What the Club is watching Thursday — Macy's, Williams-Sonoma buck retail trend with strong reports

Published Thu, May 26 20229:49 AM EDT

What we're looking at May 26, 2022 Retail has been a tough group to own, but the better operators in the right categories are starting to separate themselves. Two examples: Williams-Sonoma (WSM) and Macy's (M). Have to like Morgan Stanley (MS) taking a shot on a high-quality retailer that has been thrown out with the group. The bank upgrades Lululemon (LULU) to overweight ... calls it a "compounding retail growth story at a discounted valuation vs history." If you are selling Nvidia (NVDA) because of a lighter-than-expected guide due to Russia and China, then I have to ask where you were 100 points ago when these events started. We'll have more to say about the chipmaker for the Investing Club today. Hock Tan gets his deal. Broadcom (AVGO) officially announces its roughly $61 billion cash-and-stock acquisition of VMware (VMW). A hefty price, but this is a good sign for the profitable enterprise software group because Broadcom has waited and waited and waited for multiples to come down to attractive valuations. Now they believe the price is right. The company reported earnings as well and it looks like a solid quarter with a higher-than-expected forecast. And for good measure, the company announced a new $10 billion share repurchase program. Dow Inc. (DOW) downgraded to hold from a buy at Evercore ISI. Analyst warns of a feedstock-driven margin crunch. Notable because this is DOW's second downgrade this week. Not all aboard: Union Pacific (UNP) downgraded at Evercore due to recent relative outperformance within the group, second-quarter volume shortfalls, and risks to the operation ratio guide. We sold this for the Club at around $250 earlier this year and have recently debated putting it back in our bullpen ... but we are staying away for now. Based on its sum-of-the-parts work, Cowen now believes the enterprise value of Amazon Web Services is higher than Amazon 's (AMZN) total company enterprise value at the current stock price. Goldman Sachs still sees value in oil and gas stocks and names 8 with great risk rewards. Some of the big names they like are ConocoPhillips (COP), Phillips 66 (PSX), Club name Halliburton (HAL), and FANG. (Jim Cramer's Charitable Trust is long AMZN, HAL, NVDA. 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.

Macy's flagship store in Herald Square in New York, Dec. 23, 2021.

Scott Mlyn | CNBC

What we're looking at May 26, 2022

Retail has been a tough group to own, but the better operators in the right categories are starting to separate themselves. Two examples: Williams-Sonoma (WSM) and Macy's (M).
Have to like Morgan Stanley (MS) taking a shot on a high-quality retailer that has been thrown out with the group. The bank upgrades Lululemon (LULU) to overweight ... calls it a "compounding retail growth story at a discounted valuation vs history."