We’re making a small buy in the oil patch and upgrading our rating on a mega-cap tech stock
We’re buying 200 shares of Coterra Energy (CTRA) at roughly $28 each. Following Thursday’s trade, Jim Cramer’s Charitable Trust will own 1950 shares of CTRA, increasing its weighting to about 2% from 1.83%. The S & P Oscillator moved deeper into oversold territory after Wednesday’s 1.4% selloff in the S & P 500 . With stocks under pressure again Thursday and oil lower, we decided to make another small buy. ( We’ve bought a little bit of stock every day this week .) When we raised cash and locked in our gains on Pioneer Natural Resources (PXD) on Oct. 16 — following PXD’s agreement to be bought by Exxon Mobi l (XOM) in a $59.5 billion deal — we said we would look to reallocate some of these funds into Coterra Energy on a pullback. Well, we’ve waited — and the stock has dipped about 3% since the PXD sale, creating a pocket for us to add to our position. CTRA 1M mountain Coterra Energy 1-month Coterra Energy is an exploration and production company that is roughly split evenly between oil and natural gas . The stock currently trades with a 2.84% annual dividend yield based on a 20-cent-per-share base quarterly payout. It also has $1.7 billion remaining on its share repurchase authorization as of June 30th. When the company reports its third-quarter earnings on Nov. 6, we expect operational execution to remain a theme with the possibility of strong productivity leading to an increase in its output guidance. That’s what happened in the second quarter, with Coterra increasing its 2023 barrel of oil equivalent (BOE) and natural gas production guidance by 2% and oil guidance by 3%, at the midpoint. Higher oil and natural gas prices are always the key determining factor of what will move the stock, but we can’t help but also think Coterra could benefit from consolation in the sector. Just Monday, Chevron (CVX) followed Exxon and made a big purchase, agreeing to buy Hess for in a $53 billion deal. We would never buy a stock purely for on takeover speculation. However, Coterra would be a logical target for a bigger fish looking to add quality inventory. META YTD mountain Meta Platforms YTD In a follow-up to Wednesday evening’s earnings and stock decline, we think this week’s pullback in Meta Platforms (META) is a buying opportunity, and we are upgrading our 1 rating . Even though the social media giant reported better-than-expected earnings , the stock was getting hit in response to the CFO’s comments about how there has been some volatility in ad spending at the start of the fourth quarter due to the war in the Middle East. To reflect a range of different outcomes, Meta’s fourth-quarter revenue guide was wider than usual. However, it still bracketed the consensus and reflected robust mid-20% growth at the top end. We think the market is overreacting, especially if it’s only temporary. More importantly, the reason to own Meta stock has not changed as it has effectively leveraged AI to increase engagement on its platforms as well as monetization. Importantly, the cost discipline story — CEO Mark Zuckerberg’s “year of efficiency” — should continue next year despite ramping investments in AI and higher losses in Reality Labs, the metaverse and VR headset unit. With Thursday’s pullback, Meta currently trades at a multiple of roughly 16.5 times 2024 estimates. Of course, this multiple could compress further as interest rates rise, but it’s already pretty darn cheap for a company expected to grow its earnings about 24% next year. Meta shares have now fallen about 10% from their highs of the year despite ongoing momentum in its fundamentals, creating a point of entry for those who have patiently waited to buy. (Jim Cramer’s Charitable Trust is long CTRA, META . 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.
