What the Club is watching Friday — Marvell, Costco and Dell are big winners this week

Published Fri, May 27 20229:00 AM EDTUpdated Fri, May 27 202211:06 AM EDT

What we are looking at May 27, 2022 A lot of headlines are being written that Costco (COST) shares are down due to gross margin pressure, but wasn't everyone expecting a far worse result after the Walmart (WMT) and Target (TGT) blowups? The stock historically drops on earnings reports, so we aren't reading too much into this early move for the Investing Club. We are sticking by this core holding . Costco is more Best Buy (BBY)/ Dick's Sporting (DKS) than Target/Walmart and if you sell it getting back in will be mighty difficult. Club name Marvell Technology (MRVL) beats and raises last night despite semiconductor supply chain concerns. This is one of the great secular winners of the group , with 88% of revenue from data infrastructure markets, meaning it has very little exposure to the consumer. Data center revenues were up 12% sequentially, 131% year over year. 5G revenue was above management's forecast. Enterprise networking was constrained by supply — not a surprise after hearing from Cisco — but should improve next quarter. Demand is still very strong. CEO Matt Murphy is executing at a very high level. Great quarter from Dell Technologies (DELL) and a nice "tactical outperform" call by Evercore ISIS earlier in the week. Adjusted earnings per share of $1.84 handily beat the $1.39 average estimate. Gaining the most market share in PCs among the top four industry vendors. The Fed’s preferred index shows inflation rose 4.9% in April in a sign that rising prices may be slowing. Ulta Beauty (ULTA) shoots the lights out with earnings per share of $6.30 versus the $4.46 consensus. Comparable sales were up 18%. Management raised its full-year EPS outlook to $19.20-$20.10, up from previous $18.20-$18.70. Makeup is recovering faster than what management expected — reopening play. Jefferies immediately upgrades to a buy rating. Gap (GPS) is a disaster even after pre-announcing in April. Shares dropped about 18% in the premarket after the apparel retailer cut it's full-year earnings estimate and reported a wider-than-expected quarterly loss. Workday (WDAY) reports revenue in line with estimates but an earnings per share miss of 3 cents. Subscription backlog numbers were a bit messy with management noting that several deals were pushed out of the quarter; the company expects to record them later in its fiscal year. The company raised its fiscal 2023 subscription revenue range. Operating margins of 20.1% beat estimates of 19%. UnitedHealth Group (UNH) downgraded to market perform by Bernstein on valuation. Sacrilege. They downgraded CVS Health Corp (CVS), too. Bernstein prefers HCA , Centene (CNC), and Anthem (ANTM). The Club likes Humana (HUM), which Bernstein resumes with a market perform rating, but increases price target to $506 from $480. Citi (C) downgraded to hold at Credit Suisse on valuation. Thinks upside is limited relative to peers. JPMorgan says China iPhone shipments in April were below the historical average for the month. No kidding: Shanghai was in a Covid lockdown. (Jim Cramer's Charitable Trust is long COST, HUM, MRVL, WMT. 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. 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.

Michael Dell speaking at the 2019 WEF in Davos, Switzerland on Jan. 23rd, 2019.

Adam Galica | CNBC

What we are looking at May 27, 2022

A lot of headlines are being written that Costco (COST) shares are down due to gross margin pressure, but wasn't everyone expecting a far worse result after the Walmart (WMT) and Target (TGT) blowups? The stock historically drops on earnings reports, so we aren't reading too much into this early move for the Investing Club. We are sticking by this core holding. Costco is more Best Buy (BBY)/Dick's Sporting (DKS) than Target/Walmart and if you sell it getting back in will be mighty difficult.