Every weekday, CNBC Investing Club with Jim Cramer publishes the Homestretch – an actionable afternoon update, just in time for the final hour of trading on Wall Street. Market Comeback: Stocks are having a strong day, boosted by encouraging wholesale inflation data released Tuesday. At around 5,420 for the S&P 500, the broader market has recouped all of its steep losses related to the so-called “yen carry trade” from last Monday. In addition, the S&P 500 is almost back to where it was before the weak July jobs report on August 2 sparked the recent “economic growth scare” that we have called premature. Of course, to keep the comeback going, inflation data will need to continue to be favorable when the consumer price index report is released on Wednesday, as well as good data on July retail sales and initial jobless claims on Thursday. New Starbucks price target: The market standout on Tuesday is Starbucks, up 22%. The coffee chain is enjoying its best day since its IPO in 1992 following a leadership change. Laxman Narasimhan resigned as CEO effective immediately and Chipotle CEO Brian Niccol is set to take over in September. The news is a clear win for Starbucks shareholders, a best-case scenario given Niccol’s strong track record and stellar reputation as a leader and operator. The announcement is also resonating on Wall Street, where three firms have already upgraded their ratings on Starbucks stock to “buy” or “buy equivalent.” Here are some statements from analysts at those outlets: Baird: “While we recognize that near-term results could continue to be challenging as the company navigates a difficult economy, we now expect positive sentiment on SBUX as investors expect better fundamentals for the company over the next 12+ months.” Piper Sandler: “We think it’s hard to overstate what a ‘big deal’ this is and what will likely play out for the stock over time, and so we would buy SBUX this morning (even though it’s up 18% intraday as of this writing).” Cowen: “Starbucks is bringing in a CEO from a restaurant hall of fame, and his appointment as CEO and chairman of Starbucks suggests a new era is underway.” Even if the company reports lackluster results in the next few quarters, the market should hold off on the company until it has a better idea of Niccol’s turnaround strategy. With sentiment improving dramatically, we think the stock can hold a higher price-to-earnings ratio while we wait for more from it. For that reason, we’re raising our price target to $100 per share from $90. Next up: We’re in a small profit zone with no major companies reporting earnings on Tuesday night. While Chili’s Grill & Bar owner Brinker International and Cardinal Health report before the market opens on Wednesday, more attention will be paid to the Consumer Price Index report at 8:30 a.m. ET. The current consensus forecast is for the index to rise 3% year over year in July and 3.2% at so-called core levels that exclude volatile food and energy prices. And don’t forget, our monthly meeting is Wednesday at noon ET. (For a full list of stocks in Jim Cramer’s Charitable Trust, click here.) As a subscriber to CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. After sending a trade alert, Jim waits 45 minutes before buying or selling a stock from his charitable foundation’s portfolio. If Jim has spoken about a stock on television, he waits 72 hours after the trade alert is issued before executing the trade. THE INFORMATION REGARDING INVESTING CLUB SET FORTH ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY AND OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR OBLIGATION IS NOR IS CREATED BY RECEIVING INFORMATION RELATED TO INVESTING CLUB. NO PARTICULAR RESULT OR PROFIT IS GUARANTEED.
Every weekday, CNBC Investing Club with Jim Cramer publishes the Homestretch – an actionable afternoon update, just in time for the final hour of trading on Wall Street.
