Monthly Meeting Q&A with Jim Cramer on 20 stocks in everything from tech to industrials to drugs

Published Thu, Nov 16 20236:01 AM EST

During the October Monthly Meeting , we took questions directly from Investing Club members. Here are Jim Cramer's and Director of Portfolio Analysis Jeff Marks' responses. Their answers have been edited for clarity. 1. Selling stocks at a loss has always been difficult for me. Can you explain why you sold Foot Locker (FL) instead of a stock like Estee Lauder (EL) or Bausch Health (BHC)? (Anthony) Jim Cramer: There were some China statistics that showed that the consumer was doing slightly better. That has driven Estee Lauder in the past. We have Wynn. We don't need Estee Lauder. It's going to be a tax consideration for us because I don't want too much money coming out of the fund. My wife and I visited Foot Locker this weekend in preparation for the call. The story that we like is looking much better — but remember, this is a store closing and inventory problem. Jeff Marks: We trimmed some Foot Locker a couple of weeks ago because it climbed all the way back to its pre-earnings level, yet nothing fundamentally improved in the story. We still have concerns about inventory levels, the promotion environment, and the struggles of lower-income consumers. If EL or BHC were to ever do that, we would rip the band-aid off as well. 2. In regard to Club holding Caterpillar (CAT), we keep hearing about the upcoming infrastructure spending plan by the government. When is this expected to kick in, why hasn't it already, and are there any roadblocks to spending that could lessen the impact on the stock? (David) Jim Cramer: The roadblock is that the money is at the state level. It now has to go to contractors and then the contractors buy Caterpillar. Here's my problem: the last quarter was good but the long knives are out for Caterpillar. In the interim, it gives it up and I'm not saying I'm frustrated — we do own it for infrastructure in 2024 — but you know that I don't want to be in a battleground if I don't have to be. This stock has become a battleground. I think the next quarter can be a determinant for me. Jeff Marks: CAT hasn't quantified the impact yet. On its third-quarter earnings call, it said that it has started to see a positive impact from infrastructure investments. However, it expects more benefits in 2024, which should support earnings next year. 3. What would it take for Amazon to become an "own it don't trade it" stock like Nvidia (NVDA) or Apple (AAPL)? Will Amazon (AMZN) reach its all-time high level again? (Narayan) Jim Cramer: " Own, don't trade" is about trying to keep us in a stock that otherwise we would trade out of. Amazon is a great company, but Nvidia has always been too high. Apple is a great company but it's always been hated ever since Steve Jobs died. So you need to have a little extra incentive to stay in. Jeff Marks: The stock got into the $180s in 2021. Amazon still has another 25% to go to get there. Can it get back? If Amazon Web Services (AWS) cloud revenue growth starts to reaccelerate and the company can continue to make progress on expanding its margins, then it will be on the right path. I'm a big believer in owning the mega-cap tech stocks for the long haul, but that doesn't mean "own it, don't trade it" either. 4. There's a lot of talk about an economic slowdown, and the energy sector has been trending lower on these concerns. In light of this, do you think Coterra Energy (CTRA) can still move higher from here? (John) Jim Cramer: If you take a look at the consumer price index (CPI) on Tuesday, what's the one thing that was up the most? It was natural gas . Coterra is able to switch from oil to natural gas and back again. CEO Tom Jorden is terrific. If this stock doesn't get up, someone is going to bid for the company, like former Club name Pioneer Natural Resources (PXD) getting scooped up by Exxon (XOM). That's not what I want. I want it to go up on its own. This is the best one because it's more natural gas. Jeff Marks: At the end of the day, Coterra's performance is going to be tied to the underlying pricing of the commodities it produced — oil and natural gas. But it's incredibly well run as indicated by this year's increased production at a maintained capital budget. Capex next year is expected to fall at least 5% thanks to some cost deflation. Those extra dollars should improve cash flow and shareholder returns. As we saw last year, these stocks can act as a good geopolitical hedge too. 5. Do you think Procter & Gamble (PG) can get out of its rut? (Paul) Jim Cramer: If the Fed suddenly decides to cut interest rates fast, which I don't think they will then that P & G dividend yield will help us. It's an Dividiend Aristocrat. You always have room for a company as good as Procter. It's a leader in everything. Jeff Marks: I don't really think it's in a rut. Sure, the stock hasn't done anything this year — roughly flat year to date — but it's outperforming the broader staples group . I think it's good to have some of these defensive, staple growth companies that offer protection in an economic slowdown. Procter is doing really well — organic sales were up 7% last quarter with only a 1% decline in volumes. Plus. there's significant gross margin expansion thanks to increased pricing, favorable commodity costs, and productivity savings. 6. Ford (F) and CEO Jim Farley are really terrific but he's facing a lot of headwinds. I'm apt to stay with him, but can he do it? (Jim) Jim Cramer: First, I think we have to remember Ford actually has a lot of money on its balance sheet — a lot of cash. Second, they do have this dividend yield. My biggest problem with Ford is those warranties. They have to start making the cars better. I don't like the union, obviously. United Auto Workers President Shawn Fain ran rings around Jim Farley as much as I love Jim. But what I would say is there are times when you can own companies with good balance sheets that have great value with the dividend yield. This is that moment. I'm willing to take the pain with Ford. Jeff Marks: I think Farley has a good plan in place but what has tripped Ford up is softening electric vehicle demand even at lower prices as Tesla (TSLA) has slashed its prices. There are also the ongoing self-inflicted wounds in the form of quality issues — warranty costs are still too high. 7. I would like to add to my position of GE Healthcare (GEHC). Should I wait until General Electric (GE) sells more shares first? (Donald) Jim Cramer: Larry Culp is the chairman of GE Healthcare (and also CEO of General Electric) and I know that he feels that GEHC stock is too cheap. I think that says hang on. He's not able to sell, and so I would not make it a part of the equation. Jeff Marks: That's a good question but unfortunately, we don't know if and when that will happen next. GE owns approximately 13.5% of GEHC as of its last filing. The last secondary was in June at $78 per share. I can make the case that with the stock at $70, GE probably thinks the stock is too cheap for them to sell. GEHC had a strong third quarter — beating and raising. Orders are up 1% —even in China where many were concerned. Margins are improving. New products with AI can expand margins even higher in the future. GEHC also makes MRI and CT scan machines that are critical in monitoring patients receiving a new class of Alzheimer's drugs. 8. I have a big position in Eli Lily (LLY). It just received approval for Zepbound (tirzepatide) for weight loss. Was this a sell-the-news event because it was already baked into the price? (Louis) Jim Cramer: Oh man, was it ever. Now, why do we hold on to Lilly? We hold on to Lilly because if you go back to Merck (MRK) in the 1980s when it had a drug that people kept underestimating, what happened is that it just had these moves again and again when people didn't believe. I think that's what's going to have to happen here. You're going to have continued good news flow. Jeff Marks: Fair question. Zepbound wasn't a new "catalyst" because the announcement was generally anticipated. But it was incrementally positive. The stock actually rallied that day. Even though the medicine was expected to be approved by year-end, it happened on the earlier side in November. Sometimes these Food and Drug Administration (FDA) actions can linger and get pushed out. We've seen Lilly's donanemab for Alzheimer's get pushed out to Q1 next year from the end of this year. The stock is slightly higher Wednesday than when it traded the day before the approval. Part of the story is now what will it take for these weight-loss drugs to gain broader coverage. Remember, they are very expensive out of pocket. Coverage doesn't need to happen immediately. Lilly and Novo Nordisk (NVO), which makes Ozempic (diabetes) and Wegovy (weight loss), can't even make enough of these drugs to keep with the current demand. Zepbound's tirzepatide has already been approved for type 2 diabetes. 9. Do you consider the portfolio weighting of Linde (LIN) appropriate? You always speak highly of management, but the Trust hasn't made a purchase since March 2022, according to the Trust website. Curious as to why? (Edmundo) Jim Cramer: What a well-run company. We have faith in management. It's proven to be one of the most consistent performers around. Jeff Marks: We haven't any bought since then, but we've frequently give it our buy-equivalent 1 rating . We haven't bought it because we didn't want to violate our low-cost basis. The company consistently delivers, beats, and raises, and grows its earnings. Linde is one of 14 companies in the S & P 500 that have beat the index's return every year since 2019 — an impressive feat. It also has a backlog of 40% of which are in clean energy projects. We highlighted on Monday Linde and two other Club stocks engaged in the accelerating clean-energy transition. 10. Any suggestions on how to protect our portfolios if geopolitical events start taking a serious negative turn towards the Untied States? (Theresa) Jim Cramer: I think gold is the way to do it. Barrick Gold (GOLD) is the best one. But the main thing we use at the Club is cash. Jeff Marks: Oil and gold and defense stocks. (Jim Cramer's Charitable Trust is long FL, EL, BHC, CAT, NVDA, AAPL, AMZN, CTRA, PG, F, GEHC, LLY, LIN. 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.

CNBC Investing Club with Jim Cramer

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During the October Monthly Meeting, we took questions directly from Investing Club members. Here are Jim Cramer's and Director of Portfolio Analysis Jeff Marks' responses. Their answers have been edited for clarity.