Every weekday, Jim Cramer’s CNBC Investment Club releases the Homestretch, a practical afternoon update to coincide with the last hour of trading on Wall Street. Stocks rose on Thursday, led by semiconductor and AI stocks. Taiwan Semiconductor Co. Ltd. rose more than 5% after reporting strong fourth-quarter results and forecasting an increase in capital spending. This strength of TSMC boosted the chip group. Club names Nvidia and Micron each rose 3%, while portfolio holding Broadcom rose 1.5%. The company’s financial situation was also improving. Goldman Sachs rose 5% after beating its fourth-quarter profit, although sales were revealed to be temporarily affected by the sale of Apple Card to JPMorgan. Fellow club name BlackRock soared 6% in the fourth quarter, highlighting strong base rate growth. The market entered overbought territory on Thursday, according to the S&P Short Range Oscillator, so we shored up our capital by reducing our Dover position. Eli Lilly shares fell 5% after Reuters reported that the Federal Drug Administration has extended review deadlines for several drugs, including Lilly’s Orforglyprone, an experimental once-daily GLP-1 pill to treat type 2 diabetes and obesity. While the GLP-1 market has been driven by injectables, the obesity treatment category is expected to accelerate this category given patients’ preference for tablets. Orforglipron’s FDA approval is likely to be a big boost for club stock Eli Lilly, especially after rival Novo Nordisk jumped ship to win the first FDA approval for a GLP-1 weight loss drug. We continue to view Lilly’s approval as a ‘when, not if’, especially since orforglipron has advantages over Novo’s tablets and could be more attractive to patients. The target approval date for the drug is April 10, and a Lilly spokesperson acknowledged that approval could occur in the second quarter based on current FDA guidance. Lilly’s stock was also feeling the weight of volatility in the broader healthcare sector as the Trump administration seeks to adjust prices for drugs and insurance companies. Wall Street is crazy about Costco again. In a note to investors, Bernstein called the company the “ultimate compounder” for its ability to grow revenue and free cash flow at a steady pace. Analysts also believe Costco stock is undervalued due to its long-term consistent earnings per share growth and return on equity. The company argues that future growth justifies Costco’s price-to-earnings ratio of 45 to 50 times. Costco had a bad reputation as a retailer last year, with a loss of nearly 6% due to concerns about high valuations, declining membership renewal rates and slowing shopping trends. That’s why we cut our Costco position in half on December 16th, booking a 200% gain on the stock we purchased in early 2020. However, the negative sentiment turned to positive after Costco reported better-than-expected December sales earlier this month. Jim Cramer said Costco’s stock price has already risen 10% since the beginning of the year, but the rally is far from over. Bernstein sees room for further upside from here, as the stock is still down 1.5% over the past six months. Next: No major earnings report after the closing bell. Bank earnings continued Friday, with PNC Financial expected to report before closing. The economic calendar is bright, with the Federal Reserve’s December industrial production report and the National Association of Home Builders’ January housing index on Friday. (See here for a complete list of Jim Cramer Charitable Trust stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
