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. Stock prices were volatile on Friday, with the S&P 500 index bouncing back and forth in positive territory. For the week, the S&P 500 is on track to drop nearly 2%, continuing a weak June for the overall market. Crude oil is falling again, with US benchmark WTI crude oil on track to end the week below $70 per barrel. Oil prices fell solidly on Friday, despite President Donald Trump saying on social media that drone attacks on Iranian ships in the Strait of Hormuz were a “stupid violation” of the ceasefire agreement with the United States. Interest rates are falling, with the 10-year Treasury yield below 4.4%. Investors were once again interested in healthcare this week as the AI theme receded. The sector rose more than 7% this week, and the group topped the S&P leaderboard in June, ahead of industrials and financials. Healthcare club names Cardinal Health, Johnson & Johnson and Eli Lilly all outperformed the market and were on pace for record closing prices in Friday’s trading. Basically nothing changed for these stocks from one week to the next. This was about market positioning and rotation in skyrocketing AI stocks. It remains to be seen whether this is some kind of movement at the end of the month or quarter. Software experienced a similar rally at the end of May, but the market frenzy proved short-lived. At least in healthcare, we don’t have the same burden of disruptive AI overhang. After battling Cardinal Health for much of the spring, we adjusted our position on Thursday to make sure we didn’t waste our modest but hard-fought gains. Next week, Honeywell will make the long-awaited split into two separate companies. Stockholders will receive one Honeywell Aerospace stock (ticker: HONA) for every two Honeywell shares they own. After the spin-off, the remaining company will become Honeywell Technologies, and a 2-for-1 reverse stock split will take place. We plan to own both companies in our portfolio. RBC Capital analysts initiated coverage of Honeywell Aerospace on Friday with a buy rating and a $300 price target. We share RBC’s belief that the aerospace industry is positioned for strong growth in the coming years. Honeywell Aerospace also looks cheap at first glance, trading at a discount to peer RTX Corporation on an enterprise value-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) basis. We view Honeywell’s technology division as something of a show-me story, given the significant portfolio restructuring over the past few years, making acquisitions aimed at accelerating growth and improving the quality of earnings, while shedding slower-growing, lower-margin businesses. Honeywell Technologies will focus on architectural, industrial and process automation. Next week’s focus will be on Nike’s earnings report after the closing bell on Tuesday. This is a quarter that will make or break athletic shoe and apparel companies’ positions in their portfolios. When it comes to economic indicators, this week is jobs week. Because markets are closed on Friday for Independence Day, the June nonfarm payrolls report will be released on Thursday instead of the usual 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.
