Derivative AI benefits to 2 portfolio stocks put them right where they need to be

Published Mon, Apr 8 20242:33 PM EDT

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. (We're no longer recording the audio, so we can get this new written feature to members as quickly as possible.) Market steady: Stocks were slightly higher Monday, with the S & P 500 trading in a tight range most of the session. The positive action follows a broad rally Friday in reaction to a Goldilocks-like jobs report. But the S & P 500 still closed last week down nearly 1% in its biggest weekly decline since early January. Consumer Discretionary, Real Estate, Utilities, and Financials led the gains while Health Care and Tech lagged. Catching a breath: Shares of electrical component and power management solutions provider Eaton pulled back about 1.5% after the Club stock was downgraded to underperform from market perform (sell from hold) by Wolfe Research, citing a valuation that is "becoming ever more de-coupled from the fundamentals." The downgrade follows a ton of analyst love that sent shares to a new all-time high last week. The stock was recently upgraded by two longtime bears and was named a catalyst call buy idea by a third analyst. "Anyone who thinks that Eaton is too expensive has to consider the scarcity of anything that's related to data centers. Vertiv is selling at 66 times earnings and was a SPAC for heaven's sake," Jim Cramer said Monday. We know that tech companies are building data centers like crazy due to the overall digitization of the U.S. economy and the need to upgrade for artificial intelligence. Momentum building : Best Buy shares gained more than 1% after Jefferies lowered its price target to $94 per share from $95 but reiterated its buy rating. The analysts said the consumer electronic replacement cycle is "picking up steam." This view agrees with our Best Buy thesis, which is predicated on an upcoming AI-fueled personal computer refresh cycle driving an inflection in comparable sales growth. "HP plans a July release and a September release for new PCs that have AI capabilities," Cramer said. "Best Buy will be the central place to get them because you do need to do some learning to get the most out of them." Wide rate range: JPMorgan CEO Jamie Dimon published his annual letter to shareholders. It's a good read on how he is thinking about a number of important topics like artificial intelligence, management lessons, U.S. policy, and inflation. Dimon said the bank is prepared "for a very broad range of interest rates" that could be anywhere from 2% to 8% or more in the years ahead. "Jamie Dimon did not per se say rates are going to 8%," Cramer explained. "He gave a 2% to 8 % range. Remember, Jamie told me short rates would go to 6% and they never got there." Key level to watch: "Apple is at the level that Carolyn Boroden says will hold," Jim said. She uses the Fibonacci technique to find floors and we're at the big one. Jim went Off the Charts with Boroden, the ElliottWaveTrader analyst, last Thursday. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) 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.