times call for wider levels. Finally, a "3" rated stock is a position we would sell into strength. Currently, there are no "3″ rated positions in the portfolio. You can view the entire portfolio and our ratings here . Our decision to upgrade WFC follows our Jan. 18 article where we said we would have trimmed our WFC position if we were not restricted from trading. Wells Fargo opened that day at $57.715 per share. It's not in our style to recommended trimming a stock and then upgrading it to a 1 two weeks later—remember, we are investors, not traders, and always to prefer to take the long-term view on things. However, there are two factors that played into our decision. First—and most important--is price, and shares of Wells Fargo were lower by a few dollars per share from the time of our Jan. 18 article to the time of today's Morning Meeting. The second key factor was the 25% increase to the quarterly dividend the bank announced last week. The news was a true upside surprise because the banks typically update their capital return programs in the summer, after the completion of the Fed's stress tests. Wells Fargo raising its dividend in January was such a great sign of confidence in the business. Separately, we are taking notice of the bounce back in Chevron . Shares of the oil giant were hit hard last Friday after the company surprisingly missed earnings estimates for the fourth quarter, but as we explained in our analysis , we saw nothing in the print that changed our investment thesis. Thanks to the recent move, CVX has now reached our initial $135 price target, but we don't want to sell our position just yet with the dividend yield north of 4%, a healthy buyback, and the potential for oil prices to push higher in the coming months. Therefore, we are modestly increasing our price target to $150 , which reflects roughly 6.5x 2022 Enterprise Value/EBITDA estimates. (Jim Cramer's Charitable Trust is long WFC, CVX. 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. NOTES: 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.

A man walks past a Wells Fargo Bank branch on a rainy morning in Washington.

Gary Cameron | Reuters

In our Morning Meeting video on Tuesday, we highlighted how analysts at Atlantic Equities upgraded their Wells Fargo rating to overweight.