Investing Club: Here's an earnings report card for all 35 stocks in our portfolio

Published Fri, Mar 11 20221:19 PM EST

With earnings season in the rear view, we felt it would be helpful to provide a rundown of the December quarter and the forward guidance given for this year. Inspired by the classic western "The Good, the Bad and the Ugly," we've put the results of all 35 companies in Jim Cramer's Charitable Trust — the portfolio for the Investing Club — into four categories. The Great: AAPL, DIS, QCOM The Good: AMZN, ABT, CSCO The Not-So-Bad: AEO, F, WYNN The Ugly: BA, FB, PYPL As members know, when volatility strikes we like to focus on the stocks of those companies that just demonstrated strong fundamentals and execution on their stated goals. This report card should help in doing just that. A lot has happened in the world since these companies reported, with Russia's war in Ukraine dominating the headlines and investors' concerns over the past couple weeks. To that point, we've booked some profits and made some buys recently in many of these companies. The following earnings cheat sheet is meant as a starting point for investors' research, and it's by no means and end the last or only input for picking stocks. Indeed, sometimes earnings are not always the most important way to evaluate stocks. We have several so-called "special situation" names, including Bausch Health Companies (BHC) and Wynn Resorts (WYNN), whose stories transcend any three months of results. The Great: AAPL, DIS, QCOM Apple (AAPL): The richest company in the world returned with a vengeance after a top-line miss the previous quarter. Consider: earnings and sales handily beat estimates — with sales setting an all-time record — while management offered equally strong guidance. A reminder that Apple is a stock you own, not trade. Advanced Micro Devices (AMD): Another brilliant quarter for the chipmaker, driven by market share gains and continued growth in the data center. Strong forecast with even greater margin expansion that previously expected. Our analysis highlighted management's ability to execute through supply chain woes, making it one of our favorite semiconductor names. Costco (COST): Beat on top and bottom lines with better-than-expected consolidated same store sales. The big-box retailer's size and scale continue to help it navigate inflationary and supply chain challenges — not so many of its peers. We noted it was worth a premium multiple, especially given potential catalysts on the horizon. Salesforce (CRM): It was a clean beat all around with better-than-expected gross margin and operating cash flow. Plus management raised guidance for fiscal 2023, indicating demand looked strong with no indication that companies accelerated IT spending during the pandemic. There was a lot to like about this quarter. Danaher (DHR): We characterized this as a solid quarter for the health care tech company, noting it was a good stock to own during volatile markets. Sure it may trade at a premium, but the mix of sales growth, expanding profit margins, and superb earnings quality supports the valuation. Disney (DIS): It hasn't been easy to own Disney over the past several months, but the company rewarded its patient investors with a blockbuster quarter . The parks were incredibly profitable, even with capacity constraints, while Disney+ subscriber growth exceeded expectations. Devon Energy (DVN): Top and bottom line beat as management executes on a disciplined shareholder return strategy. We underscored how much the company continues to prioritize shareholder returns over production growth at any cost. Marvell Technology (MRVL): All in, a very strong quarter from the semiconductor stock, with beats on the top and bottom lines and better-than-expected adjusted gross margin. Guidance for the first quarter of fiscal 2023 also came in above expectations for all three metrics. Morgan Stanley (MS): Morgan Stanley's quality report shows the transformation the bank has gone through in recent years: As a result of growing more durable revenue sources and efficiently managing expenses, management has achieved greater sustainable earnings power and will be able to effectively invest in the business. Alphabet (GOOGL): This was possibly the best quarterly release this season for Big Tech. We focused on the robust growth seen across every line item (how could you not?), especially Google Cloud. For a company this size, the rates are simply incredible. Halliburton Company (HAL): We initiated a position in this oil services giant on March 8, predicated on a supportive environment for increased drilling activity. Back in January, Halliburton reported fourth-quarter earnings and revenue that beat estimates. On the earnings call, CEO Jeffrey Miller said that "several years of underinvestment in new production is now apparent" and the need to invest is "crystal clear." Nvidia (NVDA): This was a near perfect earnings release met with forward revenue guidance that is nothing short of impressive. It only served to increase our conviction that Nvidia remains at the heart of some of the strongest secular growth trends in the world. Microsoft (MSFT): Top and bottom line beat with both gross and operating margins also outpacing expectations. Cloud app Azure continues to grow at a rapid clip despite its large size — and management expects to see more strong growth ahead. It'll also be interesting to watch Microsoft's deal to buy Activision Blizzard as it looks to close in its fiscal 2023. Qualcomm (QCOM): The only thing better than Qualcomm's numbers for the reported quarter was its outlook for the current quarter. Management guided for revenue of $10.2 billion to $11 billion, vs. $9.6 billion estimate, and they expect to earn between $2.80 and $3 per share this quarter, well above the $2.51 consensus. We initiated a position in February. United Parcel Service (UPS): The solid fourth-quarter performance and strong forward guidance speaks to the strong execution of CEO Carol Tomé and the UPS team on the company's "better not bigger" framework. The Good: AMZN, ABT, CSCO Abbott Laboratories (ABT): Beats on top and bottom lines , though guidance was a bit more mixed: First-quarter view was nicely ahead of expectations, but full-year guidance was a bit short of what the Street wanted. Former CEO Miles White invented the UPOD (under promise and over deliver) guide and we don't expect anything different from his successor. AbbVie (ABBV): Sales missed expectations while earnings edged out the consensus . Ultimately, management is making strong progress and the Street has finally started to buy into the narrative that Rinvoq and Skyrizi sales will ultimately replace and potentially exceed lost Humira revenues after losing exclusivity in the U.S. Walmart (WMT): A solid top and bottom line beat. While near-term guidance was weaker than expected, the full year guide was in line to positive with full year same store sales expected to advance more than the street was expecting heading into the print. While there will be some choppiness due to the lapping of things like stimulus and wage investments, management is expecting a bounce back in the second half of the year. Amazon (AMZN): Amazon reported a strong quarter . While fourth-quarter revenues missed the mark, operating income came in well above expectations, despite more than $4 billion in costs. We're focused on the potential earnings power Amazon can generate once the company starts to digest ongoing investments in its U.S. logistics network and international expansion. (Amazon on March 9 announced a 20-for-1 stock split and $10 billion buyback.) Cisco Systems (CSCO): This was a very good quarter from Cisco, especially considering there had been a growing belief in the market that supply constraints and cost pressures would force the company to lower its full-year outlook. Management did tighten the revenue growth range around the 6% midpoint to 5.5% to 6.5% year-over-year. Chevron (CVX): While adjusted earnings per share missed the mark, reported revenues were much higher than expected. Not the blowout we hoped for , but we see nothing in the print that would change our thesis in the company and at the end of the day, Chevron is the type of "make stuff and do things" type company that can work in this volatile market environment. Linde (LIN): Top and bottom line beat, and while earnings guidance for fiscal year first-quarter and full year 2022 was a tad short, it's likely conservative given the team's history of coming in at the high end or exceeding their stated forecasts. Moreover, the backlog is robust and Linde has the ability to pass input costs through to the customer, a crucial factor in an inflationary environment. Bausch Health Companies (BHC): While this was not the release we were hoping for as the results were mixed and guidance disappointed, we believe the breakup of the company — two units (Bausch + Lomb and Solta Medical) are set for initial public offerings (IPOs) — remains the key to unlocking value and realizing upside. Eli Lilly (LLY): No real surprises in the results or with guidance as management pre-announced the quarter and provided its 2022 view at the December Investor Day. Investors were more focused on news a delay for a drug approval, but we don't see that as a thesis disrupter. We continue to believe Eli Lilly is a best-in-class name in the pharmaceutical industry thanks to its limited loss of exclusivity risk, strong pipeline, and history of operating margin expansion. Mastercard (MA): The credit card company delivered a very solid quarter . First-quarter guidance was a bit weak while the full year guide was right in line. The Russia-Ukraine crisis could have an impact, after finally emerging from the pandemic. All that said: Mastercard remains a huge beneficiary of the secular trend from cash to card and electronic payments. NortonLIfeLock (NLOK): Revenue and earnings both edged out expectations . Guidance was tightened to the upper end of the previous guide and was right in line with expectations. Looking ahead, we have the Avast deal on the horizon and believe that longer-term, cybersecurity will become a higher spending priority for companies, be it at the enterprise level or the consumer level — where NortonLifeLock plays. Nucor (NUE): Though sales missed slightly, earnings per share hit a new record and outpaced expectations. With steel demand expected to rise this year over 2021, and Nucor expected to generate — and return to shareholders — several more billions in cash, we continue to believe this cheap stock has not gotten the respect it is due. Wells Fargo (WFC): Revenue and earnings outpaced expectations . And with multiple interest rates hikes laying ahead, cost savings driving expenses lower, and a balance sheet with plenty of capacity for additional capital returns, we continue to view Wells Fargo as the number one big bank stock to own this year. The Not-So-Bad: AEO, F, WYNN American Eagle Outfitters (AEO): Headline results matched expectations with revenue hitting a new record. Gross margin was better than expected, though adjusted operating income came up short. While we like the investments in logistics, we are not pleased with the execution here as the supply chain remains a concern and we believe inventory management could have been better. Honeywell International (HON): The underlying fundamental strength remains intact despite mixed fourth-quarter results — earnings beat and revenue fell short, while expanding consolidated segment margin missed. Current quarter and full year guides also came up short, though we think Honeywell has the pricing power to protect margins in the face of inflation. Ford Motor (F): We are not letting a fourth-quarter miss shake us out of a terrific long-term story. CEO Jim Farley and his team have been exceptional in their ability to expand and maximize profits from their ICE (internal combustion engine) business, while investing heavily to ensure leadership in a battery electric vehicle world. Wynn Resorts (WYNN): Overall this was a subpar-to-just-OK quarter, but one that investors should have fully expected. Fourth-quarter revenue beat but losses were wider-than-expected. China's zero-tolerance policy remains the primary headwind. However, we believe management is taking strong action to make the company leaner and while strengthening the financials. The Ugly: BA, FB, PYPL Boeing (BA): Some analysts may call it a "kitchen sink" quarter, with Boeing putting the rest of its bad news out in hopes that the setup for 2022 will be much cleaner. We prefer to take a harder stance because huge charges, like we saw in the fourth quarter, typically happen when management fails to execute. On a more optimistic note, Boeing expressed confidence in free cash improving later this year. Facebook-parent Meta Platforms (FB): Fourth-quarter revenue beat while earnings missed. However, it was light guidance that sent shares into a tailspin. While we're bullish on Meta's metaverse ambitions, intensifying competition combined with the prior changes to Apple iOS and the transition to monetizing Reels from Feed and Stories are clearly concerns. FB remains a show-me stock . PayPal (PYPL): Revenue edged out expectations, but earnings came up short in the fourth quarter as higher than anticipated expenses hurt results. Guidance was weak . At the time, the stock got leveled and has basically remained depressed since. Management's credibility is on the line as the eBay headwind has dragged on longer than expected. (Jim Cramer's Charitable Trust is long all of these stocks. See here for the list and other portfolio metrics.) 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 . 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Andy Jassy (L), CEO of Amazon, Tim Cook (C), CEO of Apple and Satya Nadell, CEO of Microsoft.

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