Three Club holdings — Ford (F), Disney (DIS) and Starbucks (SBUX) — were in the news Tuesday. Here’s our take on the headlines. The news: Ford announced a year-over-year sales decline of 8.9% in September. But with numbers from the final month of the third quarter in, the company’s sales on a quarterly basis rose nearly 16% from last year. Shares of Ford jumped about 7% on the news. Adding a boost, electric vehicle sales in September surged 197.3% annually. Though that EV growth is off a small base, it does bring the vehicle maker’s share to 7% of the electric vehicle market. As called out by CNBC’s Phil LeBeau, the results speak to an improvement in production rates throughout the third quarter. The Club take: We believe the results reflect strong demand for the Ford lineup, even though sales remain suppressed due to supply chain issues. As a result, we reiterated our view on Ford during Tuesday’s “Morning Meeting,” saying despite solid demand, we think there’s no rush to pick up the stock until we get more signs that the inventory issues and supplier costs that slammed shares last month are closer to being resolved. We have a 2 rating on Ford, which means we’d like to see a pullback before buying any more shares. Our last Ford buy was in July 2021. We’ve been reducing our position in 2022 . The news: Analysts at JPMorgan cut their price target on Disney shares Tuesday to $145 from $160 for two reasons. The first one was a downward revision in their Disney Parks, Experiences and Products (DPEP) operating income forecast for fiscal 2023. The second was their expectations for greater losses in Disney’s direct-to-consumer (DTC) efforts for fiscal 2023. Despite the revisions, JPMorgan reiterated their overweight rating, which is equivalent to a buy. Regarding the DPEP change, the JPMorgan analysts reduced their fourth quarter operating income estimate for the segment by $160 million, attributing roughly $100 million of that revision to park closures in Florida as a result of Hurricane Ian. The remainder of the downward revision was attributed to a slew of factors, including a potential slowdown in U.S. attendance, a weakening macroeconomic backdrop in the euro zone, foreign exchange headwinds, and ongoing “Covid/geopolitical issues in Asia.” On the DTC front, the analysts expect losses to decline more slowly than the Street is anticipating due to the impact of increased amortization as content ramps up. However, the analysts do believe that DTC will reach profitability by the end of fiscal year 2024. The Club take : Ultimately, our view on the stock remains unchanged — and if anything, we believe this note serves to support our bullish view at these levels. Even with these revisions, which bring JPMorgan’s estimates a level below the Street consensus, the analysts see a roughly 45% upside in the stock. We rate Disney as a 1, meaning we see it as a buy at current levels. The Club added 25 shares of Disney last Thursday. The news: Bank of America believes that restaurant stock valuations remain “depressed versus historical averages, and not far above recession period lows,” due to input cost inflation pressuring profit margins. However, the analysts noted that as consumer spending slows, input costs should come down. As the macroeconomic backdrop further normalizes, with commodity and labor costs coming off prior peaks, they think the market will start to factor in a return to more normalized profit margins. That in turn, can lead to valuations reverting back to normalized levels. They believe Starbucks is “best positioned” in their coverage universe to benefit in this environment. The Club take: We’re encouraged by BofA’s research. As members know, we liked what we heard during Starbucks’ recent Investor Day event and believe that the combination of lower- commodity and labor cost inflation, along with a gradual reopening in China, are supportive of management’s goal to grow both sales and earnings by double-digit percentage points in coming years. We initiated SBUX in late August , and we’ve been bulking up our position with incremental buys ever since. (Jim Cramer’s Charitable Trust is long F, DIS and SBUX. 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.
Ford F-150 Lightning at the 2022 New York Auto Show.
Scott Mlyn | CNBC
Three Club holdings — Ford (F), Disney (DIS) and Starbucks (SBUX) — were in the news Tuesday. Here’s our take on the headlines.